Crawley Town – A warning for our times

THE shambolic decline of EFL League Two club Crawley Town continues to astonish most people, each day revealing another bizarre media story, ranging from owner in the dugout, madcap bonus schemes and players ignored for speaking out. And that’s not forgetting the case of a manager with past gambling issues being praised for having an “appetite for risk”. When WAGMI United rolled into Crawley, offering an alternative to unsuccessful conventional approaches, some sceptics suggested it would all end in tears, and predictably, it is heading that way.

Once again, there are some sections of the football industry that are being seduced by the prospect of success being achieved in a different and swift manner. Often people do not know what they are getting into. We’ve seen the advertisements on TV; the honest retired worker, sitting on a 40-year pension pot, exploited by a crooked “advisor” who promised huge returns on his savings. “He took the lot,” says the heartbroken pensioner. There are many other examples, such as the whizz-kid trader selling FX derivatives to working class people in what turned out to be a “Ponzi fund”. It’s hard enough for City professionals immersed in the markets to keep up with the developments and mechanics of modern finance, let alone the earnest folk who drive taxis, install boilers or lay bricks.

The football industry has an insatiable obsession with money and get-rich-quick schemes. Just as clubs and leagues are happy to take money from the gambling sector, with its questionable values, the most recent snake oil in town was Crypto Currency. For years, financial technology (fintech) has been disrupting the status quo, trying to make banking and other services cheaper, more accessible and, ultimately, more nimble. There have been good and bad aspects of this sea change but the initial noise seems to have subsided. Take it a stage further and you have the creation of new forms of currency. Unregulated, virtual currencies that exist in the clouds. Given the value of these currencies can soar and plummet in a short space of time, they cannot possible be classified as “stable”. And in the age of high regulation and compliance demands, the fact that many products seem to be part of “the Wild West of Crypto”, investors should tread with extreme care.

Football clubs have been hit hard by the pandemic with more than £ 1 billion of losses incurred. They are always looking at new revenue streams and hence, they take money from the gambling sector and find owners from the most dubious corners of the globe. And no matter how many clubs become victims of irresponsible owners with shady back stories, the game doesn’t seem to learn very easily. Like the hapless and trusting investor, clubs will bite the hand off anyone that promises riches with all the precision of Spielberg’s latex shark.

Clubs and players are lining-up to make friends with the travelling salesperson peddling crypto as the latest wonder elixir. The attraction for a crypto company is obvious; football is a global game, followed by hordes of people with little knowledge of blockchain, Crypto or distributive ledgers. They don’t always understand risk or that the blokey salesperson, calling his clients “guys”, is not interested in the punter, selling is the game they are playing. How many people on the Clapham omnibus would understand what a “Decentralised finance trading analysis and advisory technology company” actually does?

Many clubs have already dipped their toes into this somewhat murky world. Issuing instruments like non-fungible tokens (NFTs) is a way for them to raise money without tampering with their corporate model through share issues or the creation of special purpose vehicles.

When will people learn that when something sounds too good to be true, it often is just that? The financial crisis of 2008-2009 demonstrated that, without due diligence and appropriate regulation, the system can cause ordinary people huge problems. This new form of finance may have seemed exciting, may have appeared cutting edge, but it largely comes without the assurance of strong policing. NFTs, Crypto, blockchain are all part of a largely unregulated market that has the potential to cause chaos. They may have seemed innovative, but reading some of the types of asset being exchanged for NFTs, it really seemed to resemble a digital age Emperor’s New Clothes.

The International Monetary Fund has warned of the possibility of financial instability caused by Crypto and there’s good reasons why compliance professionals are among the most sought-after individuals in financial services these days. The crypto bubble burst in 2022, which deterred those drawn in through the excessive hype, but billions are being invested in new applications and blockchain technology. The industry is now preparing to be hit by an onslaught of regulation.

As for football, not for the first time, the subject of owner suitability comes to the fore. Crawley’s problems seem to include poor communication, a lack of understanding of football culture and not enough experience of the game. These can all be [quite easily] remedied, but sadly, the unconventional way appears to be as dysfunctional as the traditional model of club management. How many people really understand the nature of the owners that are guiding the fortunes of their football clubs?

The die-hards at Crawley must be tearing their hair out right now, but hopefully they will get through this crisis, but what if they actually became a casualty of the digital world? The Football Association and Football League has to realise that perils come in all shapes and sizes and from all directions. Can you hear Danny Kaye singing in the background?[1]


[1] The King’s New Clothes from the Samuel Goldwyn film, Hans Christian Andersen (1952).

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