Rewarding Failure

Dansk_Red

Article from Sunday Express, if implemented could send a few clubs to the wall.


PARACHUTE PAYMENTS IN DANGER
Vince Cable wants bonus payments to be judged on success rather than failure

Sunday January 29,2012
By Colin Mafham

RELEGATED clubs could lose their bumper parachute payments, because of proposed government legislation.

The coalition is planning a blitz on “businesses that reward failure”.

Business Secretary Vince Cable wants bonus payments to be judged on success rather than failure.

If that becomes law, it could cost clubs relegated from the Premier League almost £150million in parachute payments.

The money is intended to help cushion the costly blow of relegation for football clubs.

But under Cable’s plans, relegation would mean clubs have failed as businesses and they should not receive compensation. So clubs could lose a vital cash lifeline.

Cable says he wants to make sure there are no longer “rewards for failure and mediocrity.”

At the end of the season, the Premier League will pay relegated clubs £48m each over four years.

Parachute payments could be a thing of the past. Clubs which are relegated from the Championship will pocket £325,000, while League One clubs which go down can expect £250,000 each.

DRF

I think it would be highly likely that if this highly unlikely law were to be pased then there would be exceptions for a number of things including sport.
More Vince Grandstanding that will come to nothing.

Chirpy Red

Vince Cable talks a lot of gas and actually never does anything.......

falconwood_1

Vince Cable was very good until he got power then he realised you need balls to make real life decisions.

olster

Stupid idea.

Would only work if the financial disparity between the championship and the premiership was smaller, so that parachute payments weren't necessary.

But the gap is growing all the time.

Also, can you call failure on the pitch a business failure?

Fiiiiiish

If you invest poorly and outside your means and it shows on the pitch then i think you can.

cafcfan

Setting aside Cable's competence (or lack thereof) for a moment. He's talking about individuals - not businesses. Football clubs have a contract with the Premier League which neither Cable nor the idiots who write dross for the Express could break.

Rizzo

Personally I call getting promoted for one season and pocketing something in the region of £50m a year for 4 years an amazing success!

se9addick

This article is probably the most outrageous example of taking someone's words out of context. Cable, clearly, did not have football teams in mind when he made these comments, indeed it's increadibly hard to construe a team getting relegated as "failing in business". You could just as easily use these quotes and come up with the headline "Cable announces execution for any Olympians not winning gold for team GB"

Jints

You've got to admire the Express for its inventiveness in making stories out of nothing. They must send their hacks on creative writing courses.

DRF

If you invest poorly and outside your means and it shows on the pitch then i think you can.

But the outcome of this isn't always relegation from the premiership. If you want to penalise clubs which are not based on a sound financial model then that is totally different.

Salad

spot on Jints - surprised people fall for it

Henry Irving

You've got to admire the Express for its inventiveness in making stories out of nothing. They must send their hacks on creative writing courses.

Nail on head

And what SE9Addick said

Algarveaddick

Brilliant story writing isn't it. Why do the Express and Mail feel the need to make up these scare stories all the time? It made more sense when they were using their extreme right wing agenda to push the Labour government out, but now they have their puppets in control, why bother?

redman

I can't see it affects parachute payments. However I believe it is aimed at people who have long term contracts and fail eg failed CEO of a bank with a 2 year contract gets a 2 year pay off. However this could extend to managers who fail could it?
Having said all that I think it's all hype as in both cases you are breaking a legal contract

Saga Lout

For this to work someone has to create a definition of "failure", which can be universally applied and understood by the courts - personally can't see it happening.

iaitch

How do you quantify failure? If a team spends money beyond its means but wins the league is that success or failure? Success on the pitch but a failure financially as a business?

Friend Or Defoe

Who reads The Express?

kings hill addick

I like the way he uses the line "If that becomes law, it could cost clubs relegated from the Premier League almost £150million in parachute payments."

Yes, technically if three clubs get £48m over three years and none of them win promotion during that time then the total paid out is £144m. But doesn't £150m sound so much more exciting and big and massive.

If you are going to write rubbish, making the numbers bigger doesn't fool anyone.

Even if Cable really meant do do something about this he would struggle to get the support of his own party; he would have no chance of getting the support of the blue coalition members; the football authorities would claim that they are exceptions; even if he managed to get to that stage the Premier League would just make the TV payment each season £48m higher with £48m of it paid in the last four years of a five year term so that the parachute payments were not for relegation but the promotion that must have happened in the first place - or from being a founder member of the Premier League.

