http://www.rte.ie/sport/soccer/2010/...on_galway.html
Former rogue trader Nick Leeson is well aware of the irony when, in his role as CEO of Galway United, he blames the banks for the level of debt in both soccer and society.
'It's the fault of the banks -- they shouldn't have allowed people to over-extend themselves as much as they did,' said the Englishman who went to prison for bringing down Barings Bank.
'They actually promoted it as far as I'm concerned, and they are the engineers of their own demise.'
Like all businesses in this time of 'belt tightening', soccer is suffering. 'It's extremely difficult. The amount of discretionary spend out there is very limited,' Leeson told Reuters in an interview conducted at the Terryland Park club.
As bad as everything is in the country, the soccer clubs are struggling more," said Leeson, who was released from jail in 1999 suffering from colon cancer.
'There's a similarity with the football clubs at the moment -- you've just got too laden with debt, you reach an extreme limit and you just can't operate any more.
'You can't get any more credit, the interest on the money you owe keeps increasing at a rate you can't keep pace with.'
Leeson was a Singapore-based junior derivatives trader when he ran up a $1.4-billion loss that led to the 1995 collapse of British merchant bank Barings.
He spent three-and-a-half years in a Singapore jail, emerging to write a book entitled 'Rogue Trader' which was later made into a film with Ewan McGregor as Leeson.
Now 43, he joined Galway five years ago and lives on the outskirts of the city with his second wife and their children, combining working for the Airtricity League club with speaking engagements.
Asked about plans for his future at the club, Leeson said: 'I don't know, but I see myself staying in Galway; it's a lovely place to live and the family are happy here.'
Despite the unsteady financial climate, and soccer's battle to prize spectators from rugby and the GAA, Leeson said the country's soccer clubs offered a good investment opportunity.
Of the 10 teams in Ireland's top division, four will qualify for European football next season.
'The multiple millions you could invest in a Championship club in England - you could invest a small fraction of that in Ireland and qualify for Europe.'
'It depends what people's motivations are, and if it's to own a club in England then so be it. But if it's to qualify for the group stages of a European competition there are other ways of investing your money. You get more bang for your buck here.'
'We've got two or three players that are attracting a lot of interest from the UK, Germany, Cyprus and Greece, but it became very apparent to me during the summer that there's a glut of professional footballers out there,' Leeson said.
'If we can sell on a player or two it's a massive boost for us, but in the current environment it's just more and more difficult.'
Leeson described how he had taken on local players and unemployed professionals, convincing them to join his struggling side by selling them the dream of a big move to England.
'We always tell them that if you think Galway United is going to be your last club, then it's the wrong club for you. We want people who are going places.'
Theres a prize for bringing the most fans you know
Whatever about society:
It's not the bank's fault when clubs don't pay the taxman.
It's not the bank's fault when clubs depend on handouts from directors to survive.
And it was not the bank's fault when a club decides to react to an 80k loss in a season when everything had gone their way including a massively lucrative Sunderland friendly with a 200k increase in playing budget.
I agree with his points on debt killing clubs but the blame lies much closer to home than he makes out.
#NeverStopNotGivingUp
I agree that's not the banks fault, but it was facilitated by bank, or to put it another way, were it not for reckless lending by banks, clubs wouldn't be able to increase their budget by 200k when they have no money. It's the same argument as ordinary people who took out mortgages they couldn't afford. I personally think the responsibility lies largely with the person or club doing the borrowing, but the fact remains that if banks were responsible it wouldn't matter how stupid the borrowers are, they wouldn't be able to run up debt they couldn't afford to repay whether they liked it or not.Originally Posted by Mr A
I suppose a difference is that a person has to have a house, and had to borrow hugely inflated sums of money to live anywhere near Dublin*. So you can't say that a person is solely responsible for that - the government stoking property prices didn't help, and banks helping things along by giving 110% mortgages didn't help either.
Clubs increasing their budget was purely a form of MAD, in which they all strove to pay more than the others to stay in the Premier/strive for Europe/whatever. The pressures there are different. One is a basic necessity of life (a house); one is idiocy.
* - doesn't apply for all the population obviously, but it does for a good proportion
A person is solely responsible for their own actions. They could easily have said no but they did not.
He doesn't allow for the fact that a large proportion of clubs debts is not to banks, but to various other creditors. If the banks are responsible for the state of the LOI, it is through their part in wrecking the economy.
#NeverStopNotGivingUp
Im sorry but this is just buck passing we are solely responsible for our own private debt if i borrowed and now cannot pay it back then thats nobody elses fault. there is far to much attempt to somehow blame the banks for our inability to figure out the difference between incoming v outgoings.
