Leveraged buyouts like Liverpool's (and ManU) are wrong according to Everton Manager David Moyes. Well on the eve of a Derby match it's a good line and one which most Liverpudlians would agree with. To hear fans speak about the curse of the debt, about the £24m in interest they had to pay every year you'd have thought they'd all be taught economics by George Osborne. In fact I'm surprised that right wing politicians haven't been comparing the nations's debt to those held by football clubs. Of course a plc is a very different kind of beast to a national economy-not that you'd be aware of that judging by some of the embarrassing comments trotted out by some Ministers.
This anger about debt is all well and good but should we really be looking at the vehicle's used to own football clubs and start to reform them? The discussion was moved on a bit in this direction on Friday morning by Rogan Taylor who heads up the unit at Liverpool University on the football industry. He was speaking on the Today programme (available for a few more days on iplayer) about alternatives to the plc with particular reference to the German model of Supporters' trust which own as much as 50% of the biggest and most successful clubs.
Now any Liberal of my generation or older grew up with debates about reforming the firm and giving statutory right to employees 'on the German model' There is a very long Liberal tradition which asserts the rights of those who work in an enterprise to have a say in its control. The German co-determination model is one but so is Common ownership, co-ownership, co-ops and job ownership. J.S. Mill has examples of workers' ownership in his Political Economy and Richard Wainwright used regularly to talk about labour hiring capital. We have discussed these matters before on the blog just over a year ago when Demos brought out a pamphlet exploring alternatives to the present model of the firm which is well worth a read.
In the football world the other interest-besides capital- is the supporters. Since football clubs have been turned in to plc and bought and sold as rich men's play things the supporters have been increasingly marginalised . They have seen their clubs lumbered with large debts with a very real fear that the clubs could be forced into administration or worse. In the German model those supporters have rights and can act in the long term interest of the club rather than in the short term interest of some disinterested owner who maybe here today and gone tomorrow. Football trusts have been formed all over the UK but without changes in the legislation it is hard to see how they can raise enough cash to buy out their debt ridden clubs from the present owners.
The need to reform the plc structure is as urgent in other industries. So much of British Industry and commerce has been sold off to foreign interests without the long term interests of the workforce and community being taken into account. You only have to look at the Cadbury's sale to realise that we have a problem. Will Hutton has be asked to chair a Commission into ownership that will report next year. This is an important matter and we need to push it up the agenda. There are some excellent examples of commercially successful firm who choose to operate on this model but they are too smaller part of our economy.
The Derby match kicks off at 1.30pm and I'm sure many Liverpool fans will be relieved that all that debt has gone, but they will also be anxious about the new owners and if the US economy gets into difficulty again then Moyes words may once again be heard taunting the Kop. Mind you with persistent rumour that Moyes will take over at Man U-another club with vast leveraged debts- when Ferguson goes he might find his own words are turn to taunt him.