by Tom Bower
Terry Brown was destined for humiliation. Despite the sentiment that the club was too good for relegation, West Ham’s plight after Christmas was grim. Plagued by injuries, the remaining players performed badly, and the existing £40 million debt prevented Brown buying replacements. The prejudiced blamed Brown for dismissing Redknapp and ‘ruining a club they all loved’, while other fans criticised his replacement, Glenn Roeder, until he in turn was stricken by a minor stroke. The forlorn hope was that Trevor Brooking, an admired director, could save the dream in the last days of the 2002–03 season. In contrast, Harry Redknapp, who many blamed for West Ham’s misfortunes, had guided Portsmouth to dominate the First Division. Redknapp was guaranteed a double triumph – promotion to the Premier League and Brown’s embarrassment when his club was relegated. In an echo of his stewardship of West Ham, Harry Redknapp mentioned his requirement of £20 million to transform Portsmouth into a winning side, and his expectation that many more millions would be forthcoming to replace the existing stadium for 19,000 people so that ‘this club can move forward’. Survival in the Premiership, preached the sage, was ‘impossible for more than a couple of seasons’ in the existing facilities. The conundrum was whether the club’s owner, Milan Mandaric, a Yugoslav-born American, who had already spent more than £20 million since buying the club in June 1999, and suffered a wage bill rising from £7 million to £10 million since Redknapp took over, would risk more millions to follow the dream.
Redknapp’s glory was in stark contrast to Terry Venables’s forlorn grimace. The aspiring dream-maker anticipated doom on 30 January 2003. There was only £3.66 million in the club’s bank account and the monthly salary bill was about £5 million. Matches at Leeds were not broadcast by Sky, costing the club up to £600,000 per match. The share price was falling towards 3.7 pence, valuing the club at just £13 million, and there was a risk of insolvency. To delay disaster, Peter Ridsdale sold Jonathan Woodgate for £9 million to Newcastle, despite assurances to the contrary in happier times and the inevitable consequence for the team’s defence. To further reduce the wage bill, more players were offered for sale.
The publication of the first edition of Broken Dreams in February 2003 intensified the club’s problems. The revelation that Peter Ridsdale had employed Rune Hauge to buy Rio Ferdinand, costing Leeds £900,000 in commission to Hauge, surprised Allan Leighton, the club’s deputy chairman. The subsequent revelation that Hauge had in fact received £1.75 million astonished the non-executive director.
On Leighton’s orders, an internal audit of Leeds’s finances unravelled the background to the transfer. On 24 February 2003, Ridsdale proudly presented a report by the club’s lawyers and Deloitte & Touche, the club’s auditors, which stated ‘there is no evidence of any financial impropriety or lack of financial controls’ with regard to Ferdinand’s transfer. The report concluded that the money paid by Ridsdale to Hauge was ‘properly authorised in accordance with Leeds United policy’.
Ridsdale, pleading that he was the victim of a smear campaign, hoped that the controversy would be forgotten. Leighton remained unhappy despite the internal investigation into the chairman’s relationship with Hauge. He considered that Ridsdale had failed to provide a contract committing Leeds to pay Hauge any money, and also that Ridsdale had failed to provide any evidence which justified paying Hauge double the amount which had originally been stipulated.
There was further unease about David O’Leary’s dismissal. Comforted by Ridsdale’s defiant assertion that the ex-manager would not receive a penny in compensation, Leighton had supported the rupture. He was told that O’Leary had sabotaged the sale of Olivier Dacourt to Lazio or was guilty of other unauthorised expenditure. Leeds’s employees had minutely examined all the former manager’s telephone calls to discover embarrassing evidence and seemed set to blacken O’Leary’s reputation. One of the matters which they believed would undermine O’Leary’s claim for compensation was a series of telephone calls to a female employee of a small airline. Leighton’s confidence in the allegations was undermined. The telephone calls were innocuous and there was no evidence that O’Leary had sabotaged Dacourt’s sale. Ignominiously, the chairman capitulated and Leeds agreed to pay O’Leary £4 million in compensation for his dismissal. (Dacourt had by then been sold to Roma for £3.5 million, a loss of £3.7 million since his original transfer in 2000.) Ridsdale’s humiliation coincided with the acceleration of Leeds’s spiralling fortunes and unpopularity among the fans. To stem the unremitting pressure, Ridsdale retained Max Clifford, the publicist.
