THE BREAKDOWN: Celtic Rock Bottom, Football Clubs Have an Investment Problem, FedEX Cup Shows PGA TOUR’s Strength (E34)

27:07We are going to beat bad sides. And even sometimes we're going to beat good sides. Why? Because we actually got some talented cricketers. So the reason why you and I get so frustrated about the state of elite cricket within the England test cricket within the England setup is not a fan raging against losing. it's saying we could be so much better than this right we've actually got some talented cricketers who with a bit of application a bit of structure a bit of leadership and a bit of an idea about where the whole programme is leading and what their own part in it is all the standard stuff that makes elite sport at the moment with Australia being quite weak at the moment India I wouldn't say that they're in a purple patch right now either we could be top of the tree right now you know I think we have the players that we could be right at the top if things were being organized in the right way and structured in the right way.

27:58So the frustration is to see us at number six in the world, or whatever it is we are right now, when we could be first. Completely. And Bangladesh going down to Australia and winning a test match. Yeah. You know, in the way that they did, showcasing, as most people picked up, how actually vulnerable that Australian team was if we're taking a team out. And that was actually with them, with their full-blown front line. Yeah, Bangladesh beat the whole Australian team. We got thrashed by the Australian reserves. Yeah. Anyway, Australia corrected that the second time, didn't they? But yeah, it'll be interesting to see if Pakistan can put a better foot forward for the next ones.

28:32Charlie, there was quite an impressive interview that came out this week moving into football between the rest of his politics, Alistair Campbell, and Alexander Seferin, which is a great scoop for them because Seferin doesn't generally give many interviews. And I thought a really interesting kind of choice of platform in the context of where we consume most of our sports media. Campbell was probably a pretty good person to sit down and have that chat with considering a huge amount of the stuff we've been talking about with FIFA and UEFA has a serious political edge you know but what did you think of it because I really enjoyed it and it was great I think it showcased so much so many of the reasons why he's uh such a good leader of UEFA I thought it was a great interview first of all um it's easy to forget sometimes Alistair Campbell was originally a top-line journalist on the Daily Mirror.

29:22And when this saw Alistair Campbell, you know, I hope we're even-handed enough to be able to praise other podcasts, right? This was Alistair Campbell as journalist. If you watch him on the rest of politics generally, it's just him going on and on about some sort of, you know, mad chip on his shoulder he's got about left wing, right wing. It's just seriously dull. This was Alistair Campbell as a journalist. Yeah. And what he did brilliantly, he let Seferin speak. he didn't come with a whole bunch of his own views and his own opinions. He asked some reasonable questions. And Seferin just answered them.

29:57He answered every single one without any kind of top spin or side spin or any attempt to try and dodge it. It was calm, but it was absolutely clear. I came away from that interview knowing exactly what Alexander Seferin thinks. Even on stuff that was difficult. right so he was asked you know how do you feel now about the whole super league fiasco well i feel betrayed by andre agnelli he didn't have to say that that's a sign of a good interview an interview where the person who's being interviewed feels like he can start to really say what he thinks and feels because the guy who sat opposite him is creating that environment so i thought it was an outstanding interview but there was some stuff in there which i really want to pick out charlie and talk about seferin said at one point he said um in relation to uefa compared to fifa and the future and what's been happening recently and all the controversies not just the one about fifa ford enterprises but um all the rest he said one leader of a national association or federation said to me the other day alexander this is our money right and seferin then went on to say and that guy was correct because 75 percent of the revenues generated by fifa are generated by european countries now this is a point that i made a few weeks ago when this whole thing first blew up which is there's been a willing sort of like a murder from european football over the last 10 15 20 years to sort of hide the fact that basically the whole thing's paid for by europe right let's not seem like we're colonialists or whatever the bullshit comes up with from various people is that was rubbish um but whatever let's just play nice and let's try and spread our wealth around and fifa's the way in which that money gets spread around and yeah that's all good we want to see the game develop more broadly but seferin said specifically you know effectively fifa has that money under our sufferance right it's our money and by our money he doesn't mean uefas he was very clever about this and very clear about this no it's my it's the member federations of uefa he said we distribute everything other than three percent which we keep for administration which is true if you go through uefa's accounts that is absolutely true that's absolutely a fact and he's also right to say that three percent is a relatively small retention by an organization of that kind also true but what he was basically saying sorry just on that so his number and the numbers to back that up just for context fifa have six billion reserves in cash yeah uefa have 500 million yeah fifa's revenue is two to three times smaller than uefa's yeah so uefa exists to distribute back to its member organizations and to clubs and all that type of stuff fifa tries to gather in what it has most of which is supplied by uefa uefa clubs and national federations well he actually said one of the tries to use it to play politics with the line he used was when he said one of the small nations came to him and he said it's like trying to buy my house with my money yeah yeah and and interestingly it was the five million he said here they were offering 40 million pounds the federations with a five million pound budget yeah and the anger he said was it 40 members spoke on a conference call to react when they got this news through 40 of 55 members had something to say and he said many of them far more agitated than he was yeah so i don't think we can underestimate and and maybe we fall into um the trap sometimes as well of just assuming that one of some of these federations because they earn small revenues are there to be bought this for me interestingly showed that even within that block of uefa where you could assume that the power of the england frances etc could easily go to an albania and make them feel forced should we say to vote with them on this from what seferin was saying he was basically i think trying to say no no this was very very much the collective piece whether they earned five million a year or 600 million a year this was an affront because you were selling football partially that and partially because as you quite correctly just said those smaller federations within UEFA know that FIFA is sat on 5 billion of their money.

