Don't Forget Your Tickets
Don' Forget Your Tickets is a podcast devoted to the unsung heroes of the spectator sports and events industries, the Ticketing Managers. We explore who they are, their well-guarded industry secrets, and how they entered the field. Beyond that, we delve into a broader ticketing realm, inviting experts from various fields to share their insights and stories. Our primary aim is to add value and highlight deserving individuals.
(The podcast was originally named TicketingPodcast.com)
Don't Forget Your Tickets
Stefan Borson (interviewed by Adam Leventhal) on the Intersection of Football and Finance - A Live Special from Emirates Stadium in London
Football isn’t just about the game—it’s a billion-euro empire, thanks to the intricate work of legal and financial experts. Stefan Borson, CEO of Watchstone Group and former financial advisor to Manchester City, joins us to unravel how clubs have transformed into financial powerhouses. Through his expert lens, we explore Real Madrid's remarkable financial achievements and the sweeping changes that have reshaped football operations, making lawyers and accountants indispensable in today's complex sporting landscape.
The world of football governance has never been this challenging. With UEFA's financial fair play and the Premier League's intricate rulebook, clubs now navigate a labyrinth of regulations demanding transparency and accountability. We shine a light on covert allowances during the pandemic and Chelsea’s strategic legal maneuvers concerning past off-the-book payments. These stories highlight the critical need for skilled legal teams to steer through the modern game’s financial twists and turns.
As we move down the league ladder, the fiscal hurdles lower-division teams face become apparent. The conversation shifts to the pressures of adhering to financial regulations and the potential pitfalls, such as player swaps, that threaten the sport's integrity. We also reflect on the cherished emotional bonds between fans and homegrown players, discussing the delicate balance clubs must strike between financial demands and nurturing local talent. Join us for an insightful journey into the financial and legal fabric of football today.
This Live Special episode of Don't Forget Your Tickets was recorded at the Don't Forget Your Tickets conference at Emirates Stadium, January 23rd 2025, as the second out of 12 on-stage interviews that day. Stefan Borson was interviewed by Adam Leventhal.
Don't Forget Your Tickets is powered by TicketCo and hosted by TicketCo’s CEO, Carl-Erik Michalsen Moberg. The podcast was originally named TicketingPodcast.com
Football isn't just played on the pitch. It's also shaped by lawyers and accountants. While not everyone notices their growing role in the game, those of you know just how crucial they've become To explore this evolving landscape. Stefan Borson, ceo of Watchstone Group and the football insider expert, sat down with the athletic journalist Adam Leventhal at our Don't Forget your Tickets conference at Emirates Stadium on January 23rd. Stefan Borsen is a recognized authority in football finance, with extensive experience in corporate restructuring and financial operations across multiple sectors. Before leaving Watchstone, he held senior advisory roles in investment banking, working with high-profile clients such as Manchester City, jd Sports and Virgin Mobile. A regular guest on TalkSport, stefan is widely known for his insight into the business of football. Stefan's conversation with Adam Leventhal was the second of 12 expert-led discussions held in our front-of-life audience at Don't Forget your Tickets on January 23rd. Now it's also the second to be released in its fall on the Don't Forget your Tickets podcast. Sit back and enjoy the discussion.
Speaker 2:Hello everyone. I'm Adam. This is Stefan, so I don't want you to be frightened by this, because it looks a little bit dry, doesn't it? Lawyers and accountants.
Speaker 3:Terrible title.
Speaker 2:Oh God, you don't want to be hanging around with lawyers and accountants, do you? But it is all the more important, isn't it? Stefan? Before we get into a little bit of a history lesson which I want you to take us through, why are these people, these dull, grey people, so important now in the world of football in general?
Speaker 3:terms. Well, I think it extends, in terms of what Paul was talking about earlier and I think there's two aspects to it. First of all, there's the competitive aspects in terms of people being very keen that the game is played on the field. So ironically, that's led to an increase of people off the field. And the second part of it just is the growth of the game over the last few years. So if you were to go back, even 10 years and looked at the number of people in all of your clubs, there are literally hundreds more people in the administration part of the game and the scale of the operations are that much bigger.