I wish i did not know then what I dont know now
They could have, but then they would have been left behind by the other clubs who didn't say no, possibly leading to a loss of more than 200k. The banks aren't to blame, and neither is any one individual club. It's the clubs collectively, and the lack of firm regulation by the organising authority at the time.
No Peadar, each club which treated financial prudence as an inconvenience is at fault. Saying it was the lack of regulation is a cop out, and not fair to the clubs which have actually done their best to budget in a sane fashion.
I may be completely off the wall here, but I don't believe banks do or have lent tuppence to League of Ireland clubs, either now or in the past. In my experience they wouldn't touch them with a barge-pole, possibly aside from relatively small working capital facilities which inevitably would be fully covered with a personal guarantee. This is backed up by looking back amongst the various examinerships and winding ups of clubs, banks rarely feature as the top creditors.
Really not sure where Leeson is going here. Maybe a few clubs got loans as property plays, but that was because of the property element, nothing to do with football.
Bravo, Nick Leeson. Shame on those banks selling their products to willing customers to make money. No danger of Galway United adopting a similar approach, thankfully.
As a supporter of another club who have done their best to keep their financial affairs in order, and been punished for it, I understand your viewpoint, but Bray have been whipping boys for much of this season, and only Drogheda's equal ineptness has stopped us being cut adrift. UCD are lucky they have a decent bunch of players, but how long before they're all poached by sides chasing glory. You can blame the clubs all you want, but clubs are always going to overspend unless someone comes in and stops them.
missing the point here lads, leeson is a FAI boy and is making excuses for his club being in trouble oh yea and society
its a nice everyone feel pity on everyone piece in the same week that the FAI are getting a lashing in the media, a weak excuse of a statement covering and pandering for the FAI. Leeson, we know what your at you piece of dirt
I take your point that an individual buying a place to live is a bit more important than a club trying to win trophies, but other than that I don't think there is much difference. While people have to live somewhere, they don't necessarily need to live in a detached 4 bed/3 bathroom house in the "right" suburb. Furthermore, they don't actually even need to buy the place they live in. I'd say there is a good analogy with LOI clubs. They have to have a squad of players in order to continue operating, but they don't necessarily need to fill their squad with overpiad full time professionals.
Another similarity is that it was the behaviour of individuals in the property market that made circumstances so difficult. The biggest issue was that so many people were buying multiple properties and using the so-called equity gained from one property to fund the purchase of another, all of which led to exponential price increases in a short space of time. Without that behaviour from a lot of ordinary individuals, property wouldn't have been so expensive in the first place. Similarly, if no clubs had started paying silly wages, other clubs would not feel the need to pay silly wages in order to remain competitve. Both vicious circles where the "victims" collectively created their own downfall.
I don't claim to know for a fact what the finances of any club look like, but TBH I'm struggling to see how some clubs could have paid such massive wage bills without borrowing large sums of cash. Assuming they aren't borowing from crimelord money-lenders on the black market (although maybe I shouldn't assume that!), they surely have to have borrowed from banks. For example, I'm pretty sure Bohs and Shels owe a lot of money to financial institutions.
The clubs who got into massive debt problems are ones who were caught in the property bubble - Bohs and Shels spring immediately to mind. Banks had a major hand in it, lending on the strength of land.
I like his point about the Championship side in England (an obvious dig at Sunderland), but at least they have a large fan base, more tv and sponsorship revenue, and for a larger investment there's a larger reward, otherwise why wouldn't Abramovich have taken control of a Russian club for a fraction of the cost of Chelsea and spent the same money to get them into the Champions League, the reason is that with the pittance clubs in the RPL get from TV, sponsors and ticket sales, there's no profit to be made. Same in Ireland, actually, Irish clubs receive half of what Russian clubs do in tv money and a little over 1/3 of the prizemoney.
Most really don't have large bank loans. In fact, I'd say most are operating off just an overdraft. Not paying Revenue is a favoured way of freeing cash, as well as not paying other creditors (printers, laundrettes). A panic fundraiser when the bank nears the limit is another. Directors' loans which dry up can screw clubs over (Dublin City, ultimately Drogheda). Very few clubs have actual loans I'd say, and those that do have borrowed against an asset. Which is why I think it's not really comparable to a person buying a house.
Blaming banks for clubs getting into debt is akin to blaming McDonald's for getting fat.
Or blaming a stock broker for squandering his bank's and clients money !!
"Football is a game you play with your brain".
Say what you like about the bold Nick, it was interesting to see him sitting in among the singing section with the Utd fans against Sligo last monday night. Usually the suits sit opposite. He also has a deep understanding of football culture (obviously more than finance derivative products) and has a serious interest in the football side of our league and in the lower divisions in the UK. One Utd fan said when he is away and stuff that he constantly texts for match score updates etc.
Mike Ashley was always in the stands with the fans too.
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