In mid-March, Leeds had won just ten matches out of thirty, and risked relegation and insolvency. The blame was heaped upon Venables who was criticised as too old at sixty to understand a Yorkshire team. The excitement at the outset, Venables lamented, had been ‘quickly taken away with the steady sale of key players’. His misery undermined the enthusiasm of the remaining international stars.
On 20 March 2003, Venables heard rumours about his dismissal. He asked to see Ridsdale that evening. ‘I needed it to come to the boil,’ he later explained. Without ceremony, Ridsdale fired the man he had eight months earlier hailed as a genius and saviour. Venables received £2 million in compensation for bringing the club closer to relegation. His ego was seriously bruised. As a man who had got nearer to more trophies than he had won, some would have concluded that his opinions in the television studio would inevitably command less authority. Their mistake was to ignore English football’s dependence upon the architects of recurring nightmares.
At nine o’clock the following morning, Ridsdale telephoned Peter Reid, who had been dismissed as Sunderland’s manager six months earlier. In the aftermath, Sunderland had become a confirmed victim for relegation and Bob Murray, the club’s chairman, having admitted his concerns about the scale of Reid’s transfers, planned to quit football. Reid’s record did not deter Ridsdale, by then a desperate man. Ridsdale’s telephone call, joked Reid, came ‘just as I got into bed’. The offer for a man fearing oblivion was heavenly: ‘When Peter called I knew it was a great opportunity and I snapped his hand off. I was desperate to get back in and now it’s happened.’ For the first time, Leeds offered realistic financial terms. Reid would receive £10,000 a week and a £500,000 bonus if the club remained in the Premier League. ‘I’ve got eight games to make an impression,’ confessed Reid.
Curiously, Allan Leighton could have discovered that Reid had been an original shareholder of Proactive, Paul Stretford’s agency. None of the Leeds directors sought information about Reid’s relationship with the agent nor appeared to be concerned that John Gregory, another of Stretford’s clients, had been suspended as the manager of Derby on 21 March 2003 while ‘serious allegations’ concerning a transfer were investigated. He would later be sacked. Reports about Stretford’s practice of simultaneously representing both players and the club in transfers had ostensibly caused concern at the FA and the Danish Football Association, but the only effect was the fall of Proactive’s shares from 40.5 pence to 4.5 pence. Untroubled by any criticism, Stretford alleged that he had been threatened and blackmailed for £250,000 concerning the management of Wayne Rooney, his client since 2002. Stretford’s allegations would lead to a criminal trial in 2004. The outcome was not anticipated by Stretford: while giving evidence for the prosecution, the agent was declared to be an unreliable witness and the trial ended. Those who expected Stretford to be punished were, however, disappointed. Although the court’s ruling meant that the agent no longer enjoyed the mandatory ‘impeccable reputation’ required by FIFA, the FA did not ask FIFA to take action against Stretford. His embarrassment coincided with the crash of another falling angel.
‘I’m not leaving,’ Ridsdale had proclaimed after Venables’s departure. Allan Leighton had decided otherwise. The misery caused by the architect of a boom-to-bust strategy could not be forgiven, especially while pertinent questions about Rio Ferdinand’s purchase remained unanswered. On 30 April, Ridsdale resigned with compensation of £370,000, one year�
�s salary. Stephen Harrison, the club’s finance director, also departed with seventeen other employees. Ridsdale’s obituary was of an impassioned supporter who had bequeathed a £78.9 million debt to a failing team.
Money and amorality were the common causes of their undoing. The same illness struck Chelsea, whose accumulated debts had risen to at least £97 million. Ostensibly, Ken Bates appeared unconcerned. At a special shareholders’ meeting at Chelsea Village on 29 January 2003 to approve the issue of 15 per cent more shares, worth about £10 million, to a group of anonymous investors, Bates asserted that the club’s assets were worth more than £300 million (although the published value was £240 million). Neither the stock exchange nor the FA were minded to query his style of management. Bates’s self-confidence after winning a place in the Champions’ League rendered him immune to any criticism, not least from the FA, an organisation which once again was immersed in turmoil.
