By Ed Jones

A popular, misguided criticism made by fans and pundits alike is that "football today is not a sport anymore, it's a business". Poor performances, poor player conduct, high ticket prices and a host of other grievances are blamed on this fact. If only the assertion were true. In reality, football clubs are too often not run like a business. If they were, financial collapses like those at Portsmouth and Rangers this week might have been prevented.

The influence of commercialism - kick offs times, ticket prices, sponsorship deals and the resulting revenue growth has done wonders for the look, feel and quality of modern football. But real businesses believe in things like cost control and turning a profit. Most football clubs do not.

Fans too easily forget the unprofitable practices undertaken in their name. Think of the benefactor Chairmen who pour personal fortunes into home-town clubs (take Steve Gibson at Middlesbrough or Dave Whelan at Wigan). Millions are committed with little or no hope of financial return, speculated instead in pursuit of achievement on the field, not on the balance sheet. This practice is often urged on by fans who are then quick to attack the same owners if the results don't follow.

A true business industry would be driven solely by the profit motive, ensuring growing returns from revenue growth. Premier League pre-tax losses reached a record £445m in 2009/10, despite a ten-fold revenue increase over 20 years of the Premier League. The top 92 clubs as a whole lose more than £600 million on their day-to-day operations, while collective debts stand at £3.5 billion.

Truly commercial enterprises guard against such statistics with strict cost control – a principle worryingly absent in football. Operating margins have reduced by 75% over the lifetime of the Premier League. For successive seasons, Premier League clubs' wage bills grew
faster than revenue, rising to over £1.4 billion and a wage/revenue ratio of 68% in 2009/10. The reason for spiralling wages is clear – as Szymanski's research demonstrates, league positions are determined (almost exclusively) by wage expenditure.

A debt-fuelled swelling of club balance-sheets, guaranteed in the minds of executives by the prospect of enduring, exponential revenue growth, places the game in peril. It is a model in which supporters are often complicit before they are victims. For a warning
of what may follow, we can look not only to Portsmouth but the Championship as a whole, where matchday and commercial revenues have already begun to fall back and the new broadcast deal will be 25% down on the last. A business shouldn't need the intervention of UEFA's Financial Fair Play rules to enforce a balance between revenues and costs.

Furthermore, if football was a really "just like a business", clubs wouldn't be able to relegate their debts to the tax man below their obligations to each other. In reality, the football creditors rule has its merits, protecting clubs and supporters. But it's an example of how modern football walks a tight-rope between commerce and community. It's neither a corporate venture nor a community asset – it is unique, and all the more intriguing and enticing because of it.

Ed Jones is a Spurs fan and a public policy specialist who has worked with sports governing bodies, was previously at Deloitte Consulting and is currently at Hanover Communications.