West Ham & Arsenal. Compare. Contrast. Stop laughing.

It seems that West Iceland United might not get a fine over what happened in the match against Millwall, because the footballing authorities fear it will send the club into total collapse.  Instead, the club will just get a telling off.

As one footballing official might have said, “If UEFA can get away with banning Eduardo using retrospective legislation, I am sure we can save West Ham.”

He didn’t say that of course, I just made it up, but since everyone else makes stuff up about football, why can’t I?

Anyway, West Iceland’s problems are not just with the people who turn up and watch.

For West Iceland is not only four stops from Barking (on the District Line), it is also the home of the insane financial model upon which much of the rest of football is based.

The club is owned by a subsidiary of one of the banks in Iceland that failed, so is in fact insolvent, and up for sale.  The only thing that keeps it going is the fact that the creditors think that they can get more money for the club in the future than they can now.


the club continues to hemorrhage money like there is no tomorrow, probably because in West Iceland’s case there is no tomorrow.

In this world there  are levels of insanity, and then there is football finance.  West Iceland Utd are bust, bankrupt, insolvent, kappuit.  So what did they do last year?  They managed to lose another £37m (according to figures just published in the Guardian).

To cover this, they then, in January last year, got another £17m loan from the banks!!!!!!!!!

Which raises the question, which is the more insane?  The banks (most of which you and I own) which hand out £350m to Liverpool Insolvency and yet another £17m to Totally Barking Mad Inc, or the clubs themselves?

It is all getting so bad that the accounts for the year up to May this year have not been filed, and we are all waiting to see whether the auditors will sign to say that this is a going concern. If they don’t it is another nail in the heart.

Now the reason for that is that when clubs are in this sort of debt (as indeed when any company is) the banks make the company agree to things.  In the Liverpool Insolvency case the club has agreed to repay something like £65m a year of its debt to the banks.  Which is why that awfully nice Mr Ben E Tez can’t spend the £30m he usually manages each season – on top of the stuff he gets for people he signed who actually don’t know one end of a football from another.  Break the rules and the banks can ask for all their money back now.

Actually a football has no end, but you know what I mean, and even  if you don’t I am going to carry on writing.

Now WHAM as sky used to call them at the top of the screen, have been very naughty and broken the rules and spent more than agreed on wages.

Annoyingly the banks (our banks) didn’t wind the company up.

Of course West Iceland and Barking Incorporated have special problems.  Like the fact that when their Icelandic owner took over he spent around £20m on players (remember he bought Freddie whom we love because he has got red hair) even though at the time even I, with no real insight into the world of money, was telling anyone who would listen, “don’t put your money in an Icelandic bank”.  The bank then failed, although Freddie was not responsible for that.

The club’s disgraceful and devious tactics over Tevez meant they had to keep paying people money to get them off their backs (£21m to Sheff Untidy)

So debt upon debt, and the end is now almost upon us.

But in conclusion spare a moment to compare and contrast the situation among the Barking Mad, with that at the Ems.  Our debts are bigger… but we are paying them back each year as part of the mortgage at a very modest rate of interest.   Compare and contrast the squad, the style of play, the results, the stadium…

One of the in-debt clubs in the EPL is going to fail very soon, and when it does that will be the hump that broke the camel’s back.  No, erm, the eye of the needle in the storm.  No, the Dutch boy with a finger in the dyke.  No, sorry, my metaphors are all mixed, but believe me it won’t be good.

(c) Tony Attwood 2009.

32 Replies to “West Ham & Arsenal. Compare. Contrast. Stop laughing.”

  1. And there are gooner fans (and a couple of shareholders) who’d like us to be spending 50 million because they don’t believe that Denilson/Song/whoever aren’t good enough?

  2. It is fun to watch them all self-destruct financially. I just hope we can finish them off on the pitch more often. Life would be so easy by then, our standard might drop.

  3. I fear for Liverpool though. There in a very bad place financially. As much as I enjoy them not winning anything, it will be sad to see them fold. For now, banks are holding on to the fact that the brand name is a viable asset and they can sell to some rich freak from the middle east.

    West Iceland on the other hand is a self inflicted basket case, but you can’t blame the creditors for holding on to it and hoping some rich so and so looking for a fashion accessory will buy it.