34:01So in other words, effectively, this is the point about using my money to buy my own house is you're already sat on money that you can distribute to me to do anything I need to do. That's a huge number, 5 billion, right? So that money should be coming back to us. You're then keeping that away from us and continuing to sit on it and then selling off part of my house, then produce money, which you then very grandly say that you'll distribute parts of it back to me. Well, no, thanks very much. It doesn't make any sense. So I thought that was interesting. And I thought that it became increasingly clear, the drift as he went along, that they're not going to settle for this, either for Infantino staying or for this kind of stuff continuing.

34:43But he did it in a beautifully democratic way. And we've talked about this. There was an autocratic element to it previously, whereas if we strike, we can basically force him. out right but as we know fifa has processes in place for the democracy element where if you can get 106 plus votes you will win the presidential election and he said here very specifically in that interview he said if he doesn't resign there will be a candidate that runs against him and we will build towards that he also he also said it won't be him yeah and he said from what he understood it wouldn't be natural the psg owner but i think what he did incredibly well so that's the democratic approach but the autocratic element really came in after it and I think Alice said in the velvet glove it was basically we're going to do this democratically but on the off chance that it doesn't happen democratically we will not allow that to happen we reserve our right to do whatever the hell we want if that happens so I was terrifically reassured by it I'm a big Seferin fan I felt the way he dealt with the Super League dispute was tough and strong and clear the way he's dealing with this situation is tough and strong and clear there was quite a funny bit at one point where campbell just prompted a bit saying he was um infantino was a uefa guy wasn't he great stuff right and and sephirin bit yeah he's like yes he was and he's forgotten where he came from right he's totally yeah and and then he went on saying anyone who comes after him in that situation will need to remember well campbell also said he He said, UEFA is probably the most important of the individual bodies in football.

36:20And as Campbell said that, Seferin just interrupted and said, not probably. Yes, that's right. Not probably. That's right. Again, that was a great moment. Do you know what I did enjoy, I think, and the commentary around it, the people that have been excellent in highlighting this from the word go, I think we've speculated about a lot of things, right? But what this really, from the horse's mouth, showed was that actually a lot of the conversations that we've been having, that people have been having, have been pretty close to the mark so yeah i thought it was really good go and have a go and go check it out um if you haven't seen it i think you you will enjoy it uh and firmly probably fits into the kind of businessy side of shows that that you guys will like if you're even spending any time with us here so um speaking of businessy side of shows charlie there's been uh in the last couple of weeks some news around a club in the championship that has some serious financial challenges on the horizon with an ownership that has am i correct in saying has been served with a winding up petition um well always about no um so i want to be careful with it is complex right the club are talking about sheffield united which is currently in the english championship but until two or three years ago was in the premier league briefly was previous that in the championship previous that in the premier league they've been yo-yoing a bit between the premier league in the championship.

37:38So the background to this is that there's a Saudi guy called Sheikh Abdullah. He's not one of the big Saudi royal family. He's not a multi-multi-billionaire. He is a part of the broader senior Saudi ecosystem. I think he served as minister of sport at some point, et cetera, et cetera. Built up a small portfolio of clubs. And one of these things was being the 50 % shareholder in Sheffield United when it was run by a guy called Kevin McCabe, very good guy actually, called Kevin McCabe. They got into a corporate dispute. Abdullah won that corporate dispute and took over after a decision in the high court, took the club over in 2019.

38:18And between 2019 and 2024, those five years, even though they were promoted to the Premier League during that time, it was a slightly unhappy time. He never looked as if he really either had the money or the determination to really take sheffield united forward um and there were rumors for a little while before 2024 that he was looking to sell and he did in december 2024 so just under two years ago um he sold um to a outfit called coh sports um for 105 million pounds um co8s and they were in the championship at the time sheffield united but with parachute payments which is what slightly inflates the valuation.

