This man sounds rather dim

A former football club chairman is suing his divorce lawyers claiming they failed to warn him that promotion to the Premier League would result in an extra £2.25 million pay off to his ex-wife.

Huw Jenkins OBE, 56, the former Swansea City boss, claims he was told by solicitors that his finances were “not stable enough” to reach a financial settlement with his wife Sian, 50, while the club was in the lower league.

However just three months later Swansea City won promotion from the Championship in 2011 to play the likes of Manchester United, Liverpool and Arsenal.

This resulted in his personal wealth massively increasing and when the divorce was finally settled in 2017, Mr Jenkins was ordered to pay his ex-wife a £2.25 million lump sum.

Divorce involves the settlement of the marital finances. If there’s more of them then there’ll be a bigger amount paid over. And, even if we take the more restrictive view of only those assets created or accumulated during the marriage itself this is still going to apply here, isn’t it?

Thus, how could the outcome be otherwise?

Whether his lawyers should have told him is another thing. But that he didn’t instinctively grasp this is showing a certain lack of nous, eh? Or, possibly, a certain amount of trying it on. As anyone who makes enough to then be able to buy into a football club has a certain amount of financial nouse, nu?

25 thoughts on “This man sounds rather dim”

  1. Surely anyone who buys a football club has a lack of financial nous? As he has to spend more to stay in the premier league, why is he now richer?

  2. The capital value has risen as more rich idiots wish to buy a premiership club than a not premiership club. Don’t forget, it’s marital assets that get split.

  3. Alimony payments are essentially a tax, a percentage of earnings deducted at source. Does the Laffer curve apply? Do divorcees work less hard? I can’t find any research on the subject, yet it should be a rich area of study.

  4. Is there anyone ever made a profit out of owning a football club?

    I think you could bleed a club dry and make a ton if you don’t mind living in constant fear of being lynched by angry fans.

  5. I’ve always been curious as to what the business model of football clubs really is. Are they all hobby businesses, or not? Clearly there’s plenty of interest to own them, at all sorts of league levels.

    I know in some smaller clubs it’s as much about property development as anything else. Get your hands on some land and a brand that planners and the councillors are keen to support.

    Bigger clubs have merchandise, sponsorship etc. But many of them don’t seem to generate net profits… but then I’m sure some cash gets taken out through the expense lines.

  6. “Is there anyone ever made a profit out of owning a football club?”

    There’s clubs that do, but generally happens when a club outperforms.

    Football clubs aren’t really businesses. They’re part of the little platoons. People set them up as a community thing, like CAMRA or Garsington Opera. The main aim is playing football and the second aim is keeping going. If they don’t make a loss, that’s fine (and that can include the club keeping going just by having a sugar daddy).

    If you meet people who work at clubs, they aren’t punch-clock employees. They’re all dedicated fans. They go out of their way for the club and other fans.

  7. “I think you could bleed a club dry and make a ton if you don’t mind living in constant fear of being lynched by angry fans.”

    There is that. I knew someone made a packet out of owning a piece of a football club. Sold the training ground as a housing development with a slice of the action. But I probably should of asked whether it was possible to get an income stream out of one. Otherwise, it’s sort of owning a yacht. It’s got a capital value which might increase. But while you’re owning it, it eats money like the Abbotapottamus downs KFC’s. You’re poorer whilst you own it.

  8. Spurs just reported a relatively massive profit and Man Utd usually makes a profit, but they are exceptions (Spurs as a leading London club has a million supporters/potential supporters and Man Utd was only the second club to have a world-wide brand).
    BonM4 is right – football clubs are all about football and local pride

  9. It could be that football clubs are akin to works of art. They might not intrinsically be a good investment but to the very wealthy they are desirable and in limited supply.

    I think with TV money, sponsorship and merchandise it really ought to be possible to turn a profit. Oh, and fans through the turnstiles of course. Nearly forgot them.

  10. I sneeze in threes

    “How do you make a small fortune from owning a football club? Start off with a large one.”

  11. “Is there anyone ever made a profit out of owning a football club?”

    Debatable. Given the amount required to buy in, and subsequently required to create success, it’s not clear that outside of a pitifully small set of examples, any investor has actually made a return over the holding period.

    It appears that the only way to come out ahead, is to be on the playing staff, or sometimes the manager.

    “Football clubs aren’t really businesses.”

    Well, they are, as the British ownership model hasn’t been one of clubs or societies owned by their members for a very long time. But this model isn’t particularly common on the continent.

    As a guess, what seems to have happened is that British clubs got bought by local businessmen – “a pillar of the community, Mr Chisholm” – on the expectation that the club would never make a profit, but continue to generate useful losses for tax purposes, and thus keep the chain of used car dealerships afloat. Fans got completely the wrong end of the stick about this, so when tax rates began to change through the eighties, ownership of a club was less useful, but football culture now expected some rich person to own a club and just throw money at it until something magically happened. The formation of the Premier League made this worse, as owners had never previously needed to turn a profit, and nearly every call on a phone-in still has a fan wibbling about investment from the owner without ever giving a reason as why the owner might actually do such a thing, aside from demonstrating their love of the club to the existing fans.