  4. To the few Arsenal plastic, glory-hunter, trophy-craving fans out there, please read this before you start all your nonsense about lack of spending and new signings. Shut up , get behind the team or go do whatever else makes you happy. We dont want ot end up like W’Ham.

    Thank you Tony for another great piece.

  5. sorry tony but i fail to see the point in todays blog. I come here for your engaging view on Arsenal and English football in general. We only recently lost, unnecessarily and painfully, to manure. Then there is the Eduardo thing. Surely we cannot be talking about west ham now. Its like you westminster talking about kenyan athletes on July 7th. And please dont tell me to bugger off and write my own blog.

  6. Hi Gerald – I think you said it in your comment ‘I come here for your engaging view on Arsenal and English football in general’.

    Tony is talking about English football and its sad lack of financial commonsense. He really doesnt have to mention Arsenal and its sustainable take on club finances as he has already said that several times in previous pieces, and we all know that he is contrasting the other clubs finances to the Arsenal model.

    If you did not find it engaging – oh well – to each his own. Must say I find it interesting and something a lot of the rest of the Arsenal blogs dont spend much time discussing, except to say our squad cost more than your squad!
    all the best Dave

  7. The most frightening thing about what you say is that the authorities would allow a repeat of the West Ham or Liverpool situation to happen again tomorrow. What’s the saying “those who ignore histories mistakes are doomed to repeat them” (or something like that). All Arsenal fans should be aware of this whenever Dein or Usmanov claim we need a financial backer.

  8. Well the thing is Gerald that, as we know for a long time already, that in fact Tony’s blog is a tribute to the good financial system we use at The Arsenal.
    I always think its nice when Tony opens up the small view fans mostly have, no criticism but just a fact, and compares our team with other teams.
    But I think it is really good that you voice your dissapointment if you are dissapointed by his today blog. It would be very bad if everyone only maid a comment in the style: Good article Tony.
    I think it is just the difference in opinion and views that make a blog better than others.
    Well, I will stop by saying: Good article Tony, once again.
    Cant wait till the footballworld is coming back to their sences.

  9. It’s on Sky news that FIFA has banned Chelsea from signing any new players until January 2011. Anyone know anymore?

  10. Apparently they have been found guilty of inducing Gael Kakuta to break his contract with Lens. Sort of fits in with what you were saying the other day Tony. What are the oddds its dropped on appeal although it’s hardley the first time Chelsea have been caught tapping up players etc.

    Good job they have such a good youth system!

  11. Gerald – I was about to outline my reasons for today’s article – but readers have graciously done that for me. I would simply add that Untold publishes one or two articles a day, 7 days a week, most of the time, so if one doesn’t mean anything, maybe the next one will.

    And I don’t think I’ve ever told anyone to bugger off – the two negatives I have produced to readers are

    a) If you copy someone else’s comments you will be banned from here
    b) This is not an unbiased site. It says at the top, it supports Wenger, and that’s what we do. We don’t do middle of the road.

    Since neither apply to you, I certainly would not tell you where to go. Rather I would hope that you find another article of interest – and indeed would invite you to join the little band of people who have written articles for this blog. I don’t publish each one that I am offered, but I do read all suggestions and do put up quite a few.


  12. Walter – With the age of their squad it could cause major problems. It might also encourage Chelsea players to refuse to sign new contracts if they believe that Chelsea are going to slip down the league.

  13. Marc, I read Chelsea’s ban on bbc. One should praise Lens for taking the case to FIFA.

    Walter, I’m not sure if Chelsea’s downfall has started. It all depends on Roman. If Chelsea doesn’t win the Champions League this season, will Roman stay knowing that He cant buy until Jan’11? If he does, then that would be BIG trouble for Chelsea knowing they owe him 700-odd millions. Intersting times ahead for Chelsea…

  14. Big news about chelsea… If only they had the foresight to develop a youth setup like ours…

  15. In the light of this new development, Isn’t this a chance for Chelsea to use the money that they would have used for transfers (assuming they were not going to borrow yet more from Mr KGB) to balance a bit of their books?

  16. A comment under The Guardian article “Man Utd haven’t spent the Ronaldo money on players, so where has it gone?” The final paragraph looks at the repayment schedule for the expensive debt. If quantitative easing produces massive inflation, they might get away with it. Otherwise……….