39:03American consortium, were they? Yeah. Led by a guy called Stephen Rosen, and another one called Helmi El-Touki, I think his name is. And not well-known guys. It's not like Jeff, it's not like Bezos becoming part of Liverpool, that type of stuff. Who the hell is Stephen Rosen? Okay, we'll look him up. Seems to have done a few things, et cetera. No biggie, right? So they come in, 105 million. They sort of blotted their copybook in their first summer transfer window they fired the popular manager chris wilder for the 15th time was that chris has been in and out of sheffield united a few times a bit martin o 'neill of him isn't it it does yeah i mean chris would say he's still in the prime of his career you know he's not he's not 75 but um yeah yeah sorry he's been there a lot basically and the fans have yeah yeah um so what happened was they then started the season terribly this was their first full season in charge and it was a season when they were expected to be amongst the favorites to go back up to the premier league they started terribly they had to fire the manager who they had appointed and they then uh reappointed chris wilder um knowing chris wilder a little bit i think that would have been a very uncomfortable conversation yeah to go back to to wild with the tail between the leg um and ruben sellers you might be right yeah um yes i think you're right any anyhow so um there they were this is a year ago, having made a pretty disastrous start to their time in charge of Sheffield United.

40:34And around about the same time, I started to hear rumours, and it were just rumours, I'm not sure how much money these guys have got, not sure how this is going to go. They might be looking already for external investment. I was like, crikey, they've only been there six months. That's quite early to be having those stress signals coming out. Time went on a few months, the Sheffield United season recovered gently, and they ended up finishing mid-table. But in the meantime, it started to become clear that they hadn't actually paid Abdullah for the whole$105 million that they owed him for the purchase of the club.

41:07Now, that's not in itself unusual. Quite often what happens in the purchase of a club, rather like the purchase of a footballer actually, is a certain amount gets paid up front and a certain amount six months, 12 months, 18 months down the line. That's not. That's not it. Yeah. Right. So effectively, there was a£35 million second instalment, which it became clear had not been paid to Abdullah. Abdullah said, I want to be paid. It was then rumoured, and I think has never been denied, that they suggested to Abdullah, well, instead of taking that cash, why don't we give you some shares back in the club?

41:43which you know when you've just exited a club and you've got it out of your mind the idea that you would then go back into a minority position you know it was 30 percent of the equity as opposed to having 35 million pounds in cash was never really gonna be a flyer in my view so what happened what happened was is as abdullah started proceedings to try to recover his money through court action in the meantime um the shares in the club were transferred out of coh sports holding into a new company called um 1919 holdings or something like that i can't remember exactly the name of the full name of the company it's 1919 and at the time there was it was sort of raised because obviously it happens at company's house you can see what's going on a little bit and it sort of question was asked what's going on here oh it's going to make it cleaner better structure share and everyone went okay well fine whatever but it then became clear subsequently they've transferred these shares out of coh sports into this new company without obviously abdullah knowing or being okay about it because they hadn't actually fully paid for them yet right so this is um the start of a messy situation because the first thing that abdullah does is he then seeks to wind up coh sports and is doubtless either has been or will be successful in so doing because he is owed a lot of money by them, etc.

43:03The problem is there's nothing in there. So he then has to pursue a subsequent action to force the restitution of the shareholding in Sheffield United from 1919 back into COH so that the liquidator can then restore, can realize value for those shares and can then restore money to him, right? So that's where the whole thing gets messy. now from a fan perspective um obviously it's not great to see all of this corporate problems at the top of your club there's also potentially the risk of a 12 point deduction here um under efl rules in fact i would say strict application of the efl rules would see a 12 point deduction yeah um and in the meantime of course the again you know the challenge is if this is an ownership group who cannot pay for the shares that they've bought or haven't bought off Sheikh Abdullah, how are they going to pay for the ongoing costs of the club?

44:00Now, in the meantime, they've also taken out a loan with MSD to fund the running of the club, which is secured against the assets of the club, right? So in other words, you've got an aggressive money lender over here, where you're paying effectively 10 % or whatever on your loan to fund the running of the club. You owe the previous owner 30, 35 million, whatever it might be, which you have not given them yet, back over here and the shares might be then forced back into this insolvency process over here. Where does that all end up? I'm sure people will listen to this and say, but what about fit and proper tests and the due diligence done on owners coming into football clubs?

44:39Aren't we meant to be protected from this type of ownership situation? so for that to be applicable you'd have to look back in Stephen Rosen and Helmi El-Tuku's business history and say is there something which they've done in their past which would have shown that this was likely to happen I don't know that that's the case I had a quick look and I couldn't see anything that would prove that to be the case it is worth saying that in the interim between that deal being done and now the independent football regulator has come into existence and has taken over full oversight of the owners and directors test.

45:13So the tests are being applied and being looked at probably more strictly than they were before. So maybe that from now on, there's gonna be a more forensic look at business histories of owners and directors. And maybe that might have picked up something in their business history, which might have predicted this, but not necessarily so. But is there also a capital assessment? So they will have had to have shown X amount of capital available to complete that purchase. That is absolutely true, Charlie. And that's a slight mystery here. And the others, so in other words, just to fill readers and listeners in, when you're buying a football club, prior to that deal completing and prior to the Football League giving the okay to it, you have to show the funds available to do so.

