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Faint-hearted fans beware of Footy Finance app

Programme lifts the lid on who's spending what, who's likely to fall foul of Uefa's fiscal rules - and general wastefulness

PUBLISHED : Friday, 28 February, 2014, 10:06pm
UPDATED : Friday, 28 February, 2014, 10:13pm

Just how the human central nervous system copes with our OCD-like addiction to tablets, androids and iPhones is a marvel.

Various apps link us instantly to bank accounts, mortgage rates, utility bills, heart rate and dental data, our children's school performance reports and traffic jams ahead. Then there's the social media "Fomo" - fear of missing out - syndrome, which can also be catered to at the touch of the screen.

Stress levels increase minute by minute with all these proverbial albatrosses stuffed into our pockets and bags. Who promised the digital age would make our lives easier?

We then use all the financial data to price each of the goals scored, and how much each point actually costs.
Stephen Clapham

EPL fans should stiffen their synapses for "Footy Finance", an app that allows instant access to the dire state of your club's finances. The app is the brainchild of London-based financial analyst and hedge fund manager Stephen Clapham, who is the founder of Behind the Balance Sheet, an organisation that aims to lift the financial lid on all manner of industries and professions for a peep inside.

His footy programme offers an "unofficial look at how the finances of your favourite soccer team affect performance on the pitch and in the league".

According to the sales pitch, a host of "fun facts and animations, infographics and charts" compare your team with its 19 competitors.

It details where a club's income comes from and how much is spent on player wages, invoices from agents, board payments, shareholder bonuses and so on.

"We then use all the financial data to price each of the goals scored, and how much each point actually costs," says Clapham.

For example, once the abacus beads stop rattling the app will show Spurs spent £2.4 million (HK$31 million) on each goal in the 2012-13 season.

"Everyone can understand that," says Clapham.

There's an "entertainment index" to see how much revenue the club attracts per seat in the stadium versus how many goals we fans witness.

The collated data is then used to rank your team in the app's Footy Finance League.

"We think we have done something quite novel, which is to take the arcane business of financial accounts and translate them into something meaningful," Clapham told this column.

The app's soft launch coincided with an intriguing report by Clapham's firm which assessed all 20 EPL clubs on more than 50 different financial parameters.

It found that over the 10 years from 2002-2012, only three clubs managed to accumulate an overall profit when selling players.

Stand up Arsenal, Manchester United and, er, Watford; the Hertfordshire side made a profit from buying and selling players in the 2006-07 season.

Overall, the report found EPL clubs lost a whopping £1.2 billion trading players between 2002 and the end of last season. And it also points to a trend we fans have known all along.

"Clubs that are known for financial prudence and have had manager consistency have done best, while clubs that trade in their managers for a new one on a regular basis and have big purse strings have lost the most money," Clapham says.

"All clubs can make money on player trading, especially in an environment which has seen the value of players soar exponentially.

"But it requires discipline and the ability to sell a good player when you get a silly offer, which not every club or manager is prepared to do," he adds.

Clapham says even though many clubs will argue they spend huge amounts on players but get their money's worth by working them hard, the combined loss points to poor, wasteful fiscal management.

The report also examined how the top 20 clubs in England might fare under Uefa's Financial Fair Play Rules (FFP), which came into force for the first time this season.

"Many of the current EPL clubs would fail to pass all the FFP tests in our 2012-13 season simulation - an astonishing result given that the league has by far the highest revenues in Europe," says Clapham.

For example, nine out of 20 clubs had equity of less than £20 million. Yet any club which has negative equity and a deteriorating balance sheet is in breach of FFP rules.

"And employee benefits should be less than 70 per cent of revenues. The EPL average is higher than this," says Clapham.

"Only four EPL clubs pass all the FFP tests in our season simulation - Swansea, Norwich, Arsenal and Wolves - an astonishing result given that the league has by far the highest revenues in Europe."

The rules are designed to level the playing field.

"But instead they will entrench the positions of the top six EPL clubs relative to the next 14 in the EPL.

"FFP will prevent another Manchester City or Chelsea joining the top six ranking as the amount of equity a new owner can inject is limited to 45 million euros [HK$477.8 million]. That won't buy you many players," says Clapham.

Clever accounting will, of course, see many clubs try to circumvent the rules; shrewd owners with access to vast sums and able to employ top accountants will ensure their investments appear to turn a profit and their debts appear elsewhere in their empires.

So Clapham's report makes a number of recommendations as to how FFP might be better applied.

"There should be more public airing on finances. Many decisions are taken behind closed doors. This is inconsistent with Uefa's objective of transparency," he says.

Instead, all clubs should be required to publish financial accounts, including Uefa-enforced deductions, such as investment in youth and community services. "This will allow the local communities better to assess clubs' contributions," says Clapham.




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