Speaker 3:So the numbers that people are talking about, the prize money, the revenue that's being generated, particularly from TV but also from ticketing and match day, has obviously grown very, very aggressively over the last 10 years and that's led to really this industry, this cottage industry of lawyers and accountants, building up in the game, partly to try and protect it but also to go with the growth of the game and I don't see it stopping at this point. That's kind of as we go now through, and we're talking about top clubs approaching a billion euros of revenue, which Real Madrid did. They've just hit the top, haven't they? Yeah, nobody in England has yet done that, but Real Madrid got there. There's actually a whole paper this morning from Deloitte around the Money League. So as we get to a billion euro businesses and soon to be billion pound businesses, it's inevitable that we have this growth in the game.
Speaker 2:Before we go back, I just wanted to quickly highlight your experience and why you are an expert and why you do pop up on various radio stations Talk Sport in particular, tv stations on the Athletic, all other publications talking about this, because one of the parts of your career was to be a former financial advisor to Manchester City. What did that actually entail? For people that aren't aware, Well, it's a good example.
Speaker 3:I mean, this is the old days, so this is 2001 to 2007, when I advised Manchester City, and this was a club who?
Speaker 2:Are you keeping yourself?
Speaker 3:Yeah, I don't know. I am separated from any allegations around 115 or any of that nature. It was all before my time. But if you look at the scale of the club, at that point I was probably dealing with two or three finance people there wasn't even an in-house lawyer at that point and the club was doing revenue of about 80 million quid. So the transformation I just had a look actually on the back of what Paul was saying City had at that point 100 people in the administration and commercial areas and if you now go on the CFG, the City Football Group accounts, they've now got well over a thousand in those areas.
Speaker 3:So the scale of the work that I did for Citi was completely different in those days. We also advised on a couple of deals Aston Villa and Newcastle United so we were across the game. But it was just a different game from the game that it is now. It was much more of a cottage industry compared to today and although you know Paul says everybody knows each other and you know it's still a small industry, it is, but the scale is transformational compared to those days.
Speaker 2:I think one of the key things. When you hear Paul speak, it makes me think that if clubs were able to articulate themselves as well as Paul can and Brighton seem to be doing, it would help a lot of people, I think, In terms of the staging posts along the way, of how we've now seen so many more people like lawyers and accountants become relevant. What are the sort of key points over history? A little pot of history, Well look, it's the complexity really.
Speaker 3:So you started off with UEFA financial fair play stuff coming in to try and effectively stymie clubs like Chelsea, latterly Manchester City, and then, of course, portsmouth went into administration, and that caused the Premier League to dig out its rulebook. And again, here's another illustration the Premier League went from a rulebook that had about eight pages of financial regulation around the clubs to now having about 50., and that excludes the appendices that are there. Even you, though, you must get's. Even you, though do you?
Speaker 2:you, you must get bored by that, don't you even? Well, or do you lick your lips and go oh, we've got 50 pages.
Speaker 3:Well, interesting, you know.
Speaker 3:I'm interested in it just because to try and understand what's actually going on in the game you know, particularly when you look at situations, uh, like chelsea, for example, where you're kind of perplexed as to how the spending can be what it's been. And we talk about one. Paul talks about 1.5 as being a limit, but if you look at Chelsea's operating losses, for example, over the last three years and apologies if anybody from Chelsea here, but if you look at the operating losses over the last three years something like 700 million, before allowances and deductions are made so trying to understand that was interesting to me and has been interesting to an audience, you know, on TalkSport, surprisingly, and therefore there clearly is some level of interest. But what they've been trying to do is to regulate the game to a point where it's fairer, more balanced, not to give it a level playing field, and also trying to avoid the worst-case scenarios the Berries, the Portsmouths and these sorts of things and that's a noble cause. But what it's done is created a level of complexity and a lack of transparency, and we talked about that in terms of if everybody was as good as Paul in communicating the story. But they're not and actually a lot of clubs don't want the story communicated.
Speaker 3:We did a story in the Athletic on Manchester United. So, for example, the reason that Manchester United have managed to pass PSR for 23-24 has been largely because of effectively secret allowances that were given for the COVID period period, and actually the key numbers in there will be numbers that are familiar to people in this room, which is what looks like something like a £20 million allowance for the lost pre-season tour in summer 2021. Now, nobody knows about this. It's all sort of kept secret. It came out because of a line in their accounts, which we then probed so with the Athletics, some questions were put directly to the Premier League and we eventually found out. But there is an issue with getting to a point where we have a fair level of transparency and understanding in the game, and at the moment, I think fans are being let down in that regard.