45:54Now, I suspect the problem here is the way in which you had staged payments. So in other words, the Football League would say, well, for that first payment of£70 million, we want to see that in the bank account right and for the second payment well we don't need to see it in the bank account it's not due for another year but we do need to see that you're good for it something we call proof of funds the problem is that proof of funds comes in you know sort of there are shifting sands let's just say all sorts of different types of proofs of funds can be adduced um and if that money is to be in the bank account in cash then why isn't it just being paid across anyway you might as well, right?

46:33If it's already there, why are you staging the payment, etc. So I don't know how the IFR will look at this down the track because this problem has happened on the IFR's watch, but the genesis of it is before the IFR was brought into being, right? So the IFR will not carry the can for this, but nonetheless, it may end up being a problem. The IFR has to get quite heavily involved in trying to sort out. But I'll tell you what it brings me on to, Charlie, is something that I mentioned in passing last week or the week before. You beat me to it. You've Caused a bit of a stir. Sorry. Can you, do you want to?

47:03No, not at all. No, no, I wouldn't. I wouldn't. I want your take on the response to your statement that I think it was about, you said 42 football league clubs, 42 of the 72 were up for sale. And you'd done some research recently that had given you the belief that that was the case. Now the reaction to that, I'd be quite surprised. Either fully up for sale, quietly up for sale, or actively seeking external investment to mitigate ongoing losses or debts, right? So now of those 42-odd clubs, how many of those are in the bucket of actively seeking external investment to mitigate ongoing debts? 10, right?

47:42So you can take 10 off the 42 and say 32 are for sale and another 10, the ownerships are sufficiently concerned about their cash flow situation. They're trying to bring more money in. So could we say that 10 could be growth capital play, i.e. investors come in. No, not including those. So you say equity payments to take off a percentage of. Right, so the owners can take money off the table, not money can be put back into the club. No, this is money coming in to fund losses. So it's not owners taking money off the table. It's owners looking at their cash flow forecasting for the next 6, 8, 10, 12, 16 months and saying, I don't have the money to fulfill those needs.

48:21I now need somebody else to come and put money into the club and to fund the operational losses. Right. Okay. So we've got 10 in that bucket. Let's just say. Sorry, sorry, sorry. Estimate. Let's just say 25 % in that bucket. Yeah. Where are the rest sitting? The rest arrive actively publicly looking to sell or quietly looking to sell. Okay. Lesser City, one of them that is, right? Publicly. Publicly. Yes. And I had a look. I wanted to just test this out because I was keen to see what had been, like commonly recognized on Google. And that was when your quote last week came up from an AI generation as something that frightened the hell out of me as AI looks to take in what we say here is the information it shares.

49:05But - I don't know why you're worried about that, Charles. About as good a source as AI is likely to find. My goodness me. Lest has been one that a lot of people have asked. No, no, sorry. It's more on what I've said. Show some confidence. Lest has been one that a lot of people have asked about because it had a 200 million pound price attached to it. Now, it's worth saying that what they included in that was all of the infrastructure. So, stadium, a training complex, which is… Football club gets sold with stadium. Yeah, I know. Crazy, right? Sorry? I've never seen that before. Big training ground club and what is it?

49:35Leuven in Belgium as well. So, there's the Belgium club as well. Anyway, that was all priced at 200 million pounds. Now, it's worth remembering that this is a club currently in League One with a huge amount of financial pressure. so that is probably like the biggest example of a club for sale right now on the market with serious needs of capital support but again that's just like that's just one example and one that also probably right if we're being honest about this will attract interest because of the size of its deal but what about the ones that don't jinx this is my little daughter would say jinx So what about the ones that don't?

50:14So the reason I'm worried about this market, Charlie, is because the football club market is no different from other markets. There are sellers and there are buyers. When there are more buyers than there are sellers, the price rises of those assets because they're scarce. And that would be the case in the Premier League right now, for example. when there are more sellers than there are buyers, the price drops. Okay, so what? For the average listener or a fan, I don't care how much my current owner gets for the club. Okay, so as the price drops, at what point does the total value of that club become less or roughly equal to simply the annual operating losses of that enterprise.

51:12What do I mean by that? Let's say you've got a League One club, right? And let's say that that League One club is worth, in adverted commas, under normal market conditions, around about£10 million. Be about normal for a League One club. if that league one clubs and your losses start to escalate towards 10 million pounds you're in a situation where if you're an owner looking down the barrel of spending 10 million pounds on that club over the next 12 months if there is then not a seller sorry a buyer out there for that club the thought starts to go through your head i'd be better off putting this club into administration than I would try and keep it on the market and risk going 12 months without being able to sell it.

