Kevin Keegan, the 45-year-old manager of Newcastle United, is a folk hero who brought the team from the second division to the first, and a big spender who still failed to win a cup. His resignation caused a sincere expression of public grief in the city, and illuminated the deep, local passion a football team can inspire, but the reasons for Keegan's departure give an insight into the seismic shifts that are taking place in football as owners, managers, players and fans grapple with the implications of the transformation of a sport into a business.
Keegan's friends blamed the stress of modern football management, and reports blaming banks for Keegan's departure were dismissed by a club spokesman as the "fertile imagination of national news desks". But the club's financial adviser, NatWest Markets, had reason to be concerned. Newcastle is to go ahead with a pounds 150m to 200m stock market flotation shortly, and if Keegan had already offered to resign, or proposed to do so at the end of the season, the bankers would have been required to put the information in the prospectus issued to potential shareholders. Not to have done so would be a criminal offence under company law.
As a Newcastle United spokesman put it: "Football's grown up. It's serious now." Our football correspondent, Ian Ridley, is less detached: "This has been a week that makes you fear for football," he says.
NO cultural activity has undergone such profound changes in the last 10 years as football. From an unprofitable, downmarket game driven by passion and dominated by a working-class audience, it has mushroomed into an industry with operating profits of pounds 49m in the Premier League, and with pan-European aspirations that have turned it into one of the sexiest sectors of the stock market.
Newcastle United are just one of a number of clubs about to float on one of the stock markets. A decade ago there was only one - Tottenham Hotspur, which went public in 1983. In the past year, Chelsea, Celtic, West Bromwich Albion and Sunderland went to market. Others, like Sheffield Wednesday, Southampton and Nottingham Forest, have joined the queue.
Glasgow Celtic, which includes among its directors a former deputy governor of the Bank of England, was the third best performing share of all in 1996, rising by 380 per cent since its flotation last June. Glasgow Rangers, which was floated just over a year ago at a value of pounds 20.7m, is now valued at pounds 249m. The price of shares in Manchester United, which bestrides the business of football with revenues of pounds 53 million, doubled in 1996, as did those of its pitiable neighbour, Manchester City, which proves that the share price bears little or no relationship to performances in the pitch. Sometimes it seems now that, if you want to know how a club is doing, you ask a City analyst rather than the people who watch them play. But it was only eight years ago that football's preoccupations were the Hillsborough disaster, hooliganism and falling gates.
John Williams, senior researcher of the Sir Norman Chester centre for football research at Leicester University, believes that no team better exemplifies this transformation since then than Manchester United. "In 1989, Michael Knighton tried to buy it for pounds 10m. His bid was accepted, but it turned out that he couldn't raise the cash. The most recent valuation of company was nearly pounds 450m," said Mr Williams. One recent report, he said, even suggested that in the advent of pay-per-view, by which viewers pay to watch screened matches, United's value could reach pounds 1bn, with annual profits of pounds 100m.
Football's metamorphosis can be traced back to the Taylor Report after the Hillsborough disaster, which required Britain's mostly dilapidated grounds to become all-seater stadiums. The World Cup in Italy in 1990 (when England reached the semi-final) raised morale, and when Gazza's tears bestowed cult status on him, football suddenly became fashionable among the chattering classes.
Then Nick Hornby wrote Fever Pitch, the adept autobiography of an obsessive Arsenal supporter, and the success of Euro 96 (England in the semi-final again; beaten by Germany, again) drew paeans from Germaine Greer, among others. Football's apotheosis was complete.
"There's been this incredible change in climate. It's become very sexy and fashionable and important for people to say they have an interest," said Mr Williams. "Potential sponsors and investors want to see something stable, that would attract ABCs. It looks like that kind of product now, rather than the ugly, dirty, working-class ghetto of the 1980s."
Television has been the biggest agent of change. In 1989 the BBC paid pounds 6m for the rights to show the top matches on Match of the Day. Under the BSkyB deal covering the 1997-2001 seasons, Rupert Murdoch and the BBC will pump another pounds 743m into the top division, with an extra pounds 125m going into the lower leagues. Last year, a survey by Harris, the polling firm, estimated that pay-per-view might generate revenue of pounds 2.5bn a year for football, pounds 380m of that to Manchester United alone.
The days when a club's revenue came from the turnstiles are long gone. Last year just one third of Manchester United's revenue came from gate money; the rest was raised from television, sales of kits, from merchandising and sponsorship from Sharp, the electronics company. The club markets its own Red Tribe lager and whisky with the Red Devil crest.
The club's new deal with Umbro, the kit manufacturer, is thought to be worth pounds 60m in sales over the next six years, and the reason why is that Umbro has seen turnover rise tenfold in as many years to pounds 100m. Football shirts have become a fashion item.
"Football is no longer the C2, DE social-economic once-a-week excuse for a fight that it was 15 years ago," said Steve Preston, chief executive of Umbro Europe. "It's now more recognised for its entertainment value and commerciality than it is for its negative aspects."
Much of this is good news. Fans admit that the game had desperately needed a cash injection, as well as a more professional management structure. David Blatt, chairman of the London branch of the Football Supporters' Association, points out that in the mid-1980s, only 12 of the 92 professional football clubs were making a profit. "They were run by egos. It was some guy who wants to be a big fish in a small pond, a Del Boy in a sheepskin coat," he said. Fans with long memories recall Bob Lord, who ran Burnley from his butcher's shop in the high street.
