Arsenal News » 2010 » January » 18

To recap and explain (or vice versa) Football 1.0 started when Preston North End were thrown out of the FA Cup in 1884 after a complaint from Upton Park FC that Preston had been paying their players.

As a direct result of this Preston got together with other northern clubs and formed the Football League wherein professionalism was legitimised, and the long period of growth of the professional game was launched.

In this era English clubs were owned by the professional classes, and were widely mismanaged, resulting in clubs often piling up huge debts and going into liquidation.  I’ll be developing the story of Football 1.0 on the Woolwich Arsenal site in the coming weeks.  The story of Arsenal’s own financial collapse is told in my book.

Football 2.0 took a long time to evolve, but might be said to have started with events such as George Eastham’s one man strike against his contract in 1960, and the ending of wage restraint (taking us through 2.1, and 2.2 and into 2.3)

The change was slow at first, but it was ultimately accelerated by issues such as the Bosman ruling, the EU freedom of employment legislation, the change from TV being seen as something to be kept at arms length to becoming the paymaster, and the power of the Champions League.

But these were in the end just mechanisms which enabled the biggest change of all – the change that brought about the collapse of Football 2 and the evolution of Football 3.0.

But this period was necessary because what Football 2 gave us was a totally different way of seeing the relationship between money and football.

During the Football 1 era, Directors were allowed to put money into clubs (Henry Norris spent the equivalent of millions and millions of today’s money in building the modern Arsenal at Highbury), but they were not able to take money out.  (Norris was banned from football for having Arsenal pay for this chauffeur when he went to one particular away game, and for taking £130 out of the till when the club bus was sold.

But what brought down Football 2 were the changes that meant one could have the obscenely rich put in wealth as never seen before, and spend it on any player they wanted while other owners began to get the idea that they could make money out of football.

Football 2 also saw the end of life as we knew it in the lower reaches of football.   Amateur football attended by big crowds, leading up to the Amateur Cup Final with a sell-out Wembley crowd, went by the wayside.

Likewise the smaller professional clubs that had existed on selling on one great potential player every now and then had to change their approach, as the big clubs were able to buy players in from Europe.  (It is a style of existence that Everton cling on to – showing how much Football 1, 2 and 3 overlap).

But the biggest change of all was the attitude of the money men.  Previously football in the UK had been seen as a mugs’ game.  You put money in, and then you put money in.  The local fans abuse you because your club is not top of the league, so you put money in.   The club wins something and the fans salute the players, and then demand a repeat, so you put money in.

Under Football 2.0 however it became possible to get money out of clubs. Owners were able to write clauses into their ownership that meant they could take a percentage of each player sale.   Marketing became a method of raising money.   There could be all sorts of deals with TV companies that were never written into contracts at all.

And then along came the idea of asset stripping and leverage buy outs.  In the former the new owner buys the club, takes over the land, sells it for development, and leaves the club sinking.   (An alternative version I have just heard from France involves buying the club and selling all the top players, taking the money out, and then selling the land).

In the buy out approach the club is bought, the debt from the purchase is put into the club, and the owners have a club bought for zero.   They then either asset strip (selling off the ground etc, as Manchester United now propose) or they sell to someone else.   Either way they make money.

These people have been attracted in by the fact that shares in clubs can go up in value – buy a load of shares, and if they increase in value, you have your profit.

Meanwhile at the other end of the scale Chelsea and Man City have had the billions pumped in – money which served to raise the salaries of players and the cost of transfer fees.  They of course did not invent the plan – that honour probably goes to Blackburn, who bought an early EPL title, but Chelsea and Man City are now synonymous with such activity.

The situation however is totally untenable in the long term. Football is subject to fashion as much as anything else, and anyone who has ever looked at the history of the game will know how attendances declined year on year after the second world war, and only started rising in general terms when the EPL gained world wide status.

Crowds can go up and down.

But fortunately for us all, in the background Football 3.0 has been growing.  This is not to say that there are no clubs still following the 1.0 or 2.0 approach.  But slowly a handful of open-minded clubs have in the last ten years seen the new way and started to follow it.

This evolution into a new way of doing football happened on many fronts.

First, it has been recognised that as in all other aspects of business, the aim is for the club to make a modest profit, and to make sure that any debts it has are manageable, and not based on wild speculation.   This is because it is recognised that everything changes and the outcomes of changes cannot be predicted.   UEFA and FIFA can change rules.  Government can change tax rates.  Public appetite can wane.  TV audiences can change.

(I started writing this piece a few days ago, and just in the last two days there has been a change with Ofcom – the TV regulator in the UK – saying that Sky must radically slash the wholesale price of its sports channels.  It may or may not happen but it shows how volatile the market is).

Second, given that individuals can lose interest, become ill, be arrested, be shot, or live in a country that is liable to a coup, it is good if the whole club is not owned by one person.

Third, the processes of the club need to be proven (rather just wild) ideas.  In other words, it is not a bad start to acknowledge the insanity of the dot com revolution, and the insanity of bankers and see them as warnings, not as blue-prints.

And so the clubs that were bright enough to see a change on the horizon have looked forward to a new world, and started to build.  Here are some of their areas of activity.

Academies. The idea is to bring in youngsters as early as possible and try and keep them together, playing in the way that the club plays.  It might take eight years to get a result, and that is what marks out Football 2 from Football 3.  Football 3 involves waiting, building, and looking at the longer term.

Attractiveness. Winning is good – and many fans are hooked on the propaganda they have been fed that winning is everything.   But winning everything by a goal or two, and then playing defensively doesn’t bring in the crowds.  Football 2.0 emphasised winning, no matter how you win.  Football 3.0 emphasises attractiveness.  In a sense it takes us back to the early days of football when it was fun.

World wide scouting. In Football 1.0 the transfer policy started out as taking players who turned up locally (see my thoughts on the various transfers that Woolwich Arsenal did on www.blog.woolwicharsenal.co.uk)  and then moved into taking the occasional player from another club.  In Football 2.0 it moved into a European wide search, with a few others brought in from non-EU countries.   By Football 3.0 we are into the full development of world-wide scouting.

But this is not just about the stars – World Wide Scouting can bring in 16 and 17 year olds from the other side of the planet.

Reduced dependence on the transfer fee. In Football 3.0 it is recognised that a scouting network in a country that costs £1 million a year will save the club many more millions if it just turns up one decent player every could of years.  It is such an obvious statement that it is almost impossible to understand why others have not set up the network.  But under Football 2.0 they didn’t.

The return of the smaller clubs. Raped by their owners, mismanaged into destruction, and finally destroyed by Winding Up orders, a new type of club has started to arise… step up AFC Wimbledon and FC United.  Not every venture flourishes – the Ebbsfleet experiment didn’t work out as planned, but there is hope.  More experiments, more ideas… and in a way that is what Football 3.0 is about.

The old ways (winning at all cost and who cares about the bailiffs) are set aside, and new creative initiatives are brought forward.

The dinosaurs with their court cases in Jersey and their ownership in the Caymen Islands and Virgin Islands are doomed.   Welcome to the new world.

Welcome to Football 3.0

Thankfully we are part of it.

Further reading:

Football 1.0 will be debated in the coming months on www.blog.woolwicharsenal.co.uk

Arsenal’s own financial crisis and liquidation are covered in Making the Arsenal. I have been saying that you can read extracts from and reviews of the book on this site.  Sorry that was not so – this has been fixed now.

More about Football 3.0 in future blogs – and as always your ideas and input are most welcome.

(c) Tony Attwood 2010.