52:01Once you start to see multiple clubs in administration, because the mathematical equation is that they'd be financially better off being in administration, the price goes down even further and the calculus gets pushed even further. And this comes back to the point I raised last week about the Professional Footballers Association's obstinate refusal or to countenance proper cost controls, is that it's in everybody's interest, including the players and including the fans and including the authorities, that clubs are, quote, sustainable. What do I mean by sustainable? I don't mean the same by sustainable as other people might mean by it.

52:39What I mean by sustainable is, is that they are running on average at a level of annual losses, which means that there's always a buyer. Yeah, right? For me, that then is sustainability. if you pretty much know that your club that the moment you say i'm willing to sell i want to sell that somebody else will look at that club and go do you know what yeah i'll give that a crack that's all right i'll give that a crack under those circumstances it's sustainable so i'm not even saying that clubs need to be break even i'm simply saying that their annual loss rates needs be at a level where a normal really wealthy person or group of wealthy people thinks a that's gonna be quite fun secondly if we do well i might make a few bob thirdly if i sell the odd player i might be able to fund that a lot of those losses whatever might be fourthly even if that all doesn't happen the total amount that we're going to lose over a three four five year period is something which i put into the bracket of owning a few racehorses having a yacht or something like that now the problem is with league one losses having accelerated to an average of 7 million pounds a year, right?

53:45And League 2 to the sort of 2 to 3 million pound a year. The number of people who are willing to lose those types of money get smaller and smaller. And in the championship, it's 20 million pounds a year, right? Now here's average revenues of about 25 to 35 when I was looking. Right. So if you think about that business model on average, what you're looking at here is a club with revenues of 25 and costs of 45. Right? That's the average of what we're looking at here. 20 million pounds every year. Right? So let's take that over three to five years, which is a normal ownership tenure. 80, 100 million pounds.

54:27On top of whatever you pay for the club in the first place. Right? How likely is it that that club is going to go to the Premier League? Well, with a fair wind, maybe one in 10. Right? 10%. 20%. Right? So you're then 100 million in, plus on something which is 15 % likely to happen. Otherwise, you're just left with a bill for 100 million pounds. And then at the end of it, you're unable to shift it for anything like the amount of money which you've put into it. That then starts to guide behaviors when problems arise like this and like at Leicester, is owners start to say, you know what, I just can't take this any longer.

55:06I'm not going to do this any longer. And even though I'm told that there's no buyer out there i'm just going to slam it into admin is it not hard because that number could be so subjective on what an acceptable loss is to actually find a number that fits across the board do you want oh it's not across the board so if you want my view having tried to buy and sell clubs in all of those divisions yeah right i would say a sustainable level of loss in the championship would be about six million quid a year um league one two to three million quid a year league two a million quid a year, right? So you're basically going to 20 % on top of revenue.

55:44On average. On average, as being a reasonable punt to put in, even if you have to do it over five years. So let's say you own that championship club for five years and it's losing five or six million quid a year. And you say, right, over those five years, I am betting 30 million pounds of my money, knowing that at the end of it, there'll be somebody else coming in who's willing to bet 30 million pounds of their money. The problem when the losses go to 20 million and it's 100 million over four or five years, that basically does then require billionaires. And the problem about billionaires is there ain't that many of them, number one.

56:17Number two, they tend to be remarkably careful about what they do with their money, right? As you know, Charlie, we both met enough of them to know that they are some of the stingiest people alive, right? They don't, a lot of football fans say, well, he's a billionaire, why does he care? No, the reason he is a billionaire is because he really cares. That's why the rest of us aren't billionaires, right? So this is why I was having a go at the PFA last week. It's saying that English football is in a beautiful moment and position right now where we've got very high revenues. So you know the saying, fix the roof while the sun's shining?

56:51On English football right now, the sun is shining every single day. It's like this summer. It's just a continual heat wave where revenues are really good. I sent you some stuff recently which you stuck up on social media saying that the championship is the third most watched league in Europe, is the sixth highest revenue league in Europe, and is the 10th highest quality league in the world. Right? So the championship is absolutely doing great, but with this problem in the undergrowth looming, that 11 championship clubs are up for sale, there aren't many buyers, and then you start to see problems like this start to circle with loss rates at a very high level, and you start to go, there could be very significant problems ahead.

57:36And in that turbulence, there could be all sorts of unintended consequences. So what I'm hoping of, Charlie, just to sort of finish my, I wouldn't call it rant, but soliloquy, is to say the moment of the redistribution deal between the Premier League and the Football League, which is imminent, okay? So this has been a deal that should have been done a couple of years ago. It's meant to be done every five years. Hasn't been for seven years. So we're two years beyond when the redistribution deal should have been agreed. When that gets agreed with the either imposition of it by the independent football regulator or the independent football regulator manages to encourage both sides to come to a deal which works for both of them before he has to step into the playroom and do it himself.

