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

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  1. Everybody knows the debt that the so-called­ 'Big-4' have amassed and to be honest, it is­ scandalous. It stinks when clubs such as Luton Town are­ punished severly for their financial inadequacies, yet­ the likes of manchester united, Arsenal & Liverpool­ get away with murder (i do not count chelsea amongst­ these clubs because the Russian can clear their debt in­ one fell swoop if pushed). And what is even more­ baffling is the fact that, although the debt is public­ knowledge, they are STILL CONTINUING to accrue MORE­ debt! I honestly do believe that a big-name club will­ hit the skids soon and i have a strong feeling that­ club will be manchester united, once the Glazers'­ creditors come-a-calling.

    From cameron w, on Tue 7 Oct 6:24PM

  2. Stevie B - United not invested in Youth?

    Wes Brown,­ Neville x2, Giggs, Beckham, Scholes, Butt
    Looking back­ further: What about Sharpe?

    Seems to me that United­ have invested quite a lot in youth talent. Not to­ mention intelligent thefts from other clubs, such as­ Rooney.

    From simondoyle87, on Tue 7 Oct 6:23PM

  3. for once a story where newcastle united does not get a­ mention..

    From sean.nufc, on Tue 7 Oct 6:23PM

  4. Hull City debt free ? I very much doubt that remark. It­ would appear you think your club can walk on water­ because they have had a good start. Yes, 3 rd in the­ Premiership, sadly there will be only one way they will­ go. Lesson, You ain't won nothing yet, don't­ gloat.

    From B4ts, on Tue 7 Oct 6:06PM

  5. "Stevie G" what you said is really quite­ amazing. Try and justify Man Utd's purchase for a­ 30.75 million 'cover player'; or Chelsea's­ need to have Lampard, Ballack, Essien, Deco, Mikel,­ Cole and Malouda all in the same midfield - it does not­ make sense does it?
    Over the last couple years, Man­ Utd, Chelsea and Liverpool have all spent more than 120­ million pounds on players. Then there's Tottenham­ who spent 80 million this season and they're dead­ last. You don't see Palermo or Atletic Bilbao­ making those kinds of purchases, and they also came­ 11th last season.
    I think it's time English clubs­ start reaping the consequences of senseless spending,­ reliance on foreign players, and no investment in THEIR­ OWN youth system (yes that last one was especially­ directed at Arsenal). I mean, it will have to catch up­ on them one day, won't it?

    From Andrew, on Tue 7 Oct 6:02PM

  6. Blame Chelsea - They started it!

    From miniroll32, on Tue 7 Oct 6:02PM

  7. if the owners are rich enough to handle the debt then­ there is no problem. Chelsea are in hundreds of­ millions pounds worth of debt but it does not matter as­ the owner is worth 11 billion pound he's not going­ to watch it all fizzle away. The same goes for man u­ they were not in debt but in profit until the glazers­ borrowed money to buy the club. 800 million debt does­ not matter when the glazer family are worth around 6 -7­ billion cash not paper or assets. Also if the revenue­ anually of the clubs concerned is massive then the­ owners if pushed would wipe the debt away. They are not­ all top bussiness men in there own right for nothing.­ Its the small clubs that will sadly suffer poor owners­ and small revenue will spell trouble.

    From stspeed, on Tue 7 Oct 5:55PM

  8. Read the report properly. It says that the top 4 clubs­ owe £950m between them. That's around £200 - 250m­ each. Since each club is worth around £1b then it's­ hardly a catastrophe is it? The fact is that most large­ businesses use overdrafts as working capital, nothing­ unusual there. It's just that fans don't see­ the clubs as businesses, although that is what they­ are, and, as such, need to trade to make profits. Out­ of the 4 Chelsea are probably worst off as they rely on­ loans from Roman Abramovitch, which makes them­ insolvent. Under the Companies Act 1985 they could be­ declared insolvent if Companies House decided that they­ are breaking the terms of their Memorandum and Articles­ of Association by trading in an insolvent situation for­ three years or more. If that happened Abramovitch would­ have to GIVE Chelsea money rather than loan it.

    From quatt47, on Tue 7 Oct 5:42PM
  9. Comment hidden due to its low rating. Show

    hull city debt free and 3rd in prem

    From steve, on Tue 7 Oct 5:42PM
  10. Comment hidden due to its low rating. Show

    The English teams have been saddled with the debts of­ their owners.

