One of the most storied clubs of English soccer is a club that you probably have never heard of. If you are even vaguely familiar with soccer you would probably recognize the names of Manchester United, Chelsea, or Liverpool. They’ve been dominant forces for a number of years.
In 1992, the top English soccer league was formed (The Premier League), and throughout the 90’s the club, Leeds United, was among the best in the league. So why have you never heard of them? Good question.
In the early 2000’s, Leeds spent money to acquire some of the best players in the world. This paid off as they reached the semi-finals of the Champions league tournament in 2001. However, they failed to qualify for the following years tournament and were beset by debt payments that were planned to be covered by future Champions league tournament revenues.
This resulted in Leeds having to sell its best and highly paid players and after penalties for financial mismanagement, Leeds found themselves 2 divisions lower than the Premier League – a severe embarrassment for such a well respected club.
This has coined the phrase “Doing a Leeds” which is synonymous with the consequences for the financial mismanagement of any soccer club.
While we may never personally bring a European soccer club to its knees, without proper foresight and planning, we can end up “Doing a Leeds” with our own personal finances. This story of Leeds United reminded me of a few important financial principles that can never be over-repeated.
- Build in margin
- Avoid consumer debt
- Give your money a job
- Favor long-term over short-term
- Determine how much is enough
- Give generously with your excess
It may seem that these are simple and contrite. Yes, exactly! If “Doing a Leeds” can happen to a top-tier European club with millions of dollars of resources, what’s stopping it from happening to you and me? It’s the abandonment of the simple that leads to the complex, which then leads to reaching which then leads to the walls falling in.
We must recognize the desire behind the desire. Sure, we all want to make our money grow and last. That’s the level 1 desire. But what we really want is for us to be recognized as having achieved something, gained recognition or reached a certain level of success. That’s the desire behind the desire.
When other people are winning and seeing success, we want that for ourselves, too. The really difficult thing about our day and age is that we rub shoulders with people who make 10 or 100 times as much money as we do and we want the same successes that those people are having. We want the same recognition of status, safety, and achievement of those who are really exceptional.