Soccernomics. Simon Kuper

was down to the players. Naturally, they were reluctant martyrs. But the pressure on them was intense, including some threats from fans. In the end, after some sweeteners were thrown in, the players agreed. Peter Aitken, Chris Garland, Jimmy Mann, Julian Marshall, Geoff Merrick, David Rodgers, Gerry Sweeney and Trevor Tainton are not the biggest names in football’s history, but few players can claim to have given more for their clubs. On 3 February 1982 the ‘Ashton Gate Eight’ agreed to tear up contracts worth £290,000 and accept redundancy in order to save their employer. By the standards of the time, they were on very good pay. Most of them, nearing the end of their careers, would never earn as much again. They got a miserly pay-off of two weeks’ wages, and afterwards they had to choose between retiring from football, moving abroad or joining lower-division clubs. The eight really deserve statues outside Ashton Gate. They gave Bristol City a future.

      The phoenix rose from the ashes: the club was transferred from the ownership of Bristol City PLC, a company heading for liquidation, to BCFC (1982) PLC. The directors of the new business still faced the formidable task of finding the money to buy Ashton Gate. They had agreed a price with the receiver of just over £590,000. They raised £330,000 by selling shares in the new club to fans and well-wishers. They might have raised more, but they felt obliged to close the share offer early when rumours emerged that an unknown bidder was considering buying a majority of the shares on offer, possibly with the aim of selling off the ground to property developers. (Ashton Gate is handily located near the city centre.) The rest of the cash was raised from short-term loans.

      Today Bristol City still play at Ashton Gate, in the Championship. (And Ashton Gate is now much more than a mere stadium. ‘A premier conference and events venue, our stadium features a wide range of function rooms for both corporate and private hire,’ proclaims Ashtongatestadium.co.uk.) The ‘phoenixing’ of Bristol City was the first of its kind in English football, and established a template that, like the club itself, survives to this day.

      Other clubs quickly cottoned on to the joy of phoenixing. Between 1982 and 1984 Hereford, Hull, Wolves, Derby, Bradford and Charlton went through much the same experience as Bristol City. All these troubled clubs survived either by creating a new ‘phoenix’ company (Wolves, Bradford and Charlton) or by getting creditors to agree to suspend their claims (a moratorium), under the threat that a phoenix might be the alternative. In all cases, the bankrupt company was ditched, but the immortal club inside it salvaged.

      Phoenixing – the creation of a new company – turned out to be an excellent way to escape creditors. Clearly there is something suspect about the method. Phoenixing allowed disastrous directors to escape the consequences of their decisions. Their clubs survived, but at the expense of creditors (often players, banks and the taxman), who never saw their money again.

      Still, this was just what hapless football clubs needed. Many of them struggled in the 1980s, and several survived only thanks to a ‘sub’ – financial support – from the players’ trade union, the Professional Footballers’ Association. Charlton and Bristol City’s neighbour Bristol Rovers had to move grounds because they could not pay the rent. However, nobody resigned from the league.

      Soon after the Thatcher recession, a new law made it even easier for British clubs to survive. Historically in Western countries, attitudes to bankruptcy had been harsh. In nineteenth-century England, bankrupts were still being sent to prison. But over time, we have become more forgiving. Increasingly, people have come to recognize that bankruptcy can be caused by bad luck as well as bad judgement. As well as relaxing our moral stance, we have discovered some self-interested motives: bankruptcy destroys a company’s value, often unnecessarily. By the 1980s, the UK’s traditional method of liquidation – the bankrupt company’s assets were sold, the debts repaid as far as possible and the company liquidated – had become discredited. Critics said it gave stricken companies little chance to recover. They praised the American approach, which treated failure as a frequently necessary precursor to eventual success. In 1979 the US had introduced the now famous Chapter 11 provisions. These protect a firm from its creditors, while it tries to work out a solution that saves the business. Britain – where insolvencies hit an all-time high during the Thatcher recession – wanted some of that. Later, Italy, Germany, Spain and eventually France too moved towards more forgiving, ‘American’, bankruptcy laws.

      The UK’s Insolvency Act of 1986 transformed a procedure known as ‘administration’. Now when a company went into administration, an independent insolvency practitioner was called in and charged with finding a way to keep the business running, while repaying as much money as possible to the creditors. After the new law came in, stricken football clubs typically entered administration, struck deals with creditors and then swiftly emerged from administration. That’s what Tranmere and Rotherham did in 1987, for instance. For most clubs, financial collapse was becoming something of a breeze.

      True, Aldershot FC was liquidated in 1992, but supporters simply started a new club almost identical to the old one. The ‘new’ Aldershot Town FC has a badge that shows a phoenix in flames. Aldershot went into administration again in 2013, but now play in the National League, the fifth tier of English football. Other tiny British clubs that folded – Maidstone United, Newport County, Accrington Stanley – were also eventually resuscitated and now stumble on somewhere in the semi-professional or professional game. Accrington Stanley’s rebirth was surely the most drawn-out: it resigned from the Football League in 1962 with debts of £63,000, got liquidated in 1966, was newly created by fans in 1968 and returned to the Football League in 2006, its brand still very much alive, probably even enhanced by the drama. ‘Above the turnstiles now, the welcoming sign is, “The Club that Wouldn’t Die”,’ Accrington’s then chairman Ilyas Khan told us proudly in 2012.

      The new British law was so kind to insolvent companies that ever more companies decided to enter insolvency. Some did it just to wipe off their debts. The method became more popular even as the economy improved. Company insolvencies in the recession of the early 1980s had run at an average of around 10,000 per year. In the boom period between 1994 and 2001 they ran at 16,000 per year. Football clubs, too, loved the new law: more of them went insolvent in the 1990s boom than in the early 1980s bust. They rarely even needed to bother to create a new ‘phoenix’ company anymore. Clubs would run up unpayable debts, go insolvent and, hey presto, months later would be fine and signing expensive players again. Better-run rivals complained that insolvency and phoenixing were giving the culprits an unfair advantage. In 2004 this argument prompted the league to introduce a ten-point penalty for clubs that went into administration. Still, it hasn’t proved a huge deterrent.

      There’s something else to note about these near-death experiences: they almost only happen to small clubs. Big clubs almost never go bust.

      Yes, there was a great kerfuffle in 2010 when Portsmouth of the mighty Premier League entered administration. The club had been on much the same journey as Bristol City thirty years earlier, just with larger sums. It had overspent on good players, won an FA Cup and ended up in trouble.

      On the one hand, Portsmouth’s story was all too familiar: football club goes bust and after many premature reports of its demise is reborn. The shared fan angst about their club disappearing has a useful psychological function: it’s a communal ritual that gives people a chance to join together to affirm their love of the club. After administration, Portsmouth slid down the divisions and spent a few miserable years bumping along in League Two, the bottom tier of English football. In summer 2017 they celebrated an emotional promotion to League One, and were then taken over by Michael Eisner, former chief executive of Disney. Like almost every English professional club that has ever existed, Portsmouth still exist.

      Yet in another way, Portsmouth’s story is exceptional. They are the only club in the Premier League ever to go into administration. The other sixty-six cases of insolvency in English football from 1982 to 2010 involved teams in the lower divisions. That is something that doomsayers should note. They often complain about the debts of rich clubs, such as Manchester United. They ask how Chelsea would survive if Roman Abramovich falls under a bus.

      In fact, though, big clubs are not the problem. Across Europe, lower-tier teams live on the edge of insolvency, while the top-tier teams, even though they too mostly lose money,