The FA found itself weaker than ever. ‘There’s a fundamental breach of trust,’ Richard Scudamore had pronounced, accusing Adam Crozier of ‘incompetence’. The lack of transparency in the FA’s finances, Scudamore complained, was as exasperating as the conflicts of interest among its members and their ignorance about the Premier League’s commercial realities. Crozier’s resignation on 31 October 2002 was blamed on his lack of financial credibility. In the wake of Crozier’s departure, other senior executives resigned including the press spokesman and travel manager, suggesting that those responsible for the Crozier regime’s extravagances were being punished. The selection process for a replacement exposed the regulator’s flaws.
With David Dein’s approval, head-hunters were hired. Mark Palios, a former professional footballer playing for Tranmere Rovers and later an accountant at PriceWaterhouseCoopers specialising in business recovery, was identified as the ideal candidate. Dein objected. His favourite candidate was Peter Littlewood, a marketing expert promoting confectionery in America. Although Littlewood appeared to have little experience in football, British public life and rescuing businesses from financial crisis, Geoff Thompson – notwithstanding the experiences of Adam Crozier’s reign – favoured the marketing over the financial expert. The lacklustre chairman was undaunted by the FA’s own financial predicament. The cost of the new Wembley Stadium and the training ground in Bykley were threatening the FA with bankruptcy. A weakened FA would enhance the Premier League, further limit the money trickling down to the grass roots and encourage more foreign bids for Premier League clubs. Thompson appeared to ignore those problems and to be oblivious to the Premier League’s requirements.
Although the Premier League’s annual income of £1.3 billion was the world’s highest, no club was enjoying substantial profits. Complicating the clubs’ plight was Sky’s threat, on the expiry of the FA’s three-year contract in 2004, to pay considerably less than the £400 million annual fee agreed in 2000. David Dein, like other Premier League executives, feared that the absence of a rival bid would strengthen Sky’s resolve to offer £100 million less. Dein’s concern was complicated by Arsenal’s own accumulated losses. During 2002–03, the club’s trading debts had risen to £42.7 million and the new stadium, costing over £400 million, required loans of £317 million. The club was faced by the perennial problem that money spent on infrastructure would mean less cash to buy players to challenge Manchester United. Dein expected his candidate to become the FA’s chief executive to assist the Premier League’s negotiations. Once again, to the irritation of other club executives and Richard Scudamore, Dein appeared to equate the Premier League’s interests with his own and ignored his conflicts of interest, whether he was representing Arsenal or the FA. Dein’s candidate was not chosen. Mark Palios was appointed for a lower salary than his predecessor.
Within weeks, Mark Palios described his environment as ‘the biggest shambles I think I’ve ever seen’, the identical words uttered previously by Crozier. Palios added with further familiar echoes, ‘nothing here is ever decided’ and ‘we need a wall of credibility’. The organisational ‘mess’ was compounded by a financial predicament bequeathed by his predecessor.
After Crozier’s departure, the FA had been told by Deloitte & Touche, the auditors, that the FA needed £100 million immediately to avoid a cash crisis. A sum of £23 million was needed for Wembley and more millions were needed for Bykley, where it appeared that the project had been approved without the required £80 million funding being in place. ‘Bykley’s a monument to failure,’ Palios told a colleague, aghast that there had been a failure to budget for a possible 25 per cent reduction in TV income. Palios was appalled at what he considered to be mismanagement, although others doubted the existence of a financial black hole.
Solving financial crises was Palios’s expertise. By restructuring the debts he avoided the meltdown. His success was unappreciated on his first encounter with the tabloid press. His introduction to those critics coincided with the unexpected exit of Ken Bates from football.
