Premier League - English clubs £3bn in red

Eurosport - Wed, 08 Oct 08:50:00 2008

English football has amassed debts of around £3 billion at all levels of the game and a top club could fold in the current financial climate, according to FA chairman Lord Triesman.

2008-2009 Liverpool Benitez is the business - 0

Triesman told a conference of football business leaders that the figure was based on information supplied by sources in the City of London and was the most reliable and up-to-date estimate available.

"The best estimate I could get in the City yesterday was that debts in English football as a whole have probably edged to the 3,000 million pounds mark," he said in the opening keynote speech at the two-day conference at Chelsea's Stamford Bridge ground.

"There is one thing certain about debt and that is that it has to be repaid, alternatively it has to be refinanced.

"The debt mountain as we now know is owned around the world and therefore part of the value of the club is owned around the world, either by financial institutions some of which are in terrible health, sometimes by very wealthy owners who are not bound to stay in the club and sometimes by not very wealthy owners who are also not bound to stay with their club.

"As we all know today and far too painfully, financial institutions become ever more risk averse."

Triesman said nearly a third of the overall debt - £950m - was owed by England's top four clubs - Manchester United, Liverpool, Chelsea and Arsenal - and that on average the wage bills were climbing by 12 percent a year.

The FA itself had accrued 400 million pounds of debt following the construction of the new Wembley Stadium which opened last year - a figure included in his overall estimate.

Asked whether he could guarantee that a top English club would not succumb to debt and fold during the global financial crisis, Triesman told a news conference: "I don't know - it could.

"If somebody had said to me a month ago did I have a genuine fear that Lehman Brothers would go bust I'd say no I didn't.

"What I know is we are in very much more volatile position in which debt is not only a problem in terms of its volume, it's a problem because those who own the debt are themselves now often in serious problems. Your fate isn't in your own hands."

In a later address to delegates, Richard Scudamore, the chief executive of the Premier League, said he did not think a leading club would fold.

"This is top of the clubs' agendas and in my view they are managing it responsibly. Is there a financial danger to any club? There is always a financial danger and there has been since clubs first came into existence over 100 years ago, but the 92 professional clubs in England today are very similar to the 92 clubs of yesteryear.

"They are brands that persevere and survive. I don't agree that debt is bad, it is inevitable and to a degree it is healthy as long as it is linked responsibly to your income."

Triesman would not be drawn on the reported troubles of West Ham United, whose owner is Icelandic banker Bjorgolfur Gudmundsson. His family are major shareholders in the bank Landsbanki which was put into receivership on Tuesday.

Triesman also said the ownership of clubs was no longer as transparent as it should be with owners moving the debt on through the financial markets.

"The owners break the debt up as a matter of policy into small packages. They mix it with other debts, some of it fine some of it toxic, and sell it on," Triesman told the conference.

"I believe this poses us with a tangible danger, not only is debt at high risk levels, but also in a period where transparency lies in an unmarked grave.

"There is no point in thinking that this affects everybody in the world except football.

"Indeed, further down the pyramid of football more and more clubs are in trouble and a number of owners leave abruptly and either seek repayment of debt owing to them as directors or they can consider selling the ground."

Triesman, a former foreign office minister, said the test for determining who could own an English soccer club, known as the "Fit and Proper Persons' Test", should be more rigorous.

"We can't have a test where someone like Robert Mugabe can own a club because he has not been convicted of anything and someone like Nelson Mandela couldn't," he said.

Reuters

Comment 23 - 42 of 82

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  1. Comment 35 - I have never heard so much bulls***t in my entire life. If Febregas was such an establish brilliance then why did Barcelona release him on a free-transfer!! Sure, the potential was there, but that's what makes a good manager - being able to spot that potential. Wenger's been finding young talent and moulding them into superstars his entire Arsenal career as far back as Anelka - an un-heard of young french striker who cost £500,000!! Think before you post anything else cos you're just making a fool of yourself!

    From goonerstuff, on Tue 7 Oct 7:38PM

  2. prichardsonuk

    The last 4 weeks should tell you that "market capitalisation" is not something you should put your life savings on the line for; or reckless statements in.

    From Poison pill, on Tue 7 Oct 7:35PM

  3. Oh and BTW, Chelsea are only as good as Abromovich's willingness to play a very expensive Championship manager. Frankly, I would just get an Xbox if that was my thing.

    Arsenal are only profitable as long as Arsene Wenger enjoys being there.

    From Poison pill, on Tue 7 Oct 7:30PM

  4. Anyone who has studied accounting would know that the revenues and profits being generated were nowhere near required considering what was being invested in players, wages, purchase price, stadia, etc

    Hence, buying a football club as a financial investment has not been a good idea.

    In a way, this is good for the game because clubs are going to come back down to earth and we could see a reshuffling in the league a return of real love for the game by the players and the fans alike.

    From Poison pill, on Tue 7 Oct 7:23PM

  5. Due to Jack Walkers clever thinking he invested in keeping blackburn debt free, just meens no money for big buys

    From threemanriot@..., on Tue 7 Oct 7:10PM

  6. Comment 35 - try looking up the phrase 'market capitalisation'. You'll realise that although United are in debt to the tune of hundreds of millions, the club is worth approximately twice that. If the Glazers were stumped for repaying the loans, they'd simply sell up and make a tidy prorfit on their original investment.