    Realistically, many clubs will face­ folding or merging.
    I expect Liverpool will fold within­ 3-4 years or merge with Everton - Liverton? Arsenal and­ Spurs will probably merge as well Arsespurs. Man U will­ merge with Man City to become Manchester City.­

    It's all doom and gloom...English clubs­ weren't protected from the cash pirates...

    From Winston Bunn, on Tue 7 Oct 5:34PM

  11. POINT 10: The idea is to buy players on the cheap, then­ try to sell at a PROFIT!!

    From Singin' Ginger!!, on Tue 7 Oct 5:34PM

  12. long live ARSENAL WENGER!

    From shizzelez, on Tue 7 Oct 5:20PM

  13. At everyone saying get Man U Chelsea Arsenal ect out of­ the PL and its there fault - you all talk @#$%.

    I am a­ Sheff Wed fan, and we have nearly £30million debt.­

    Answer me this -if you don't want clubs to get­ into debt - Why do you keep going on about 'oh we­ need more players', HOW ARE YOU MEANT TO BUY­ PLAYERS WHEN YOU ARE BROKE WITHOUT BORROWING MONEY!­ OUTSIDE THE PREM CLUBS DONT ALWAYS MAKE ENOUGH MONEY TO­ BUY PLAYERS! We own our own stadium and we don't,­ so how the hell are clubs that have to pay rent on it­ ment to cope?

    We are skint, and have to loan players­ out to get them in on loan, because we can't pay­ the wages. Are we complaining? We have got into debt­ and we are trying to get out of it. Nobody is screaming­ we should be out of the championship!

    Money is a vital­ part of football, were @#$% for defenders atm cuz of­ injury, what are we meant to do? Put strikers in­ defense? No, we have to get money to cover. The big 4­ buy players because they want to win, then they buy­ cover for players. The more you spend, the more money­ you can win.

    Before you make stupid comments, learn a­ little about football.

    From Stevie G, on Tue 7 Oct 5:19PM

  14. the commodity-based, global communities of major­ football clubs will be disillusioned as they seek­ comfort in their 2008/2009 shirt with deco and samsung­ branded on front and back, regardless, they will find­ methods to recruit support, or rather, revenue. there­ is a definate relationship between the greed for­ silverware and the greed for profit. chris l - trophies­ are the illusion of the balance sheets.

    From kingharvest_jme, on Tue 7 Oct 5:16PM

  15. English clubs deserve to go bust they have squanderd­ hundreds of millions to try and win the champions­ league/ survive in the premiership. They have inflated­ players prices and wages by a ridiculous percentage. ­ It might be great to watch but its ruining football in­ the rest of europe

    From seumasfraser, on Tue 7 Oct 5:06PM

  16. MAN U AND CHELSEA HAVE TOGETHER A £1BILLION DEBT...GET­ THEM OUT OF THE PL,THEN IT WILL BE OK!!

    From thejackoss, on Tue 7 Oct 5:00PM

  17. i pray for west ham at the mo!
    put into a crisis of­ nobody's fault apart from the worldwide fiancial­ meltdown
    even me as a geordie would hate to see the tru­ london club fold - tho i doubt it wold be aloud to­ happen
    chin up hammers (as i said not 1 persons fault­ unlike our club)!!!

    From CARL, on Tue 7 Oct 4:54PM

  18. CHRIS L: you've just admitted what I was trying to­ say... You've BOUGHT SUCCESS, not nurtured it­ through a halfways-decent youth policy. Even Gary­ Glitter invests more money in youth development than­ the mighty Man U!!...

    From Singin' Ginger!!, on Tue 7 Oct 4:53PM
  19. Comment hidden due to its low rating. Show

    YEAH BUT MAN U 950 MILLION DEBT WON THEM THE PREMIER­ LEAGUE AND CHAMPIONS LEAGUE. PEOPLE REMEMBER­ TROPHIES..........NOT BALANCE SHEETS. POOR OLD BIN­ DIPPERS....

    From CHRIS L, on Tue 7 Oct 4:47PM

  20. WEST HAM cud be the first club to cry out­ ..........HELP!!!

    From Richie, on Tue 7 Oct 4:45PM
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