Creating a Sustainable League of Ireland

How to create a sustainable League of Ireland?

What do I mean by sustainable?

I am never seen anyone put on paper a plan to improve the league and make it sustainable. Nothing from the FAI or the clubs, personally I think the clubs need to drive it more as it's more key to us than anyone. So here is my personal opinion on where we are and where we could go with state help for a short term of time and using that help in the right areas.

When I talk about a sustainable model, I mean that clubs have enough income from football sources to pay their bills and make long term plans for 3 to 5 years with some level of certainty. Benefactors investing is great and should be welcome but as a league our top division should be full time professional offering jobs to 400 to 500 people from sustainable income. If we cannot do this from gates, commercial, grants, transfers, prize money etc then we will continue to have a league that implodes from time to time when benefactor money runs out. The 2000's was a great example of that when we had a lot of full time clubs, none of which were sustainable.

Background

This September is the 100th anniversary of the formation of the league and due to the short season in the 2000's we are now in the 101st season. Over the 100 years we have not yet managed to build a sustainable professional league in this country. We have had periods of professionalism which have all ended with the clubs involved going bankrupt, going out of business or dropping to lower leagues. 

Going back to the 1940's Cork United/Athletic won 7 of the 11 leagues between 1940 and 1951. They eventually folded due to running out of money so while they were very successful in the short term they didn't survive to enjoy that success.

The next period of continued domination was Waterford from 1965 to 1973 where they won 6 out of 8 leagues. Thankfully Waterford still exist having had many owners since but have rarely come close again and have struggled with debts at various times since.

After that came Shamrock Rovers of 1983 to 1987 who were probably the most dominant team of any era winning 4 leagues and 3 cups having signed some of the best LOI players from other teams. However like the 2 clubs above that model wasn't financially sustainable and ultimately their home ground was sold and they spent 2 decades on the move until they arrived in Tallaght.

In the 2000's Shelbourne and Bohemian FC had their most successful periods. Shels won 5 leagues between 1999 and 2006 while Bohs won 4 leagues between 2000 and 2010. What happened then? Shels have largely been a division 1 side since and lost Tolka Park after selling it to developers to fund said wins and Bohs lost Dalymount after selling it to developers to fund said wins. DCC ultimately bought both grounds and as for their future, time will tell.

Since then the dominant team has been Dundalk who have won 5 titles between 2014 and 2020. What was different about them was between 2014 and 2017 they had this dominance while not losing money, however since then they have lost a lot of money trying to sustain their position. Their immediate rivals in this era were Cork City and Shamrock Rovers, who while both had some success on the pitch, have lost a lot of money trying to keep up with Dundalk. Ultimately Cork have been relegated and looked to sell themselves but thankfully they don't appear to have a significant debt overhang.

League of Ireland - Current Reality

Today I would say there are 2 full time professional sides in the country, Shamrock Rovers and Dundalk FC. Neither of these can afford this model from the money they bring in from football activities. There are then a lots of  semi professional sides who pay 40/43 weeks and in that time are professional and then there are clubs that pay 40/43 weeks but the players also have day jobs. So a mixed bag of a league.

Over the period 2014 to 2020 there were 3 teams generally in the top 3 of the league and winning cup finals and were full time. They were Dundalk, Cork City and Shamrock Rovers. By being at the top these teams have secured the European money which compounds their financial advantage. But even that advantage hasn't stopped cubs running up losses and Cork City having serious issues.

Dundalk won 5 leagues and 3 cups,

Cork won 1 league and 2 cups,

Shamrock Rovers won 1 league and 1 cup with St Pats winning the other FAI cup back in 2014.

The table below shows the P&L's of these 3 clubs over that period;

Dundalk were making money in 2014 to 2017 while winning trophies. This was helped by the 2016 Euro run but even without this run the club was well run on and off the pitch. Since Peak 6 bought the club, the success has continued but the losses have increased significantly. 2020 was another good euro run but those profits were eaten up by Covid losses and a big wage bill. Dundalk as it stands today would be a heavily loss making club on an annual basis unless it reached the Euro group stages. And that is fine as long as their owner will prop up the losses, the challenge arises when the owner can't/won't.