58:21That is the moment at which the football league clubs have to get their house in order. because as we've seen from i see the situation right now in the football league as being identical to what formula one was before liberty came in which is an amazing product with a great audience but uninvestable and everything always needs to be investable right because if it's not if it's uninvestable then basically then from that moment everything does have to run at break even and that's why i say about unintended consequences to the pfa is that you guys should be happy that there are football club owners who are willing to lose money, don't feel you need to push it as far as you're currently pushing it because you could end up in a situation where the whole bubble bursts and every club ends up going, do you know what?

59:05We can't lose money because there's no way of ever getting any money back. The final message would be to some of the owners in the football league, particularly the championship, who vote against spending restraint in general is you are guilty of a fundamental misunderstanding about sporting asset value, which is you think that if you're able to spend more than some of the other clubs in your division, that gives you a better chance of success and that then your club will become worth more even if the rest of them go to rat ship, okay? The lesson of Formula One and every other sport is the biggest single increase in sporting value, sporting asset value that you get is when you get spending restraint.

59:48But that's a bigger increase that you'll get even from going to the Premier League for one or two seasons. Because it enforces better practices, efficiencies, makes you review your business. Makes you investable. Makes you investable. Yeah. And just on your point of having enough buyers, you mentioned the bigger idiot theory last week. If you're looking at what we've talked about here, you can look at all the clubs across the divisions. And let's say you could bucket them and you could bucket the different types of investors that would find each of those clubs attractive. Should. Should find each of those clubs attractive.

1:00:17Let's just say, you know, if you're hitting up to 10 million pounds, You could have an individual businessman who's done very well and is keen to go and buy something and add a little bit of the kind of social side to the business side. You go over 10 million and you start getting either a couple of groups of those people or some slightly smaller financial houses keen to go and dip their toes in it. Let's call that the 10 to 50. Then you get the 50 to 100, which is only just a slight upgrade on that. But it's people doing the same type of thing with a bit more money. And then over 100 is when you start becoming attractive to a private equity type individual.

1:00:48you start becoming attractive to maybe the billionaires that you're referencing but the big problem is the hardest bracket really is that 10 to 100 million that's the hardest bit yes because you're not just talking about the buy price of these clubs as you've said you're talking about the cost of running them operationally and that over a five ten year period is what will put the most pressure on this industry not necessarily what they grab the club for that they can finance early on and the challenge with that straight away you're suddenly going oh shit but that means we just said the championship and league one teams most of those fall within the 10 to 100 million price range absolutely right that's the concern 100 so the typical type of person who would be able to get involved in this kind of stuff either on their own or with one other person would be somebody who who created their own business had then sold their business for 100 million pounds let's just say, just to use a round number, post-tax, 100 million pounds, and whether it be in the US or here, whatever.

1:01:47And the purchase price, they can say, well, that's an investment. It's a risky investment. So if I'm paying 20 million, I've still got 80 million, right? So that 80 million is enough for me because there's not so many other different things. Perhaps I want to have a boat or something like this, but I've got a nice house. I'm okay. the problem is the person with the total net worth of 100 million will most likely have an annual passive income or maybe even active income of about 5 million a year after tax 3 million a year 3.5 million a year so even if that person were to vote to were to devote their entire post-tax income to funding the football club which would be a bit awkward at home um sorry honey i'm afraid we're not able to weep right now because our entire disposable income is going on playing the football club so what that basically gets to is that even somebody with a who's got a hundred million pounds is no longer actually an appropriate owner of a football league club so then you move up into the two three four hundred million pound category there aren't that many of them this is the problem and then you take okay there are x amount of them only half them are interested in football only half of those guys got appetite for actually subjecting themselves the public glare of owning a football club.

1:03:01Only half of that lot have got the gambler mentality of, if I do this, it could end up being great and whatever it might be. You end up with quite a small number of people, right? And that is where we are right now. That is what I'm referring to when I'm saying there are too many sellers, not enough buyers, and the fundamental problem is the annual loss rate. Yeah. Brilliant. Should we have a quick look at the PGA Tour? Talking about organizations that not just are investable, but have been heavily invested recently um the u.s pga tour is reaching the climax of what must be a must feel good to be a pga tour executive right now champion year isn't it oh champion year god especially especially when you're key your golfers are coming out in their media uh in their media chats and as you said you know for the seferin piece isn't it lovely when someone actually sits down and answers a question and whether it's the executives doing it or the athletes like a rory mackerel or fitzpatrick or, you know, just sticking the knife just further into those that didn't stay with them a few years ago.

1:03:59There was a joyous exchange between McElroy and Westwood in the last couple of weeks. Did you see that? Yeah, I did. I loved it. McElroy basically came out and said, I always thought Liv was a shower of shit and I would have been proved to be right. And Westwood, in that sort of, you can imagine that 20 years ago, 25 years ago, he was the senior guy in the Ryder Cup team room and Rory was the junior guy. Yeah. Right? And he came up this year, well, Rory just often gets these things wrong. Sorry, Lee, no, he fucking got it right You know, the fact that he's rubbing salt on the wound now doesn't mean he wasn't right all along and he didn't call it right.