    03 Sep 09, 2:27pm (17 minutes ago)
    Once a City fan…

    There was an interesting article – well, a disappointing article with a lot of interesting comments – a few months ago. A sample –

    It is true the senior debt is held in the name of Red Football Limited, not held in the name of Manchester United Football Club Limited, however it is secured on the assets of the Football Club, so any action to recover taken against Red Football Limited would ultimately fall at the door of the club.

    The PIK, or interest roll-up debt is held by Red Football Joint Venture Limited, but is secured on the Glazers’ shares in Red Football Limited and Manchester United Football Club, so the shares fall to the lender in the event of default.

    On the subject of rates, the senior debt does attract interest at LIBOR+ however the premiums over LIBOR range from 2.125%pa on the “lowest risk” tranche, £75m to LIBOR + 5.5%pa on the “highest risk” £150m…..

    It should also be noted the current arrangements are the result of a refinance which took place in August 2006, twelve months after Glazer ownership began. It is widely known a further refinance was attempted in the summer of 2007 but this proved unsuccessful.

    Finally, the current arrangements see interest-only payments being made on the senior debt with nothing being paid to the PIK debt which is increasing, as mentioned earlier, by 14.25%pa. In June 2013, the first tranche of debt becomes repayable, £75m. In 2014, 2015 and 2016, further payments of £150m a year will see the senior debt repaid. In August 2017, the PIK debt falls due and if allowed to continue until its redemption date will then equate to just under £600m in capital and interest.

  17. Chelsea Ban… FIFA statement

    On the occasion of its last meeting held on 27 August 2009, the Dispute Resolution Chamber (DRC) was called to pass a decision in a contractual dispute opposing the French club Lens to the French player Gael Kakuta and the English club Chelsea.

    ‘The French club had lodged a claim with FIFA seeking compensation for breach of contract from the player and requesting also sporting sanctions to be imposed on the player and the English club for breach of contract and inducement to breach of contract respectively.

    This is (just from my memory) the third time Chelsea have been done – once we all know about with Cole, and once with their youth development officer.

    Chelsea can appeal – and of course will – and the ban might be reduced – but we will now see just how good or bad their youth policy is (see my previous articles on this).

  18. cape gooner, thanks for the information. So MU has to begin repaying the debts in 2013. Intresting times ahead.
    I always wondered why the Ronaldo money wasn’t spent and MU bougth little unlike to other years.
    I think they are beginning to feel the ground trembling, not for another stolen victory by the aid of a ref, but because the club itself is tumbling down.

  19. What I meant by downfall is that Chelsea almost never can bring up players through their ranks from the youth teams. And now they have what they got and this will have to do untill jan 2011.
    This is a long time taking notice that they have an old squad and they will run out of steam come the end of the season.
    And then what wil the russian do ? Will he throw the towell ? Will he walk out of it ?
    Intresting times ahead.

  20. Even more interesting times for ManU. If they are going to start the repayment by 2013. And from Cape Gooner’s comments, If ManU have to pay 150m each year from 2014-2017, from where will they be able to generate such big amounts? Sell parts of Old Trafford??

    I hope, atleast now, people(Gooners especially) realise why Arsene and the Arsenal Board took all those years back and still following them. It is for future of the club and nobody else.

  21. I think in 5 years time whole the football world in England and over the world will finally see what Wenger en the Board anticipated years ago.
    Thanks to AW our club will not be in danger and we will have the finest stadium in the PL, the best youth system, the best team.
    And the rest will have to live on memorys of times gone by.

  22. I’ve said it before and I’ll say it again with regards to Manure. This is the beginning of the end. Not so much as the complete end of the club but the end of the glory that they are used to. The end will come once SAF has gone and he will hold up his hands any say “it was all ok whilst I was there”. Pity the next chap who takes the reins as this will be one big poisoned chalice. Exciting times ahead for us, everything is falling into place. Perhaps a large percentage of Arsenal fans suffer from the “Van Gogh delusion” in that they don’t recognize a genius’ brush work. The masterpiece being created at the Emirates is truly going to be a sight to behold.

  23. I, like Tony, is a firm believer in Wenger.

    The thing is, we all want the team to win trophies, that’s the goal every year.

    And we haven’t done that for awhile which I totally understand people’s frustation including mine.