Cork City looked like the a good model as a fully owned members club. They were successful on the pitch and made money every year bar a small loss in 2018. They haven't filed 2019 or 2020 accounts yet so hard to know when/where things went wrong, but were relegated at the end of 2020 and its reported they had built up debts etc. They did look to sell themselves to Trevor Hemmings but that has gone quiet. As a fully owned members club a couple of bad years with no cash reserves and a drop in income can lead to problems.

Shamrock Rovers are the current league champions. Over the last 7 years they have accumulated football losses of circa (€3.7m) (probably more when they file their 2020 academy accounts). They have funded these losses by a €2m investment from Ray Wilson and a further €2m investment from Dermot Desmond. In return they have sold 50% of their club to these investors. Like Dundalk running these losses is fine as long as someone will invest to cover them, the challenge arises again when said investment runs out. 

While the Rovers losses look big they are not unusual, plenty of other clubs have run up losses backed by investors in this period, St Pats (€3.5m losses over 7 years funded by benefactor), Derry (stg £1.2m losses over 6 years funded by benefactor), Waterford (€1.2m losses over just 3 years) and Limerick (€2.2m losses over 5 years funded by benefactor) would be 4 of note. So its the norm as such to run up losses in the league. In 2 of these clubs these investors after a few years of losses have run out of money or cut their losses voluntarily which highlights the risk of being dependent on this type of model. 

Clubs running losses like any business running a loss is fine if you have a path to profitability. No club here has ever developed that path and as a result we don't have a club like Juve/Bayern/Celtic etc winning 7/8/9 titles in a row as clubs run out of money before they can do that.

Future Financing of the League of Ireland

Step forward the Irish state. The Irish state currently funds lots of sports in Ireland at all levels but gives close to zero to League of Ireland football (does it give anything ?). From the well known horse racing support (€65m per annum) and greyhound support (€20m per annum)  to Sport Ireland funding various elite programs across the country lots of sports are financially supported. GAA players get circa €3.7m in state support. The state should support everything I mentioned above and give even more support given the benefits of sports in terms of viewing and participation.

The League of Ireland is no different in needing financial support. Based on how little support we have gotten from the state over 20/30 years we are in an even worse position than most of the sports that are funded. 

Requirement

To help football develop proper systems here we need circa €17.5m of investment per annum for 10 years, so €175m (that's probably not even thinking big :)). 

Of this circa €7.5m per annum should go into facilities that can be used by the league of Ireland clubs but also the local communities in which they are in. This €75m investment over the decade will step change the facilities that clubs use. (pitches, gyms, meeting rooms etc). The UK government gave stg£31m a year to clubs after the Taylor report in the 1990's to help clubs modernise stadiums through the football trust. Even these massive clubs needed state help to improve facilities and we are no different.

Secondly circa €6m per annum should go to running the academy model. It sounds a lot but it is circa €300k per club per annum. (There should be a tiering and matching funds principle here I think) This will allow clubs to hire coaches, invest in education schemes etc and really be able to put the hours required into training what we want to be elite athletes. Based on the clubs above there are circa 2,000 kids at various age groups playing in the league of Ireland. Even more at these same clubs with teams below U14's. Most of our future Irish internationals will come through this pathway at some stage especially as more players are currently staying here until 18.

Lastly the remaining €4m per annum should be spent in prize money/grants in the league. We need a professional league here, we need a pathway for these players to be able to make careers here after U19. Having a bigger prize pot or grant pot will allow clubs to not run such losses and allow them to increase the playing budget sustainably. This should be split where the league winners don't get as big a share in lieu of the European money and allows a competitive league, however the top teams would still get the bigger amounts. (Obviously you can still have clubs going too far but more guaranteed money gives a safety net to players).

How its paid back to the state

The €175m over 10 years sounds a lot but in reality a lot of this is paid or would be paid by football itself. So €17.5m a year would be the cost over 10 years.

Firstly at present the league contributes circa €4/5m per annum in PAYE and VAT to the state. I can only go on various annual accounts filed but I don't believe I will be far off. If we can grow the number of players and coaches etc being paid this money will go higher to say €7m per annum. So in various taxes we would be contributing anything from €50m to €70m to the state over the 10 years, in affect the state are giving us this back for a defined period to build a product where in the future they can get the €7m with a far lower contribution.