Speaker 2:I mean, that's a good example with Manchester United. Do you think that overall, the need for legal teams to be top-top, as they would say, in football is ever more important because they need to be agile, they need to be creative in these sort of situations where they think, right, we are going to be stuffed if we don't come up with something? So just sort of take us through the importance of a, of a strong legal team and I mean maybe move on to, you know, financial officers etc at football clubs.
Speaker 3:Well, we've got this conflation where we have sporting sanction that came in on the back of the everton and the nottingham forest penalties that they had last season. That focused a lot of minds around the game, because what that meant was, all of a sudden, the financial miss on your P&L the sorts of things that are talked about every day within the organisations all of a sudden became something that costs you on the pitch and that puts it in a completely different world, because, of course, the only thing that matters is performance on the pitch, and the consequences as well of three to ten points of deduction clearly can take you from a very different financial picture in the following season. It can relegate you, it can put you in europe, it can put you in the champions league, it can win you titles just before you go.
Speaker 2:Do you agree with that? Do you think that's a good way of doing things, that you should be punished for, yeah, what you're doing off the pitch I.
Speaker 3:I think most people here, if they sat here as fans, would understand the concept which is there, which is, to the extent that that spending or overspending or wrongdoing contributes to success on the pitch and gives you a sporting advantage, that should be penalised with a sporting sanction.
Speaker 3:That seems to me to be a sensible approach and actually it's why, in talking of transparency and talking of Chelsea, it's why there will be such controversy, and many people may not have seen it, but in the last couple of weeks, chelsea's lawyers have apparently done a very good job regarding the historic payments that have been made off the book over many years, and the lawyers and the accountants presumably appear to be in a position where they've negotiated with the Premier League to get a non-sporting sanction, which I think contrasts with the position we've got to, where they sign players that Arsenal, spurs, many other clubs wanted to sign. They signed them on the back of off-book payments and you would have thought, therefore, that necessitates a sporting sanction, but, because of the use of very high-quality lawyers, they seem to be in a position where they're able to negotiate a financial settlement to it.
Speaker 2:It's interesting. Obviously, I know Manchester City is not a good example this season because they haven't been quite as dominant as they were not a good example this season because they haven't been quite as dominant as they were. But sometimes when you see the lawyers step in going up against the Premier League or footballing bodies, it feels like a bit of a mismatch that they are so powerful that they are going to win. It's almost like Manchester City playing my club, Watford, who are no longer in the Premier League, and usually they hump them six or seven nil. Do you see it as a mismatch? Do you think that the lawyers are too powerful for some of these sporting bodies and organisations like the Premier League and the FA?
Speaker 3:As it happens, it's a bit of a myth. There's actually a very level playing field in the courts and in the arbitration centres, because the reality is there's a limit to what you can spend on a high quality KC and the reality is the Premier League has actually outspent a number of these clubs. So if you look last year at what the Premier League spent on legal fees, they spent 50. Last year they outspent Everton on Everton's case three to one. So this sort of David and Goliath that's painted isn't, is not really this is about the recruitment.
Speaker 2:Now we're talking about the recruitment of the best cases.
Speaker 3:Yeah, the selection of your legal team. I think you know largely you should assume that in all of these cases the lawyers are not the deciding factor. Both sides have got fantastic lawyers and fantastic representation and actually the cases tend to turn on fairly sort of slim points and loopholes. But that again from the club side. And if you look, leicester's a good example of you know of a loophole. Leicester got themselves out of an entire case by using, you know, a clever argument about a loophole, but lawyers will not be the deciding factor. It's very much, you know, very high quality lawyers battling it out and you know, ultimately we'll see on the city case, both sides will spend probably 30 million quid on that case.
Speaker 2:It's a drop in the ocean, though, isn't it?
Speaker 3:In many ways it's a drop in the ocean more for the Premier League, because at the end of the day, all the Premier League do is take the top slice of the revenue that everybody in this room has worked so hard for. That goes in in terms of the broadcast revenue that should be distributed out to the clubs. That should make budgeting easier and life easier for the commercial people inside the clubs, and actually they just reduce it. So the top slice of the payments out to the club is all being reduced by the spend on legal fees you mentioned that word loopholes, and you mentioned Leicester.
