http://www.guardian.co.uk/football/2011/mar/01/aston-villa-randy-lerner-accountsAston Villa must balance books after Randy Lerner's £200m investment
Randy Lerner has plunged more than £200m into Aston Villa in the five years of his ownership, the Guardian can reveal.
Accounts lodged at Companies House last week for the Villa Park club's parent company, Reform Acquisitions, show Lerner has overseen the growth of revenues from £37.2m in 2006-7 – his first full season as a Premier League club owner – to £90.9m in 2010.
But alongside that strong growth has been the vaulting expansion of the wage bill. Villa's salary payments amounted to £22.4m in Lerner's first year, a just about sustainable 60% of the club's turnover. Today they have reached £79.9m or nearly 88% of the club's total revenues.
Losses last year were marginally down, from £46.1m in 2009 to £37.5m, but that was broadly attributable to the better returns from the transfer market. Booked net investment on players was down to £12.2m from £20m the previous year.
Yet still Villa are burning through Lerner's fortune. The US billionaire has injected £115.6m in equity and another £89.6m has come in through shareholder loans. Investments in player transfers alone have amounted to £138.8m but where it really counts – in the league table – there is precious little to show for it.
Villa finished 12th in Lerner's first season and sixth in each of the next three years; this season the former European champions have flirted more with relegation than courting the Champions League. Today they are 12th again.
The wages-to-turnover ratio is alarming because player wages are a particularly intractable problem. As Arsenal announced on Monday, in only six months they had achieved turnover of £120m yet the books did not ultimately balance: a £6.2m pre-tax loss ensued.
By no means are Arsenal in financial trouble; the loss in the interim accounts is attributable to a number of factors, not least a fixture list in which the Gunners play more often away than at home in the first half of this season. But the key contributor was the renegotiation of player contracts on more generous terms. "Every club has to compete for its own players," said Ivan Gazidis, the club's chief executive. "In the modern game that is true of every club." Not every club has a willing benefactor like Lerner but all must operate in an environment where wages are set by the most extravagant employers.
Yet even Lerner's patience is not inexhaustible and he wants the wages-to-turnover ration to return to 60%. Now Gérard Houllier will be called upon to deliver the managerial two-card trick that few have ever been capable of pulling off: bringing success with untried players from the club's own academy.
"We have an excellent academy with lots of very talented youngsters and Gérard is prepared to play them," said a high-ranked Villa insider. "You are locked into individual contracts but you are not locked into the overall bill. If you have a 35-man squad, with an average of two years on each there are plenty maturing each year. You always have that scope. And that is where the art of the manager has to be deployed."
So expect Villa to back away over the coming years from investing in more Stephen Irelands and Richard Dunnes in favour of attempting to win something with kids. It must be hoped Houllier will have a helping hand in that endeavour. Both Villa and Arsenal are members of the European Clubs Association, whose dialogue with Uefa helps shape the European regulatory environment. And both are looking to Uefa's financial fair-play rules as a means of stemming the flow of cash from club balance sheets.
"We shouldn't underestimate these rules; they will become a reality for leagues across Europe," said the Villa source.
"No one knows what kind of reality that will be because the rules must reflect the collective acceptance for football to be more sustainable than it is. But it is seeping into people's world view and it's going to help, hopefully, everyone get to a sustainable model."
Gazidis was still more forthright. "The escalation of player salaries to unsustainable levels means that those clubs who try to act responsibly find it more and more difficult," he said. "The extent the FFP are affecting decisions, we think that is healthy for the game. It influences not just those clubs whose spending has been above what their football revenues can sustain but also everybody else.
"I hope that Uefa will enforce those rules consistently and with transparency and I certainly hope that all the clubs who have supported it through the ECA will take the rules seriously." Fans of all but a tiny few clubs will depend on it.