  12. @ Ducky McDuckface
    The answer to your last sentence is simple – there is no fan alive who has not grown up with the concept that the owner/Chairman of his local club’s purpose is to benefit the club not himself.
    To your first sentence – to paraphrase Douglas Adams: if you want to make a profit out of a football club you are not a fit person to own a football club (Craig Whyte and Owen Oyston may be examples – when Blackpool fans are outnumbered by *Sunderland* fans at Blackpool there is something rotten in the state of Blackpool) .

  13. “I think with TV money, sponsorship and merchandise it really ought to be possible to turn a profit. Oh, and fans through the turnstiles of course. Nearly forgot them.”

    The problem is that all the money goes on players salaries.

    Sporting teams aren’t like other businesses. You can still enjoy a reasonable restaurant rather than the best in town, and you get a saving for that. But no-one goes to see a team lose. Everyone wants to see a team win.

    So, everyone wants the very best players, in a way that every restaurant doesn’t want the very best chefs. Which means there’s an arms race for the best. Everyone has to outspend the next guy. The result of that is that clubs spend all their money on players and manager.

    It’s also why the clubs with rich oligarchs keep winning. A lot of teams are running on re-injecting TV and ticket money into players, but Man City and Chelsea also get money from Sheikh Mansour and Roman Abramovich (and Sheikh Mansour is spending around £100m/year). Even if City have a bad season, they can buy the best players and manager next year.

  14. @ Henry Crun
    I said “usually”
    The MUFC accounts for 2017-8 show *pre-tax* profits of £47m.
    I was citing Spurs and Man Utd as exceptions to BonM4’s insightful comment – Leicester City is more in line with the tradition of businessman spends some of his spare cash to support his (or in this case his son’s) local club.

  15. John 77; To your second para – did football clubs, in aggregate, manage to achieve a useful average profit rate prior to 1961? I’ve no idea.

    “In the last 30 years there have been about 70 cases of insolvency involving English clubs in the top four divisions. But this is a pan-European problem. According to the most recent survey of European football club finances by UEFA (UEFA, 2012), 63% of top division clubs in Europe reported an operating loss, 55% reported a net loss, 38% reported negative net equity and auditors raised ‘going concern’ doubts in 16% of cases. This is also not a recent problem: a British government report by Sir Norman Chester in 1968 expressed concern that football clubs might become bankrupt en masse. In 1983 another report by Chester suggested that without fundamental reform English football might collapse….However, despite frequent financial failure, clubs are almost always bailed out by fans and wealthy investors – it is hard to think of one European club of any significance that has disappeared in the last 50 years, despite frequent financial crises.”

    (Szymanski in 2014). The dates are interesting.

  16. John, “Liverpool broke the world record for the biggest pre-tax profit made by a football club during the 2017-18 financial year, the club’s latest accounts have revealed.”
    https://www.theguardian.com/football/2019/feb/08/liverpool-world-record-profit-2017-18

    About £125m pre and £102m post. The previous record was held by Leicester. For all that Fenway don’t appear to be stupid, certainly not at H&G levels, the numbers appear to remain highly volatile.

  17. @ Ducky McDuckface
    Prior to 1961 I was *playing* (schoolboy) soccer, not analysing accounts, so my failure to ever hear/read of soccer club accounts is understandable albeit regrettable. The only bits that hit the newspapers were some local businessman buying into his club – I never heard of a dividend being discussed, let alone paid. Sunderland were known as “The Bank of England team” because they paid enormous sums in the transfer market, not because they made profits. There was money in Italy which is why John Charles went to Juventus.
    I *can* tell you that the ethos was different: in 1956 the Football League gave Man U carte blanche to buy whichever players they needed to make up those gaps in their first XI that they couldn’t fill from their reserves.

  18. Ah well. ’61 was the year Jimmy “The Chin” got the maximum wage abolished. The first Chester report referred to by Szymanski is only seven years later. The second Chester report is ’83. Was there anything that might have happened from about ’75 onwards maybe? It could just be general economic conditions.

    Slightly o/t, but this cropped up while looking for the ’83 report;

    “Aston Villa Director William McGregor proposed the formation of a Football League (inaugural season 1888) which quickly contributed to the game’s growing popularity. This in turn led club owners quickly to invest in stadia to accommodate the additional supporters. They adopted a commercial limited company model to limit liability when investing in stadia. Club owners did not expect to reap financial reward from their involvement in football; indeed a Football Association (FA) rule (Rule 34) prevented this. This restricted payment of dividends to 5% of the nominal face value of shares and prohibited payment of directors. If a club was wound up, any surplus had to go to another sports club or a charity.”

    https://publications.parliament.uk/pa/cm201012/cmselect/cmcumeds/792/792i.pdf

    Were you any good?

  19. “Aston Villa Director William McGregor proposed the formation of a Football League (inaugural season 1888) which quickly contributed to the game’s growing popularity”

    There had to be someone to blame…

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