Speaker 2:there have been other examples Manchester City, presumably this whole process of 115 charges, et cetera, et cetera, will have a certain element of analysis of loopholes that they can jump in or out of, or whichever the best way of doing it is. What are your top loopholes that you've seen evaded, I suppose, or taken advantage of?
Speaker 3:Well, in first place, it's definitely Leicester City who argued that because their accounts, and therefore the date on which their accounts were tested, was the 30th of June and they'd already been relegated on the 31st of May, they got themselves out of the entire regime. So Nick DiMarco for Leicester is definitely number one on that. I mean clearly, the big story that's still not come to a conclusion. I find it an astonishing situation that clubs like Arsenal, brighton and the other major clubs have almost allowed it to happen in terms of Chelsea's use of assets around the club. So I wouldn't call it necessarily a loophole.
Speaker 3:They do appear to be complying with the rules on a strict interpretation, although there is some debate about that. But effectively, last season they sold a hotel for a sizable profit just because it had been in the books for a long time. This season well, the season's just gone it appears and we don't know yet for sure that they sold the women's team and also the women's stadium, again for significant profit, to fill the hole of their operating losses, because we all know that the size of the wage bill in a lot of these clubs on the field is such that they are losing huge amounts of money. So I think Chelsea's use of the rules has been probably the most effective, but of course, leicester to manage to avoid any liability at all is still the most impressive and just for my benefit because Watford are down in the championship.
Speaker 2:Are Leicester going to be stuffed when they go back down?
Speaker 3:Well, nobody actually knows. So it's not a case that it's not actually been released. We know that the Premier League are appealing against that Leicester decision. I think it's unlikely to succeed. But nobody actually knows what happens if they then get relegated and whether the EFL then kick in with a prosecution. You're talking about multiple layers of regulation and that's part of the issue that all of these clubs have now got. When they begin the year, almost the only thing that they can be budgeting for with certainty is actually the revenue generated by people in this industry the match day revenue, because that's known about. They know more or less where that's going to land. Most of the rest of it they're unsure about. So we'll have to see how all those pan out. But you know, I think Leicester is definitely the one to watch if you enjoy the complexity of what this has led to in the game.
Speaker 2:In terms of and Paul mentioned it when he was talking about the I don't know this almost perception that there should be a trickle down, there should be money from the Premier League distributed to the rest of the clubs and it's an argument that some people have different views on but in terms of clubs down the pyramid, maybe away from Manchester City, Arsenal, etc. Etc. How they're struggling and how much help they need from lawyers and legal teams, we've seen clubs fold fairly regularly or at least get very, very close, sail very close to the wind.
Speaker 3:Yeah, so, first of all, the trickle down has got all the issues that Paul talked about. Do Premier League clubs want to be funding effectively, excessive spending, particularly in the championship, for clubs that are trying to get into the Premier League to try and then knock down teams like Brighton and the other clubs that will then be pushing them? And that's that's clearly an issue. They don't want to give Wrexham any money, do they? That's basically it. No, and you can understand that from a competition perspective, which is why we'll end up with a regulator effectively enforcing it for political purposes.
Speaker 3:But on the other side, and in fairness to the EFL, what the EFL have done, I think very effectively, is come up with a set of rules which don't help in terms of the complexity of the modern lawyer and accountant in the football club, but do help in terms of keeping those clubs sustainable, because they're actually very stringent rules. The problem that the clubs have got in the lower divisions is they just don't have the money to have big teams of of people going through multiple layers of complex regulation and, you know, as they go up the pyramid, that is a challenge for them and if they have an outperforming season, if they happen to qualify for. It's unlikely, but if they happen to qualify for the uefa competitions in some way, maybe winning the fa coventry could have done it last season, of course then that again is going to add on a level of complexity which is just going to be very difficult for these clubs to deal with.
Speaker 2:And, in general terms, looking forward with your financial crystal ball. Do you see and obviously Paul mentioned it there, you've alluded to it as well with more regulation it's going to make it more complicated. Or do you think this is going to lead to a simplification of the rules that will make it far more enjoyable for everyone? Because however much it plays into your hands that you're having to explain all this complex financial ups and downs for football clubs, fans don't really want to be immersed in it all do they?
Speaker 3:They despise it when I talk about their club. So you know I will literally get abuse from Everton fans, chelsea fans.