Anticipating that at the end of June 2003, Bates could no longer fund Chelsea’s debts and meet a bank’s demand for the repayment of £70 million, he asked Trevor Birch, Chelsea’s managing director, to find a buyer for the club. Over lunch at Les Ambassadeurs with Pini Zahavi and Jonathan Barnett on 14 April, Birch asked for help. Zahavi immediately identified a potential buyer. Weeks earlier, he had been introduced to Roman Abramovich, a Russian orphan and former pauper who had recently become an oligarch. Estimates suggested that Abramovich had just completed a $34 billion deal involving oil and aluminium, earning an estimated profit of between $7 billion and $10 billion. An unexpected telephone call from Moscow had introduced Zahavi to Abramovich’s new ambitions. ‘We want to see Manchester United play against Real Madrid,’ Abramovich’s friend announced, knowing that tickets were like gold dust. ‘Roman wants to celebrate.’ Zahavi delivered and after the match introduced the two visitors to Rio Ferdinand. ‘I want to buy Manchester United,’ announced Abramovich, a football fanatic. ‘Not for sale,’ Zahavi replied, smelling a fortune. ‘Arsenal?’ asked Abramovich, having heard that the directors of the financially struggling club were immersed in a feud. ‘No,’ replied Zahavi – and Daniel Levy at Spurs, he knew, was asking for too much. Soon after the lunch with Trevor Birch, Zahavi telephoned Abramovich. ‘Chelsea’s for sale,’ he announced. The price was £150 million, including £17 million for Bates personally.
On the eve of concluding his purchase, Abramovich met Bates briefly at the Dorchester Hotel. Chelsea was just twenty-four hours from defaulting on its loans but Bates showed little gratitude when Abramovich agreed that he could remain as the club’s ‘honorary’ chairman for two years. Nor did Bates acknowledge that Zahavi had brokered the deal. ‘Not even a bottle of champagne as a thanks,’ Zahavi complained. ‘We got shafted,’ agreed Jonathan Barnett, who had expected to share £1 million in commission.
The announcement of Abramovich’s purchase on 1 July 2003 caused a sensation. Amid the uproar, the FA admitted that Abramovich’s financial history would not be scrutinised to ensure whether he was ‘fit and proper’ to own an English football club. Any existing caution was abandoned after he revealed his intention to invest £100 million in new players. His pledge to rescue the Premier League’s finances quickly materialised. Within weeks, Zahavi had negotiated the purchase of nine players for over £120 million and Chelsea’s wages bill soared to fulfil Abramovich’s dream of transforming Chelsea into ‘the world’s greatest football team’. ‘Money is no object,’ said Abramovich, permitting his expenditure to rise to £250 million. Zahavi’s reward was to earn millions in commission fees and to witness the exclusion of Bates from the club’s board room, formerly his exclusive preserve. For Zahavi, who had his doubts as to the depth of Bates’s affection for Jews, the irony that Jews were his saviour and landlord – he remained in a penthouse at Stamford Bridge – encouraged hilarity among the newcomers. ‘God will deal with Bates,’ Zahavi told his friends. ‘I’m not looking for revenge.’ The new owners welcomed the FBI a
nd other US regulators to investigate the club’s records involving Stanley Tollman, Bates’s former American partner. Tollman had become a fugitive from the New York prosecutor on charges of fraud.
By mid-2005, Abramovich had spent over £440 million to boost Chelsea’s prospects. In his exuberance to substantiate his prophecy, Zahavi was cavalier with the rules of the FA and Premier League. First, Zahavi poached Peter Kenyon, Manchester United’s managing director. Alex Ferguson telephoned Zahavi in bewilderment. ‘One day you too can be at Chelsea,’ the Israeli quipped.
On 3 July 2003 Zahavi struck again. Eleven months before the European Championship in Portugal, Sven-Goran Eriksson was photographed meeting Peter Kenyon to consider deserting the England team for Chelsea. The revelation posed a challenge for Mark Palios and the FA. Neither Abramovich nor Eriksson had shown respect for the organisation. Polarised as a personal confrontation in the media storm, Palios was expected to assert the FA’s authority, enforce the propriety of a contract and issue a warning to unscrupulous foreigners that money could buy a major club but not immunity from the rule book. Instead of behaving like a brave politician, the technocrat panicked. He refrained from disciplining Chelsea and, instead of assessing the Swede as a shallow, selfish mercenary basking in vanity, he extolled the manager’s virtues. To maintain the England team’s stability, he rewarded Eriksson’s disloyalty by doubling his annual pay to £4 million in a new contract lasting until 2008. To the few who asked, ‘What does Sven bring to the party?’, Palios responded with praise for the manager. He lacked the courage even to include a performance clause in the new contract. England’s defeat by Australia in February 2003 appeared to demolish the illusion of Eriksson’s magic. England’s lacklustre performance in Portugal confirmed Eriksson’s flaws, and renewed doubts about the FA. Palios was undeterred. The FA, he knew, remained critical to English football’s strength.
