Business of Sport Ep.35: Charlie Methven, Co-Owner @ Charlton Athletic, The real cost of football club ownership
Aug 27, 2024
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Charlie Methven, co-owner and CEO of Charlton Athletic and former Sunderland owner, shares his insights on the complex world of football club ownership. He discusses the stark financial contrasts between Premier League and lower league clubs, emphasizing the necessity for sustainable business practices. Methven reflects on Sunderland's tumultuous financial history and the vital decisions required to ensure a club's viability. He also tackles the unique challenges of investing in women's football and the importance of community engagement for long-term success.
Charlie Methven highlighted the stark financial challenges faced by football clubs after relegation, emphasizing the drastic shift from high revenues to significantly lower income.
Establishing a sustainable financial model is essential for clubs to avoid dependence on owners, fostering a culture of proactive financial management and reasonable spending expectations.
Cultural perceptions surrounding ownership can create unhealthy dependencies within clubs, causing resistance to necessary financial adjustments crucial for long-term success.
Deep dives
Financial Challenges in Football Ownership
An organization that previously generated substantial revenues in the Premier League now faces drastically reduced income in a lower division, illustrating the stark financial challenges football clubs encounter post-relegation. The disparity between past earnings and current liabilities, including high player contract costs, creates a precarious situation for club management. A significant portion of player costs were based on expectations from former Premier League contracts, complicating negotiations to offload players unwilling to accept lower wages. This scenario underscores the importance of establishing sustainable financial practices within football operations to prevent large-scale losses.
The Role of Sustainable Business Practices
Establishing sustainability within a football club is crucial to avoid a reliance on owners for financial stability, which often results in a toxic culture where expectations for spending are unchecked. A healthy approach balances operational losses with reasonable expectations for revenue, fostering a proactive environment. It becomes essential for clubs to define what sustainability looks like in financial terms, potentially agreeing on a manageable operating loss. By prioritizing sustainable practices, clubs can navigate the complexities of both sporting and financial responsibilities successfully.
Understanding Financial Decisions in Football
Clubs often face the tension between financial prudence and the pressure to spend significantly to remain competitive, particularly in a talent-rich environment. The need for relegation clauses in player contracts has gained importance as the financial chasm between leagues widens, yet many clubs historically underestimated the implications of relegation beyond the Championship. This lack of foresight can lead to untenable financial situations, where clubs must navigate the complexities of player contracts amidst financial realities. Understanding the financial landscape helps clubs make informed decisions when hiring players and managing budgets effectively.
Cultural Dynamics in Football Management
Cultural perceptions greatly influence how clubs operate, often leading to misconceptions about the financial realities of football ownership. Clubs can develop an unhealthy dependency on owners to fund losses, leading to an environment where both staff and fans expect continuous spending. This dynamic creates an internal culture that might resist necessary changes or cost-cutting measures, which is detrimental to long-term success. Effective management must address these cultural issues and align everyone behind a vision for sustainable growth, education, and transparency.
The Importance of Strong Management Teams
Successful football management requires a strategic balance between business acumen and football expertise, which is often challenging to find in one individual. Distinct roles within a club, such as technical directors and managers, must work collaboratively to achieve sporting success while adhering to financial constraints. This division allows for specialized decision-making, where the managers focus on football performance and the executive team handles financial operations. Identifying the right leader who understands the specific cultural and operational context of a club is paramount for achieving desired outcomes.
Community Engagement and Brand Identity
Developing a strong brand identity that resonates with a club’s community is vital for engagement and long-term support. Clubs like Charlton Athletic leverage their history, local culture, and community ties to foster a sense of belonging among fans. This approach involves strategic marketing and outreach to new demographics, recognizing the necessity to adapt in an evolving landscape. Engaging with local communities not only strengthens brand loyalty but also helps to cultivate the next generation of fans and players, making it a critical aspect of club strategy.
This week, we are delighted to welcome Charlie Methven to the show. Charlie is the co-owner and CEO of Charlton Athletic. He was part of the consortium that bought the London club in 2023, and was appointed CEO earlier this year. But as many of you will have seen in the infamous ‘Sunderland til I Die’ Netflix documentary, this isn’t his first dabble in football club ownership.
He was part of the group that took over Sunderland as they attempted to recover from back to back relegations. What followed was the most transparent insight into what happens when it all goes wrong at a club, both on and off the pitch. You can’t rely on the owner to pick up the tab at the end of every month; you have to build a sustainable business behind the passion and fanfare. That’s not as easy as it sounds.
It’s the realities of decision making at the highest level, the understanding that universal popularity is impossible, underpinned by what goes into running a sports entity as a business.
We’re delighted to welcome Charlie to the Business of Sport.
On today’s show, we discussed:
Navigating Football Finances:
What did the business of Sunderland look like when Charlie and the new owners bought the club in 2018?
How to manage going from £200m a year revenues to £20m.
Owners cannot be left to pick up the bill. A club has to be sustainable if it wants to progress.
What does it cost to buy a team outside of the Premier League?
How are budgets spent? The cost of running the academy, first team, women’s team, behind the scenes staff.
The problem with relegation clauses; why they’re very important but often hard to implement when attracting the top talent.
The Sunderland Experience
Balancing the business objectives of a football club alongside fan expectation can be the hardest job of an owner. How do you navigate it?
There were ingrained cultural issues at the club. How did Charlie go about changing these?
Managing a player wage bill that was more similar to a Premier League club than a League One club.
How did they go about turning a £27m a year loss making club into a breakeven Championship team in just a few years.
Buying Charlton
What did the new ownership buy Charlton for and how does that compare to the current revenues across the club?
The unique academy set-up that plays a huge part in the successful running of Charlton, and the strength of the local population that feeds it.
What are the ambitions of the team over the coming years and how are the ownership looking to achieve them?
The challenge with running a women’s team in an environment that isn’t set up for success; how the FA missed a golden opportunity to make women’s football great.
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