    From Paul, on Tue 7 Oct 7:09PM

  7. Sorry for those who misunderstood, by 'own youth system' i mean taking English youngsters and bringing them up, not taking established brilliance like Fabregas and claiming to have developed him, all the hard work was done by Barca. Like seriously, Arsenal have 2 English players in their first team, 2!! You obviously won't see Wilkshire unless it's the Carling Cup and had it not been for Walcott's exploits against Croatia, he'd still be warming the bench to Eboue. It's still the English Premier League for a reason remember.
    But this whole debt thing aint about Arsenal, the bigger problem at the moment lies with the rest of the 'big 4', and I guess you could say in the bigger scheme of things, the FA's policy on debt. It's sad to see how dichotomous the league has become; you have the 'big 4', and then the rest - some spending to stay in top flight and others trying to reach that unattainable goal.
    But anyway, praise should go to Wenger for investing in youth, but maybe he should trying some of England's youth? That's all I meant. Like look at comment 21, besides Giggs, you had some of the best English players produced in the last decade or so.

    From Andrew, on Tue 7 Oct 7:06PM

  8. HA HA brilliant news as i've been saying for ages Manure are fooked, they are paying 60m A YEAR INTEREST alone, when fregie goes in two or three years manure fans will be crying there eyes out only the red faced alcholic fregie can keep that club alive, and he WILL be gone in three years time. Manure dont even have a decent youth system anymore, who have they produced in the last 8-10 years?? Nobody's, that's why they pay 30m for rio, 30m for rooney, 30m for berbatov, 25m for Ronaldo. Admit it manure fans your future looks very bleak. And before you start crying about the debt being set off against your shirt and tickets sales saying its alright, @#$% 60m a year interest is enough to cripple anyone (apart from chel$ki). You have to win everything for next 10 years. Not even the narrowest minded of fans can say that'll happen.

    From ronaldiniwho, on Tue 7 Oct 6:59PM

  9. stevie b.. thanks for helping to put 5 million a season into our clubs coffers, thank again.

    From sean.nufc, on Tue 7 Oct 6:54PM

  10. This is directed to Rob L (Post #13). You are a fool mate. First of all answer this: Why would Man Utd merge with Man City? They both have rich owners who could actually afford to buy their respective clubs outright if they wished. As you sound a bit dim I'll explain it to you in simple terms. When they say they are in 'debt' it doesn't mean they don't have the money. It means they want to borrow the money from the bank and pay for the club over a longer period of time, thus gaining different tax benefits along the way. It's like mortgaging your house, you wouldn't buy your house if you had the money would you? You pay off a piece of it and then borrow from the bank and the rest of the loan amount is tax deductable.

    Teams merging? Grow up.

    From sean.nufc, on Tue 7 Oct 6:50PM

  11. aye sam i am...... maybe if we get a manager good enough to spend some on decent players we can join the club

    From sean.nufc, on Tue 7 Oct 6:49PM

  12. in my eyes football is football leave the buisness to buisness people and enjoy the football that happens on the pitch its still all good.

    From Jamie, on Tue 7 Oct 6:47PM

  13. Newcastle Utd - sponsored by Northern Rock (a.k.a. Joe Public)... Just another wee mention for ya!!

    From Singin' Ginger!!, on Tue 7 Oct 6:45PM

  14. SIMONDOYLE - all the names you've given are all "old" men at the club now!! Maybe Gary Glitter can put them in touch with some YOUTHS then!!

    From Singin' Ginger!!, on Tue 7 Oct 6:37PM

  15. HULL CITY DEBT-FREE - maybe they have got in touch with one of these companies on tv that specialise in debt-consolidation and IVA's!!

    From Singin' Ginger!!, on Tue 7 Oct 6:35PM

  16. juvenovic your an idiot to say arsenal havent a youth policy

    From Steve, on Tue 7 Oct 6:33PM

  17. this is just @#$%

    From footballmadman97, on Tue 7 Oct 6:30PM

  18. i lol @ newcastle not even good enough to get in debt (happy now sean.nufc?)

    From MUFCareligion, on Tue 7 Oct 6:29PM

  19. And as for each of the 'Big-4' being worth a billion each, quatt47.
    What planet do you live on?

    From cameron w, on Tue 7 Oct 6:26PM

  20. Juvenovic - You obviously know nothing about the investment Arsenal have made in it's youth system. If you bothered to notice, you would know that Arsenal have one of the best youth set up's in the country. Plenty have played at International level. Plenty more who have come through the ranks play in the Premiership at present. My only hope is that AW has got it right, when he says he has not spent vast amounts of money recently because there is so much talent coming through the reserves and youth teams.
    BTW - We also now make £30m per annum in gate receipts since The Emirates opened. Capacity crowds at every game! Not many EPL clubs can boast those figures.

    From John, on Tue 7 Oct 6:25PM
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