Speaker 2:Nottingham Forest fans, I know, but you just need to be. You put too much conflict out there, you see. Well, no, I, you just need to be kinder to them.
Speaker 3:I just try and explain it. But the reality is exactly what you want to understand this situation and, you know, want it almost to be as stringent as possible when it's not their team. As soon as you start talking about their team, then it's a different world. Now, of course, the end game has to be, particularly in the premier league, which is still the key driver of the whole of the football industry in this country. They have to get to a point where they're all working in the same direction.
Speaker 3:There's been, you know, with respect to what paul said, everybody shakes hands, or most teams shake hands after a game, but the reality is that we know that there's a lot of battles around the table in the Premier League, shareholder meetings and in relation to City and a number of other teams, to the point where it has actually even after games. It has got to the point where people are not shaking hands. So when Arsenal played at City earlier this season, there was an issue with Arsenal's chief executive not being willing to shake hands with City's chief executive and chairman. So it is bubbling over and, I think, going forward, what has to happen is that it's all brought together, probably by Richard Masters, and it may be that actually no clubs failing 23-24 PSR may be the first sign that that's actually what's going on, because on the face of it, a number of clubs look like they should have failed and didn't. So it may be that we've now got a more pragmatic approach from the Premier League which will bring the top of the game together, which will simplify the rules and which will mean that there's a more cohesive and commercial approach going forward, which I think that should be the end game. We're not there at the moment, but the less litigation there is and the less that we don't know who the lawyers are, the better for the sport, you know.
Speaker 3:So the less time I get called to go and talk sport, I think it is true that is a better scenario than where we are today, where we've still got an outstanding Manchester City case on a very technical aspect of competition law. You've got the Manchester City sort of fraud case. You've got an outstanding appeal for Leicester. You've got an outstanding investigation on Chelsea. You've got the 23-24 PSR situation not yet completely resolved, potentially because these things haven't been fair market valued and that's a whole other sort of it's actually a whole other appendix of the rules. So there's still numerous matters that are still outstanding. So there's still numerous matters that are still outstanding. And then, on top of that, the whole of the UEFA set of charges or fines are likely to come in for last season as well. So the game still has a lot of this sort of regulatory stuff going on, and then, layered on top of that, you've got the independent regulator coming in. I think the sooner it is simplified, the better. Are we going to get there?
Speaker 2:Not sure, I think your appearances on TalkSport and other stations are guaranteed for at least. Well, you know, yeah, I've got another three months, I think. I think it sounds like three years, just very, very quickly, because I know we've hit our time. But I will ask you one very final question. In terms of some of those issues that you raised there, the one that I think was sort of a new step seeing clubs avoid PSR issues was the swapping of young players and that fair market trading that we saw. I know there's been players that have gone and moved Minte, for example, elliot Anderson, that have gone as well. Great players, great opportunity. But it felt a bit brazen, didn't it?
Speaker 3:have gone as well. Great players, great opportunity. But it felt a bit brazen, didn't it? Yeah, and you know, I think it's a symbol that the league has taken a more pragmatic view and has not raised questions over 10 or 15 swaps that happened that it could have raised, I mean at the end of the day, something like 300 million pounds or euros, I think it was, was spent on players swapped between premier league teams and, as of early january they played, they started for their teams something like 24 games.
Speaker 3:Between all of them, there's about 12 players involved. Most of them had played zero games. Not one first team star for a number of them, and so they they, on the face of it, looked very obviously, uh, to be a psr. You know loophole, but that wasn't pursued. That can't be good for the game. I mean teams selling off their best young players. I mean the way even united are looking at doing right now with, potentially with, with three players. That can't be good for the product that everybody's trying to sell.
Speaker 3:We know that, of all of the things that fans love, it's players that come through the youth system that play that are, you know, one of our own. We know that that's a big part of, you know, fandom, particularly those in the stadium. You know maybe it's not so important for a global audience, but definitely for particularly those in the stadium. You know maybe it's not so important for a global audience, but definitely for the local fan in the stadium. It's a key point and if we're effectively saying, well, we're going to sacrifice them just for the sake of you know making PSR, then I think that's probably an issue that needs to be addressed.
Speaker 2:Yeah, it was a real clash of financial and the footballing world. Stefan, thank you very much for your time. Thanks for your attention. Thank you very much, cheers you.
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