Friday, 12 June 2009

Premier League Clubs Deep in Debt

author: David Conn
source: The Guardian

date: 2 June 2009

England's 20 Premier League clubs owe a total of £3.1bn in bank overdrafts, loans and other borrowings, according to the latest published financial information. The accounts for the clubs, mostly documenting the year to May, June or July 2008, show that the FA chairman, Lord Triesman, significantly underestimated football's indebtedness when he cautioned last October that debts in the sport as a whole, including the Football League and the FA itself, were at £3bn.

Manchester United and Chelsea were by far the most indebted, owing £699m and £701m respectively, Arsenal were third, with £416m debts and Liverpool, the other top four club, were understood to owe around £280m; their accounts, due to be filed at Companies House last week, are overdue*.

The debts of those top four clubs, incurred in very different ways, demonstrate the extremes to which Premier League clubs' finances have been taken. United, Premier and European Champions League winners in that 2007-08 season, nevertheless made a loss of £44.8m because of the swingeing interest the club pays on its debts. United owed £699m to financial institutions because the Florida-based Glazer family, who bought the club in 2005 largely with borrowed money, then loaded their own debts on to the club. In just three years to 2008, £263m has become payable by United in interest alone**.

Liverpool's debt is similar, owed by the club's holding company, and including the £185m borrowed by the north American businessmen, Tom Hicks and George Gillett, when they acquired the club in 2007.

At Chelsea, by contrast, no money is owed to banks; the entire £701m was an interest-free loan made by the club's owner, Roman Abramovich, since he bought Chelsea in 2003. The Russian oligarch has poured money in to pay for players whose wages the club would otherwise not be able to afford, in his hunger to claim football trophies. Since the accounts were published, Chelsea, partly as a response to Triesman's warning about high debt levels, announced that Abramovich had reduced his loan to £339.8m, converting the rest to shares in the club.

Arsenal is the only Premier League club that incurred significant debt to carry out long-term investment. The club borrowed £260m originally to build the new Emirates Stadium, and a further £133m to convert the old Highbury ground into flats.

The 20 clubs' accounts*** show that despite booming incomes, which include the first season of a record £2.7bn TV deal which runs from 2007-10, Premier League clubs increasingly rely on subsidies from billionaires who now mostly own the clubs. Manchester United's takeover may have resulted in huge sums going out of the club in interest payments, but 15 of the 20 clubs in last season's top flight are now subsidised by owners. The smaller Premier League clubs are struggling to compete financially, and as they are desperate to avoid relegation out of football's golden circle, they have been urgently seeking backers of their own. In the last week, two more clubs, Sunderland and Portsmouth have announced takeovers.

The Premier League defends the financial picture presented, arguing that the levels of debt are generally manageable, given rising turnovers and the improved TV deal. Wages, for players and administrative staff, rose to £1.095bn, but at an average 55% of turnover that is generally reckoned to be sustainable.

The top clubs' directors have also seen their salaries rise way above those for directors of non-football companies with similar turnover. Ten directors in football were paid over £1m in 2007-08. Keith Edelman Arsenal's former managing director, was paid the most: £2,726,000 in total, including a £1,056,000 payoff when he left the club on 1 May 2008.

Gordon Taylor, chief executive of the Professional Footballers' Association, maintained his status as Britain's highest paid trade union official, with a salary package of £972,087.

* Some reports have been published since this article appeared about Liverpool’s finances. Read more here.

** Read more about Mancehster United's debt here.
*** More details with figures included of the returns filed by all 20 clubs

read the full and original article here

Read more:
Rome final will boost European economy
Financial impact of Champions League qualification
A profit of 16 million euro halfway the season
Proposal to limit spending on transfers and salaries


Aussie Barca Fan said...

Surprise Surprise

Anonymous said...

It's not confined to the premier, we are £386m in debt and Madrid even more. And that was BEFORE they signed Kaka and Ronaldo.

TengkuAmir10 said...

madrid was more than 500million € in debt now they r like 700million € possibly..

Rivaldo said...

Actually Anonymous, i think it was last year around October/November that on Barca's official website that we were about to finally cancel our debt. Someone can correct me but if you go back to the OFFICIAL website i think you might find it there.

Laporta and his team has done a better job than we think. We here arguing about who we should sign and Real Madrid doing this and that like if we're losers. Everyonge is trying to follow our model. i remember someone saying that our football is the type that would probably be played in 2025 or something like that. And our economic and youth models are coveted world wide.

Guys just grow up a bit. Have faith in our Business and Sporting Models. As Ramzi said wehave our MISSION STATEMENT and this defines who we are.Part of this is the motto MES UN CLUB. Be Proud Man. Not Act like you've only yesterday been a Barcelona fan (for those who haven't) We've been scared before.

Do you guys Realize how many titles we've who with Laporta, more than the Galacticos. Let Real Madrid choke on that. And I think if we're looking to a team to compete with for building a squad Real Mardrid isn't that team. There's Chelsea(believe it or ot very strong team) and there is Man United( very Balanced and deep squad).

I Love This squad man. The world must be laughing at our fans(if i can call some of you that) Are we ever being our team. I wondering if it was us in the Nou camp at some of these crucial times would we have ever won anything. Imagine when you were small your parents turn their back on you...likr because you couldnt wlak and talk or just in general (sorry to thise of you to who this're really woth more than that) Life would be hard., you might ever see the best from yourself because of this.

STAND UP AND BACK YOUR TEAM WITH PRIDE and let's please look at this transfer market being prudent and being respectful to our Barca honour.


Rivaldo said...

*are we ever behind our team*

rahul said...

well said @ rivaldo. i dont think most of them who come here r really barca fans for a long time just glory hunters coz teh comment like they r supporting teh worst club n r doing a favour by commenting here. seriously back ur team we r teh best in w/e we do. no one plays football like on n off teh pitch. so respect that instead of cribbing like a lil girl. he shud go he shud come in. how many have managed a team in life? what teh hell gives u ppl a write to impose ur decision here. suggesting is different bt turning ur back n bitching just coz barca wont sign a player n real r doing all teh signings is pure being a backstabber.
let pep n barca do their n they r teh best in wt they do. how many teams have 7 youth academy players n out class a team like manu in CL. or how many clubs can produce talents like xavi, iniesta, messi. so just shut ur mouth n support barca instead of pelting stones. etoo shud go, buy ibra, buy villa give it a break. does anyone remember last year fans were booing etoo after all that he has done for teh club. still he expresses desire to stay n wins everything for us. be grateful for that. teh way i see it way dont need ribery for 40m euros we just won teh treble n this squad shud stay wit few new signings. ya if etoo n valdes n other players dont sign extensions or demand too much yes then replacements r needed but not just for teh fun of it.

Surendra Chaplot said...

i agree with you rivaldo and rahul.....its the unique footballing philosophy that barca has had....which is wht makes it special..... back the kids ..... to hell with money ..... the ultimate aim is to play football .... the barca way ... and u cant buy tht with any kind of money ... and somewhere i feel these clubs with huge debts are one of the reasons of bankruptcy of so many investment banks ..... so many job losses.... recession and wht not....proud tht barca isnt one of them....

Iason said...

I agree with you Rivaldo but still, that's like the third time in 24 hours that you told people to grow and stop complaining. You over react to peoples comments. They are just opinions.

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