The main news today (12 January 2010) concerns the further revelations about Manchester United and the way in which their owners have not only led them into unprecedented debt, but how simultaneously they have personally taken £20 million out of the club.
If you have followed my ramblings on the subject of Arsenal 100 years ago, you’ll know that 1910 was the season when the modern Arsenal was formed, as the old club was declared insolvent and Henry Norris took over.
But the question not yet answered is, were Arsenal unique 100 years ago? Obviously we know that financial disasters for football clubs are commonplace today, and if we just think about the EPL we see Manchester United and Liverpool are hopelessly in debt, Chelsea and Man City are in the same position, but using financial manipulations to avoid forthcoming UEFA rules, while numerous clubs from Everton to Portsmouth just lose money year after year.
But what was it like 100 years ago? Were Arsenal alone in going bust?
I don’t have a full picture – I am trying to gather it so if you know about any specific club and its financial situation in 1910 do let me know. But let me focus initially on Leeds…
Leeds City was the name of Leeds United until 1920, and they joined the league in 1905. By November 1909 they had a £9,000 overdraft – an equivalent to about 7 years salary of a well off man. It was big money
So to try and do something about it the club issued new shares (not a bond like Man U but similar) and the shareholders started to get edgy.
Here’s what the Leeds Mercury had to say of the AGM in 1910 where the crisis was revealed: “The chairman, in moving the adoption of the report and balance sheet, said a loss of £1,904 took a lot of explaining away, but he thought he could say with conviction that the reason why the balance sheet was so bad was decreased income.
“The gate receipts were down last year by £2,300 and the sale of tickets showed a decrease of £269. But there would have been a very much worse balance sheet had there not been a great reduction in expenses.
“The shareholders might imagine that the shortcomings of the directors were at the root of the trouble, but his opinion was this, that the playing was so unsatisfactory that the public would not support the team. (Hear, hear.)”
So the plans were put forward: cut playing staff costs, get rid of poor players (yes, a director actually said that was the official policy of the club) and call another meeting to look at ways of raising money.
What is so interesting is how closely this reflects what happened at Arsenal 100 years ago – even down to having two meetings (although Arsenal had both on the same day).
The Leeds debts like Arsenal’s were mostly to the bank, but some were to the manager who rather than being paid a fortune was helping bankroll the club. Some directors offered to guarantee the bank loans, but others refused so the bank in turn refused to help the club further with an extra loan (sound familiar?)
The directors came up with a plan: a debenture loan – not quite a bond of the Manchester United style in 2010, but not far off it.
It is also interesting that there was talk of liquidating the club and starting again, although that would mean the club would lose its League place. The club could re-apply for a place, but there was no guarantee of getting it.
The club struggled on, ending 17th in Division II in 1909/10 and 11th the following season.
Of course the Leeds situation is only one example of a club in trouble – but it is an interesting one from our perspective because Herbert Chapman later became a manager of Leeds. But now we have evidence from two clubs and it looks from this as if football’s finances were in as much of a mess 100 years ago as now.
I’ll be returning to the crisis that hit Woolwich Arsenal 100 years ago, in later posts, but if you want to read the whole story through the diary of a journalist of the time, that is what the book Making the Arsenal is all about.
- Read what The Online Gooner said about MAKING THE ARSENAL here
- Read what Arsenal World said about the book here
- Read what Arsenal Independent Supporters Assn said about Making the Arsenal here
- Read what A Cultured Left Foot said about Making the Arsenal here
And when you are ready to buy, click here.
(c) Tony Attwood 2010
Sources: “English League Football” (R C Churchill); “Making the Arsenal” (Tony Attwood), Kentish Independent newspaper, Web site: http://www.mightyleeds.co.uk/seasons/191011.htm – to whom many thanks.