- 50 players now coming Arsenal’s way and 12 leaving. Arsenal nearly half way there.
- What happens when a club starts to go wrong? A work in progress.
By Tony Attwood
“Debt is something that plagues almost every football club. Indeed only four clubs in Europe are free of it: Paris Saint Germain, Manchester City, Leicester City, and Chelsea.”
That is a phrase that might interest you if you have been following my ramblings this summer about football, its future, and its catastrophic financial situation. And I must admit that it isn’t a contemporary comment: it came from All football in 2022
And yet here we are, three years on, contemplating Leicester City teetering on the very edge. What has gone wrong? Or better put, “What is going wrong?”
Of course, there are all sorts of explanations – a club might falsify its accounts (and to be clear I have no inside data on such matters), its main sponsor who has been pouring money into the club has itself run into difficulty (Sheffield Wednesday may be an example), or the club simply makes a who series of bad purchases and has a run of poor managers.
Plus there is an underlying problem: the majority of managerial changes fail to make things better – indeed mostly they make things worse. Yet clubs go on changing managers just to show fans that something is being done, and probably because no one has any idea what else to do.
Arsenal have in fact avoided much of this because they did not react to setbacks with panic. They didn’t sack Arteta when the club came 8th two seasons running and then came fifth in Arteta’s third season. He’s also turned out to be rather good in the transfer market – which is what gives me hope that he will not be swayed by the hysteria of the media and bloggers over buying a centre forward.
But to come back to figures, the net debt of of the 20 Premier League clubs is reckoned by to be over three and a half billion pounds according to Statista. As for the two clubs with the biggest debt, they are of course, Tottenham Hotspur and Manchester United. Commentaries on Tottenham however say that this figure is not particularly troubling for them as the interest rate is low and it is payable over a very long time. Even so, there it is. Interest on their stadium debt was £29.7m last season. Enough to buy a player or two.
And we should also notice that whenever the media get round to reporting football’s combined debt figure each summer, it goes up alongside the phrase “This figure represents a significant increase compared to the previous year.” And the reason for that is the debt in terms of future payments on transfers rises all the time. It is currently about £3 billion.
This brings problems if a family business owning the club goes into decline (Leicester City or Sheffield Wednesday for example). Or profits might be reasonable, but the cash runs out. Or debtors want their money now and again the cash runs out. Or what was thought to be an eternally profitable business such as running duty-free shops, isn’t as eternal as was thought. It can be anything.
Whatever it is, in Turkey there is an interesting development in which all four big clubs have fallen onto what we might call hard times – all at once. Beşiktaş, Fenerbahçe, Galatasaray, and Trabzonspor. Together they are said (by TransferMarkt) to have a combined debt of around one and a half billion euros. Now when you have four big clubs in one league with that level of debt, you have a problem. And even if it is not being seen today, it will cause disasters tomorrow.
Indeed in just the last week we have seen statements that show that The combined net debt of Premier League clubs surpassed £3.5bn and is increasing at a rate of around 12% a year. But such as in the income gained from being in the Premier League, Championship clubs are still risking everything to get into that League, and the Championship clubs have a combined net debt of over £1.5bn.
This is not a question of being too big to fail, but rather too indebted to recover. Clubs are put up for sale, but no one is willing to take on that much debt just to own a club – unless…. yes there is talk of Americans buying clubs like Sheffield Wed, and clearing the debt, and the supporters will be pleased. But will they then demand more transfers to take the club back up the league to “its rightful place”?
And I have mentioned previously the utter insanity of the ManU position where they are seriously thinking of paying players just to go away.
Now the thought is often – we won’t let this happen again, but many clubs do, and it happens by bringing in a manager who is given the right to spend money, only to find that his purchases don’t do the business. So he is sacked, a new man comes in, the players are deemed not good enough, and they are sold at a fraction of the price they were bought for and the debt builds once more. And that’s before we come to the cases of players such as Marcus Rashford being “frozen out” of the squad. And for ManU that scenario is happening on several fronts at once.
Such a situation brings further difficulties, because nothing in football is secret: players talk and the media spread rumours. When clubs are thought to be in difficulty, the offers made to them for their players decline significantly, effectively making their troubles worse.
And let us not forget that at the top of the bonkers-money pyramid is Barcelona who, as we have reported before, has sold its future TV rights, taken the money and spent it on players now – leaving them short in the future.