1:04:30Anyhow, the USPGA Tour, we've been through it before. They basically, from a very poor position that they started the whole live war in, they then played an absolute blinder. They propped up the European Tour here. They took in external financing here. They created an equity percentage of the commercial arm of what they do here for the big players to incentivize them to stick around. They increased prize money. and they tightened up their FedEx Cup playoff system at the end of the season, which is now, I think, epic. I think the FedEx Cup is brilliant. I don't follow the USPGA religiously week by week, but I do follow the FedEx Cup.

1:05:08Because when you think about the format of the FedEx Cup, which Charlie will line out in the moment, it's the exact opposite of what Liv was doing. So what Liv was doing is they were doing everything possible to make it as uncompetitive as possible. right so if you're on the live tour you are automatically on the live tour unless you perform really really badly but basically you're on for the time of your contract we're not gonna bother having a cut so enough was in the on the us pga tour and indeed the european tour and all other professional tournaments halfway through the tournament the bottom number of players not quite not quite half but almost half but a number of players have to just leave and don't get any prize money at all have to bugger off back home having made a loss on the weekend Liv said, well, we're going to get rid of the cut, thus removing a whole layer of jeopardy.

1:05:53We're going to basically pay massive appearance money, contracts just to be here, etc. The FedEx Cup is the opposite of all that. It's the most Bruce Lee meritocratic sporting thing that you can ever see. Do you want to line it out, Charlie? Yeah, so the reason we're talking about it actually is because the final tournament, the Tour Championship actually is on right now. so we're just coming out on a Friday it started on Thursday um and really throughout the whole season so the PGA Tour season you have all of the individual tournaments but behind it you have a point system and the point system you're accumulating points based on how you're performing in various events throughout that season and come the end of the season pretty much where we are right now you have three events and the three events are first one top 70 players so first if you haven't you know 140 odd players on the pga tour the bottom half don't make it to the fedex cup these three events so the top 70 players play in that first event the second event which we just had the bmw championship which wyndham clark won that then cuts the field that that's then 50 players that event after the bmw championship we then go into the tour championship which is what we've got on now which is 30 the final 30 players now previously what had happened on the tour is when it got down to this final event, whoever was 1 to 30 in those rankings, if you were number one, you would start on minus 10.

1:07:20If you were number two, you were 8 under. Minus 10 in the golf scoring system, which means that that is like starting off like you're 2-0 up in football. Yeah. Now, to make it fair, you really need to be starting Scotty Scheffler on plus 10, right? And putting everything else together. The challenge with it is that, well, the thought behind it is clear. You play very well throughout a whole season. When it gets to this flagship event, which has huge prize money attached to it, about 10 million for this specific event, and then there's a tour of merit type thing, which is about$22 million, I think, on top of that for the winner.

1:07:50They get rewarded for their performance throughout the season by starting in an incredibly favorable position. However, while that makes a lot of sense, it was a challenge from a viewership perspective because, yes, the most likely candidate to be number one is probably the best player. If you give them the head start, it doesn't create a great product for the fans. That massive opportunity right there. That final bit. Yes. That final little bit of the players who were already towards the top of the FedEx rankings. You have the top 30 players coming in to an event. And this is, as you said, it is the most meritocratic piece.

1:08:21It is the top 30 players throughout a whole season. No one can have a complaint that if you're not there, you should be there. Everyone knows what you've got to do. Why not start it and have it as a flat-out shootout from where we go? Now, the PGA Tour, from all of its learnings of the last few years, one of them has been a real focus on what the fans want and what they've done to change this has been driven by the fans all of you who may skip through surveys and everything right you won't skip through a survey if your sports organization that you follow and love gives you the opportunity to have a say to change how a tournament operates so the fans 50 ,000 people 50 ,000 fans of the PGA Tour got on one of these surveys and basically highlighted the scoring system in the Tour Championship as an issue for them and so the PGA Tour listen to that there would have been consultation with the players if you listen to someone like scotty scheffler he's actually kind of said look you know so i could win every tournament from now to the end of the season and get two shots at the final like it doesn't make it's not the end of the world so the players weren't basically saying we have to have that advantage and therefore it was quite an easy change for them to make i think the difference that it has made to the to the product though i think will be huge because you really then do come back to this incredibly exciting shootout of the best players against each other they have also interestingly building into the whole like live fanfare piece everyone was very excited about you know they are going really hard at the concessions the food stuff on site the entertainment that's going to be around it they're making this kind of tour championship final a proper thing the money obviously is a huge part of it and the pga tour has really upped its prize money i mean what to 200 odd million into the prize part yeah but at the heart of it still is a really great product and this is a fantastic, exciting way to round off a season.