But Keegan's resignation also reminded the fans that radical change has a price, and many fear that it may be the game itself. "The big question is, are the interests of shareholders always synonymous with those of the fans? The answer to that is obviously no. As soon as a company floats, its ultimate and complete loyalty is to the shareholders," said John Williams. "The Kevin Keegan business shows how clearly the interests of fans can come into conflict with those of shareholders."
Supporters of Nottingham Forest were also acutely aware last week of the ease with which their loyalty can be traded. On Friday afternoon fans demonstrated in the stadium's car park as directors listened to a pitch from a consortium wishing to take over the club and take it public. They had already demonstrated earlier in the week when another take-over bid was being debated.
Nottingham Forest's pounds 1 shares are owned by 203 people representing a broad section of the community. Few can have purchased the shares as anything other than an act of faith in their team, but owning the shares has placed them at the centre of an increasingly bitter struggle for power in the club between a group of newly rich businessmen.
Last week Sandy Anderson, who has made a fortune out of the privatisation of British Rail, offered to put up pounds 13m in cash in return for control. The money was not intended for the shareholders, however. Anderson proposed to spend it on new players. (Since Forest were second from bottom of the Premiership before yesterday's game, they are in dire need of them.) At the shareholders' meeting, 111 votes went in favour of Anderson, but a successful bid requires 75 per cent of the vote; 79 shareholders presumably preferred to realise the market value of their shares. "The actions of a minority of shareholders have pushed the club nearer to possible relegation," says the Nottingham Forest Supporters' Club chairman, Mel Hart.
But there is a motley crew of bidders lining up: Nigel Wray, the property developer who already owns a rugby club (Saracens), in association with a former chairman of Tottenham (Irving Scholar) and a Nottingham author and businessman (Phil Soar). Grant Bovey, who made a fortune in the video industry, is also on the prowl, although the least probable bid comes from an American consortium including a distinguished magazine journalist, Albert Scardino, husband of Marjorie, the new chief executive at Pearson. Brian Clough, the celebrated former manager of Forest, says: "To see all this going on is breaking my heart." He is not alone. In fact, the attitude of owners to supporters encapsulates football's most radical change. Fans are metamorphosing from being the turnstile-turning lifeblood of the game, to ephemeral end-purchasers, whose perceived function is as consumers of viewing time and merchandise.
"Everyone agrees that you can't make enough money by staging games," Mr Williams said. "The big clubs don't care where their supporters come from or if they never come to a game as long as they buy a hat or shirt."
Local ties that have traditionally fired the game are breaking down. Football managers have already complained that crowds are not "getting behind their clubs" at matches, but rather expecting to be entertained. However, if fans are treated like customers, they will start acting like them, and de- mand value for money. Increasing ticket prices mean that some clubs have experi- enced a steady drop in gates. In fact, one analyst suggests that as gates become an increasingly less important part of the club's income - down to 42 per cent in 1995 - clubs may strive to fill stadiums for a different reason - to keep their shareholders happy. "One of the future functions [of fans] may be to act as extras for TV coverage. The club has to look healthy. It needs to induce confidence in potential investors. So they can't afford to have a half-full ground." An unexpected silver lining for fans, he suggested, might be lower ticket prices.
But while the Premier League flourishes, other divisions show operating losses and these may worsen as the game polarises further. Some believe that smaller professional clubs will fold, or change their status.
How all this affects the quality of the game depends on how quality is defined. If football is increasingly considered to be "entertainment", then some believe watching the best players play the best football can only be a good thing. The opposing view is that people support clubs because they still say something about the place where they come from. It is here, David Blatt believes, that the views of fans, considered the "unpredictable element" on balance sheets, have been largely disregarded.
He believes the intervention by the City of London may end up damaging the very thing it has found so attractive. "Football will not work as a spectator sport unless the audience has passion. Without that passion, it's not the same product that they can market to their investors," he warned.
That is not what the City wants to hear. The bankers and brokers are mesmerised by the new money. The scores that interest them are produced by a firm of accountants, Deloitte & Touche. They show revenues up 20 per cent in 1994-5 to pounds 468m, followed by a surge in wages and transfer fees as clubs jockey for position. All together, clubs paid pounds 110m in transfer fees in 1994-95, with that figure matched by pre-season signings in 1996 alone, including the record-breaking pounds 15m Kevin Keegan paid for Alan Shearer.
Currently, however, four clubs out of five lose money, and cannot afford the higher wages that will come with freedom. The revenues of the top four Premiership teams alone outstrip the three lower leagues together. And the divide is set to grow.
"Football should be in the black as a whole by now, but there's no prospect at the moment of that gap closing," said Dale Thorpe, a co-author of the Deloitte & Touche report. The message to investors is that the prospects may not be as rosy as the share prices now suggest. "Don't let the heart rule the brain. Don't forget these are really small companies and management is key," said Nick Batram, an analyst from brokers Greig Middleton.
The experience in Newcastle last week suggests that Mr Batram's warning may go unheeded. After all, the real point of football is that the heart rules the brain.
Ian Ridley, page 31
Your Money, Business, page 21