In terms of the capital expenditure, the state will recoup VAT on the projects as well as PAYE etc on the people working on building the facilities. I can't exactly quantify either but the state will get up to 1/3 of this money back each year in taxes. So another €25m of the funding is covered here.

So of the €175m given by the state the net cost to the state over the decade would be less than 1/2 of that cost. And after the 10 years, the funding would be scaled back, however the PAYE etc would continue to be paid. What the state funding allows the clubs to do is build a proper league with a real pathway for players to make a living here, contribute to the state coffers and allow thousands of young players to be play football here. If the FAI/clubs do their jobs right with this investment the state will recoup multiples of the investment in the years after.

Reduced State Investment

How does the league sustain itself after we reduce the state investment?

Well from the work done over the previous 10 years, clubs now should have a higher base income. The capital money can be reduced as a lot of capital projects will be done and the prize money/grants can be reduced as football income will have grown. Clubs will probably need academy support in the future in terms of high performance like all sports here are helped.

Our sustainable income should grow for the following reasons:

• Better facilities should allow clubs to grow their gates with the right marketing by clubs. There is clear data to show the attendances grow in new modern venues.
• Likewise commercial income should grow as a more professional league in better venues with more coverage will allow clubs to attract more sponsors.
• Transfer income should also grow with a proper academy model. By investing in this area, clubs can pay coaches, retain kids on proper contracts and when selling drive higher fees like many mid tier/smaller leagues.
• European money should grow (and some should be split in a pot). At present we start this year ranked 46th out of 55 nations in Europe. We have 1 seeded team and 3 non seeds in Europe. At a minimum we will bring in €1.55m or so if we lose all ties (hopefully more). By having a professional funded league here we can improve the overall and individual teams coefficients and generate more income from this source.

So while we would lose the €4m state prize money/grant money the income growth from the above sources would more than replace this to keep thing sustainable.

The FAI and financial management are key here. We need a proper structure to ensure this money isn't wasted, money for facilities, for the academy etc go to where it should go. Also clubs are living within their means and can survive post the state help. Otherwise its a wasted 10 years where some players make a load of cash, some clubs win some trophies and we have nothing to show at the end, the 2000's anyone?

Long Term Benefits (financial & non financial)

People with more football knowledge have decided the national league underage pathway is the best so I am sticking with that model. If we got the state support (and remember a chunk of that is the state just giving money we give to it back for a while) we could build a proper football industry here (BTW I hate that term) The only reason there is a horse racing or greyhound industry here is state support so football is no different. In 10 years time we could have;

• A league with decent facilities for fans and players. A league with a bigger support base than today.
• Training facilities and education link ups to keep young players here until 19/20 and move when they get good opportunities and clubs are rewarded.
• A league that has moved up the European coefficient rankings which shows the improvement in the league and gives more credibility to football here. A team in 1 European group stage competition every year would be a realistic aim.
• Safe secure jobs for 400/500 people on a full time basis. They wouldn't be millionaires at the end but kids coming through the youth set ups could see a future where they earn €30/40/50/60k per annum here and it not blowing up after 12 months into a 3 year deal.
• The national side will be improved at all age groups. Players getting more coaching hours from paid coaches can't but help our coaches and players improve.
• Lastly if we used the opportunity right, a league set up to grow in the years ahead. A full time league, progressing in Europe being played in good facilities will be a much easier product to sell to fans, sponsors and in todays age most importantly TV.

There is probably loads wrong here, I don't have access to FAI numbers or detailed club numbers but I think my figures are broadly right. It sounds a lot of money but in the scheme of things its not for the state and the benefits significant . To make anything like this work it would need the clubs and FAI to work together, not to benefit 1 or 2 clubs, but to improve the overall league. That's what the premier league did at the start, its what the NFL, NBA etc do today. They all know that for league to be successful its only as good as its weakest part and for it to grow we all need to be successful/competitive.

Personally I think with some vision and ambition we could step change football here that in the long term would really change things for the better. There would be some hard decisions on the way, but that's for a different debate.

End