1:10:08Here are the players in the top 10, right? These are the people who have been playing off for the FedEx Cup. Scottie Scheffler, Rory McIlroy, Colin Morikawa, Tommy Fleetwood, Matt Fitzpatrick, Wyndham Clark, Cameron Young, Lucas Arberg, Siwon Kim, Siwoo Kim. These are just the best players in the world, right? So this is a full-on major, but only for the top 30. That's how it's different, right? So you don't get the... It's nice to have that sometimes a total outsider can win it, like happened in the Open this year and sometimes does happen. But in this case, it's going to be one of the big stars who's going to win it because the only people who qualify it are the very biggest stars who have been winning a lot on the Tour in the first place.

1:10:49If you look at who's won it previously, I think Rory's won it three times. Tommy Fleet was the defending champion. Tiger won it twice. And that's just in the last 18 years that it's actually been going, right? So it absolutely has been the apex of the game from a pure meritocracy and pure performance basis. So I just think it's an interesting example of a really thoughtful structuring of something where innovation, you can innovate within tradition. So you can keep the absolute tenets. We're a four-round competition. It's 72 holes. It's all about who, stroke play event. but there's stuff that we can do that makes it more interesting and that gives it more of a narrative arc um another interesting thing i found about this is from the fedex bonuses a big chunk of them get paid into players pensions yeah i didn't know that you told me yeah again it's something which has been done in discussion with the players why do you find that interesting do you remember i said to you about how i felt that really effective trade unions work with their employers um to work out what is the best balance the most sustainable best balance for all parties balancing lots of different things.

1:11:59So this clearly has been the result of negotiations with the players over a number of years where they say, well, do you know what, actually, one thing we could do here, because there are some golfers, and always have been, who do blow their career earnings whilst they are still at the peak of their powers and end up, you know, dare I say it, having to sell stuff from Hooters outside the US Masters every year, which I know is great fun, but it's still a bit odd that a two-time major champion basically is hawking concessions outside outside the Masters. Apparently it's so fun. Apparently it's great, but I'm just saying it's a bit sad he has to do it.

1:12:29Charlie, we'd be there. Of course we'd be there. Of course we'd be there. We'd be contributing to John Daly's old age. But I do think it's just a really interesting example of how mature current relations are between the USPGA Tour and the leading players in the USPGA Tour. You just mentioned there about Scotty Scheffler's very mature reaction to being told that he wasn't going to get a sort of several shot head start, etc. And then you look back on how they actually beat Liv was through cooperation with the leading players, that cooperation happens because you're already in good relations with them.

1:13:01And the players get huge benefits from that, right? Because once you start to get that influence, do you remember what I said about the PFA, which is I think the PFA should be very focused on the calendar. I think there are real risks to footballers' physical well-being and to their career longevity from the current way in which the calendar is progressing. If you're at the top table and if you have been shown to be cooperative on stuff which really matters to the organizations and the employers you absolutely have the authority then to say guys there's some stuff we do need to talk about here but if you're the type of player organization the type of trade union who's just give us more money we want more money more money then effectively you're basically just pushing yourself down the food chain and you go okay you're just one of those guys okay well here have a bit more cash and fuck off right so i think that that is a really good example the uspga tour of how the organizations and players can rise together and i i love it i i'm so you know happy with the way in which the pga tour has safeguarded golf you know if we talk about the way in which uefa has been safeguarding football the pga tour has been safeguarding golf for what was frankly in my view a real risky way of doing it no i will caveat it with now if live doesn't continue at all in any capacity what continues on the pga side what what gets dropped if it gets its monopoly back i think i think it's monopoly do we keep that balance i think prize money has to come down and i've seen you know i think i quoted before a couple of players senior players saying look it's not sustainable to keep prize money at current levels paul mcginley paul mcginley said that right so they they know that the reason why prize money is so high at the moment is because the live threat they know this and they're intelligent enough to understand it and they're intelligent enough to know that the USPGA Tour can't keep on taking external finance because that external finance is going to eat away at the equity which they themselves have earned in their own commercial arms.

1:14:56They're very aligned in that way. So I think it's a really good ecosystem and I would encourage anybody who's got an interest in golf to pay some attention to the Tour Championship this week. It's going to be a cracker. Yeah. Do you know what else is a cracker? Being back in the studio with you, Charles. Oh, Charles, thank you very much. It's been fun. I think, as you said earlier on, we should go for a couple of beers now. I've got meetings. I'm working for those of us who are interested you'll be seeing Charlie outside a police station on the Kings Road in about 10 hours from now after a couple of years I won't be arrested I'll just be handcuffed big difference thank you guys we'll see you next week thanks a lot thank you as always for tuning into another week's show Celtic England cricket footballs money merry-go-round golf what got your brain whirring I personally love the breadth there once again so many parallels to pull from these sports and how they operate or they don't.

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