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Stoke City – A Damn Fine Football Business Model

When Stoke City were promoted to the Premier League no one gave them any hope of surviving and establishing themselves in the Premier League. However, that is exactly what Stoke City has done and now surely they provide the inspiration and example for other teams coming up from the Championship to follow.

Stoke are a good example of fortune following the brave and for all the plaudits that Blackpool have received this season – I question if they really gave themselves a chance with of lack of transfer investment. This is certainly not the case at Stoke, but it should be noted that Stoke are heavily backed by the Coates family that have invested £43m into the club and the majority of that money has gone directly into Tony Pulis’ playing budget to keep Stoke in the Premier League.

However, the money that was invested into that team is what gave them a chance. £16m was invested in the 2008/9 season – their first in the Premier League. The biggest fees went on Dave Kitson, Seyi Olofinjana, Abdoulaye Faye, Matthew Etherington and James Beattie. The spending paid off as they finished 12th in the league with 45 points; their survival was comfortable as they finished 11 points clear of relegation.

In the 2009/10 season Stoke looked to cash in on the success they had in the previous season further investing in the team. Dean Whitehead, Robert Huth, Tuncay Sanli, Diego Arismendi, Danny Collins and Asmir Begovic were all signed for a combined total of over £21m but they also recouped some money with the sales of Seyi Olofinjana and Leon Cort. Again it looked to be money well spent as Stoke finished in a comfortable position in the table; this time 11th with 47 points, an impressive 17 points above the relegation zone.

The season that just past Stoke started to calm down their total transfer spend as they had already developed a decent Premier League squad. But it was the season that proved they can spend fairly big sums on one player; when Kenwyne Jones signed for £8m and was joined by fellow new signings Florent Cuveiler, Jonathan Walters and Jermaine Pennant, the combined total was just under £12.5m. Stoke again performed well by finishing 13th in the Premier League but with a little less comfort away from the relegation zone; this time just 7 points.

It will be interesting to see what Stoke’s transfer approach ahead of the new season will be – but I think they have done superbly to establish themselves and next season they can think about having a go of breaking into the top 10. They already have a solid looking Premier League squad but will want to add a few quality additions. Above all though Stoke’s success is reward for being brave and ambitious.

As you would expect from the quality that Stoke have signed, the 2010 wage bill has steadily increased and stood at £45m, 2010 turnover was £59m and debt is relatively low in Premier League terms of £8m, only 0.3% of total Premier League debt. The club looks in a healthy state providing the Coates family continue to back them financially.

The Premier League is a tough division to stay in and unlike some other divisions there is no real escape from quality players. A good manager, decent Championship squad and team spirit can get you so far – but you’re unlikely to really grab this opportunity without that bit of Premier League quality as well. Blackpool was an example of what might have been – if that little bit of extra quality had been added to the team.
Now as we know from the data presented above Stoke spent around £16m in their first season and have spent approximately £49.5m since they have been in the Premier League. Blackpool last season clearly took a different approach to Premier League survival spending only £3.675m. But clearly the act of spending money in itself is not the guaranteed way of surviving; the process is a fair bit more complicated than that. And copying the level of spending that Stoke have done doesn’t give the assurance that a team will finish well away from the relegation zone. Wolves for instance only just survived despite a transfer spend of around £15m; they do have a relatively low wage bill.

But there is clearly something in the Stoke City approach and it seems the right level of spending on the right players can allow a team to progress in the Premier League. However, it’s important that things don’t go the other way and money is just thrown at the problem. West Ham spent £14m this season but perhaps more important than that was the wages they paid out and have been paying out; something that will hurt the club next season in the Championship. Birmingham spent nearly £20m all new players, but both these clubs were relegated.

So it will be interesting to see how QPR, Norwich and Swansea approach the transfer market ahead of the new season. All three clubs know that they will need a level of extra quality in the squad, but will be cautious that any money they do spend will not be guaranteed to keep them in the league. Therefore, they need to consider, if they spend this money and they get relegated – will the club still be in a good financial place.

Making some good quality signings on players that are young and ready for the opportunity seems a good approach to take. Norwich has made an early start with the £2.5m capture of James Vaughan and this appears to be the right sort of signing. In conclusion, have a look at what Stoke have done and try and do a similar job within the financial restraints of each individual club. For any of the newly promoted clubs to have a chance they must add some Premier League quality to their squad – but do so in a sensible way. For instance Stoke’s wage bill was £30m in 2009 but that increased to £45m a year later, because they were now a solid Premier League team. So invest but with logic and common sense.

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Article title: Stoke City – A Damn Fine Football Business Model

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