Business lessons for football
PROFESSOR John McKenzie, chairman of Leeds United FC knows about financial crises. His club is more than pound;70 million in debt and the future of its star players is in doubt.
He also ran Liverpool polytechnic in the 1980s, when the far-left city council got into serious financial difficulties. "Money simply dried up," he said. "We couldn't buy food to keep the rats going in the science laboratory."
McKenzie's life has been split between education and business. His CV includes the job of marketing manager at Allied Breweries and marketing consultant to Cadbury Schweppes and Unilever. But the passage to Leeds United is traceable to his first principal's post, running Ilkley College in the 1970s. He became a season ticket holder at Elland Road and retained a house in Yorkshire.
A few years ago McKenzie, 65, elected to spend more time in the north, easing down his commitment at the London Institute, where he is founder governor and director of international development. He oversaw the Institute's creation in 1986, merging seven under-performing colleges of art and design, and becoming its first rector. Merger and restructuring are among his specialisms - he united two colleges to create Ilkley, and did the same thing in Bolton.
At Leeds United, however, he found himself having to contemplate amputation. "If we'd been relegated, we might have had to shut down the academy," he said. "It probably costs pound;5m and anything that wasn't core business would have had to go.
"It's been very successful - it's where the new stars emerge from. But if you're having to reduce your budget by 50 per cent, you cut into everything."
There speaks a businessman forced to make drastic fire-fighting decisions.
The bigger clubs are, the harder they fall, and Leeds, which swelled on the back of European Champions League revenue, crashed with a thump after failing to qualify two years running. For an educationist, axing the academy would have been an unpalatable last resort. The 1997 FA Youth Cup winning team included names such as Harry Kewell, Jonathan Woodgate and Paul Robinson. Just behind them came Alan Smith. This year James Milner has emerged, a 17-year-old prodigy eclipsed only by Wayne Rooney. Even in a deflationary transfer market, that is around pound;35m of home-grown talent.
And if the academy had been shut down, where else might Leeds have looked? Several clubs are associated with FE college-run centres of vocational excellence. But McKenzie is ambivalent about them. "They're an interesting concept in terms of first level of development," he said. "The problem is that talent doesn't necessarily evolve.
"We train and work with kids from seven, eight and nine. But very few move through each stage. Even when you get to 16 or 17, you may have only one in 20 who'll get into the first team. Taking kids out at too young an age is, I think, quite difficult in the area of sport."
Leeds United's previous chairman, Peter Ridsdale, who went from being revered to reviled in two years, also fostered one of football's most extensive community programmes. It has worked with an inner-city population offering adults and children computer and literacy skills; also football sessions and creche facilities. Its fate, too, would have been uncertain had the club been relegated.
"One has to build it up so that it generates sponsorship and becomes cost-effective," said McKenzie.
"The total programme costs around pound;500,000 a year. With season ticket sales of 25,000 and crowds of 38-40,000, we should be able to fund the thing. But if you've spent your money and you're pound;70-80m in debt, you don't have that freedom.
"There's a terrible tendency for community and education programmes not to be run cost-effectively. When I came to the London Institute, staffing ratios were about 6:1. Now they may be 17 or 18:1. The educational process isn't necessarily worse: we had to re-examine how to deliver it differently, perhaps with more discipline.
"Some people say that running education like a business is shocking, but it does mean you have to have a quality product, the demand and to live within a budget. The football world has similarities. Yet people who become involved get so embroiled in the excitement and ambition, that business sense disappears out of the window."
Sorting out a huge financial mess is not what McKenzie expected when he headed back north. "We took up a corporate facility and four seats at Elland Road, and then I thought I'd buy some shares. I was persuaded by Alan Leighton, the deputy chairman, to get more involved. He felt more business input was needed."
The fury among Leeds fans when Ridsdale sold Woodgate to Newcastle in January caused McKenzie to get in much deeper.
But he was also invited on to the plc board because of his expertise of marketing abroad, especially in the Far East, having fostered the London Institute's recruitment of international students.
"There is a huge potential, growing interest and sponsorship opportunities," he said. "We have to make the brand name stronger in Asia."
One thing a background in education, where finance has a trickiness all its own, did not prepare him for was the world of players' agents touting their clients around Europe and stirring things up in the press.
"To some extent it's like poker," he said. "They don't know what you're going to do any more than you know what they're up to."
Nor has a life in academe made him inherently cautious about his own finances. "Otherwise how do I end up with four million shares in Leeds United?" he said. "I've lost money but I've stopped thinking about it. It matters much less to me than having a fantastic club that I've helped regenerate."