This is lazy journalism at it's worst, the man should be ashamed of himself. It is quite staggering how many voluntary blogs there are out there that are much more professional than the rubbish that these guys get paid to write.

GlassHalfFull

If Man City win the title but in the process lose 100million+, are they a success or a failure ? Confused.

SilentAddick

Not read the papers yet but from the radio it came across as that Vince Cable were targetting individuals in the financial industry sector who is being paid bonuses regardless of whether the company succeeds or not - so put this in perspective - this does not apply to businesses as an entity therefore excludes football clubs.

Now with regard to managers being paid to leave... that could be threatened so Terry Venableses of the world out there, BEWARE!!!

Rizzo

Not read the papers yet but from the radio it came across as that Vince Cable were targetting individuals in the financial industry sector who is being paid bonuses regardless of whether the company succeeds or not

That is indeed the aim but totally unworkable in practise. Shareholders, via the board, decide wages and bonuses and even when the government is 84% of the sharholders they still end up awarding ~£1m bonus to the RBS boss whose performance this year is a mixed bag at best.

DRF

They did not award the RBS boss a £1million bonus. He got £1million in share options which is very different. And please bullet point the reasons why you believe he has had mixed results at best?

RodneyCharltonTrotta

Thought this was going to be about giving Parky the job full time ;-)

Rizzo

They did not award the RBS boss a £1million bonus. He got £1million in share options which is very different. And please bullet point the reasons why you believe he has had mixed results at best?

Nicely summarised here http://www.bbc.co.uk/news/business-16759963

And why is it not a bonus? It's a payment on top of his salary. The fact that it is in the form of shares doesn't alter that.

rikofold

Yes, technically if three clubs get £48m over three years and none of them win promotion during that time then the total paid out is £144m. But doesn't £150m sound so much more exciting and big and massive.

I'm not quite sure what that means either, but to be fair the article does say 'almost £150m' and I think £144m qualifies.

Parachute payments actually last 4 years, £16m each in the first two and £8m each in the next two. In theory therefore there could be up to 6 clubs receiving parachute payments of £16m and up to 6 more clubs of £8m, coincidentally totalling £144m. The reality is that the financial advantage will ensure at least one club goes back up each year, but it could still be in the region of £100m.

The elephant in the room, of course, is that parachute payments are required at all. It results from it being so damn expensive to lose a Premiership place, particularly when a Premiership wage structure is fully established, and creates uneven competition in the Football League. Not healthy at all for football.

Of course parachute payments won't be affected at all, even if Vince does manage to get some legislation through, but actually I think it might not be a bad thing if they were outlawed. Might force clubs into managing themselves a little more within means, might even force the Premiership to start thinking about a more even, long-term view of its distribution of funds.

tangoflash

Sounds like an idea that would only come from a supporter (sic) of one of the big boys who won't have to worry about such things as the R word......................

lolwray

You've got to admire the Express for its inventiveness in making stories out of nothing. They must send their hacks on creative writing courses.

Now if Vc had also linked this with value of pension funds and death of princess Diana then it would be on the front of Express for the next year

Jints

You've got to admire the Express for its inventiveness in making stories out of nothing. They must send their hacks on creative writing courses.

Now if Vc had also linked this with value of pension funds and death of princess Diana then it would be on the front of Express for the next year

"Vince to Prince - No cash for crash"
"Now Lib Dems want YOUR hard earned money to pay for Euro chauffeur's failure"

EZ game

kings hill addick

Of course parachute payments won't be affected at all, even if Vince does manage to get some legislation through, but actually I think it might not be a bad thing if they were outlawed. Might force clubs into managing themselves a little more within means, might even force the Premiership to start thinking about a more even, long-term view of its distribution of funds.

Sadly, all this will do is make the established teams risk even more to avoid going down and then relegation will, by default, mean administration and a period in the lower divisions for any club with an established Premier League wage structure or significant debts (which is pretty much all of them these days).

rikofold

@kingshill, you're right in practice. It's the solution only if they take a wider view of the health of football across the 92 and beyond. But they won't. The reasons for the Premiership's inception still apply and most of the clubs will expect themselves to remain among the elite. I was going to say it would take relegation and near bankruptcy of a big club to effect change, but that club was Leeds and it made no difference at all.