    But sometimes over the top comments about how we will never win with this team and booing on the pitch??? You really think that will help?calling for Wenger’s head? After all he has done?

    You really need to think for a minute WHY we support this team in the first place. I’m sure it’s not for the trophies ’cause we never really were dominating and winning everything anyway (apart from, ironically, Wenger’s Arsenal).

    And there re millions more people who are even more frustrated than us, teams like Liverpool spent all their money on mostly AVERAGE players to win….well…. nothing!

    I would not go as far as calling people glory hunters, but just remember before Wengrr we were an average side scraping for cup glories. Now we re competing, with alot less spending, top clubs in Europe.

    And it’s true when people often said to someone; to go support other teams if you re looking for short term success. The team need us even more in bad times.

    As for me, I love this team because we always win against all the odds and bricks stacking up against us—

    89′ anfield, 98′ wenger’s ‘who is this guy’ first, 04′ invincible with everyone laughing when Wenger sugguested it might happen…..and with this team soon when everyone including alot of Arsenal fans say It will not happen.

  24. HI,
    What I did not say earlier is that I am hooked to Untold Arsenal, and I think your articles,including this one, have a certain “unappologetic maturity” that cannot be found any where else.

    Of course its, crazy whats being allowed to happen regarding financing in football and I think that the FA and UEFA are in an “enjoy-it-while-it-lasts” mode, not different from how central banks stayed silent as they watched banks eating their own tails in greed leading to the current crisis. One, between Chelsea, Man U and Liverpool is a Lehman Brothers and 15th September will happen soon.

    And, by the way, I do not do middle of the road either, though I cried when wilord left.

  25. Cape Gooner – Interesting piece earlier. I did not know a lot of that and while I’m not an accountant I can see when a company is using “fronts” to hide and distribute debt (anyone see the repeat of the Enron documentary the other night!). Can anyone work out exactly how much ManU are going to have to pay back?

    What I’d really like to know is what the Glazers original plan was. Was it to continue spending and building the name and then sell the club at a profit or did they assume the madness that was affecting all aspects of society through excessive lending would continue forever?

    Either way I think Plan A is caput.

  26. Please everyone, this may just add to today’s topic. I read Forbes.com and found this list of Most Valuable Soccer Teams (Please note that values are listed in dollars):

    —– —–
    01. Manchester United $1.87B
    02. Real Madrid $1.353B
    03. Arsenal $1.2B
    04. Bayern Munich $1.11B
    05. Liverpool $1.01B
    06. AC Milan $990M
    07. Barcelona $960M
    08. Chelsea $800M
    09. Juventus $600M
    10. Schalke 04 $510M
    11. Totenham $445M
    12. Olympique Lyonnais $423M

    This valuation made April 2009, was based on 2008/2009 Financial Accounts. You can all see that our club has gone up in leaps and bounds. Up Arsenal!

  27. Marc – I think both Liverpool and Manchester United were bought with a view to selling on later. None of the owners has much interest in football per se – remember one of the Liverpool buyers saying how wonderful it was to buy Liverpool Reds – so it must be profit.

    They really thought they could ride out any financial downturn and sell on later. But the only people to sell to are the Arabs, and they are picking up smaller clubs like Portsmouth and Manchester City. I believe this will stop when they realise just how much abuse an English crowd can hurl at them.

  28. Tony: I think Man U & Liverpool are going to struggle to find buyers. Forbes.com listed their values at $1.87B & $1.01B respectively. How many people in the world would be willing to pay that much, if indeed thay have that much?

  29. Just a thought about the way Man U and Liverpool are financed. Presumably the Glaziers, Hicks etc are all paid remuneration as directors or whatever position they have given themselves. This will be part of the running costs associated with the club/company so they will be picking up a sizeable pay check. Peanuts in comparison to the overall debt but dont forget they all have several other interests so total income will be fairly hefty.

    In the meantime they also claim expenses – seem to remember a piece in one of the papers saying that gillet (or was it Hicks) claimed something like half a million Us dollars for flying around and consultancy to set up the deal in which they set up the loans and brought Liverpool.
    The big pay offs presumably occur if they manage to sell the club for a hefty amount.
    If they fail to keep up payments presumably they loose the club but I doubt if they loose any of their own money.
    Seems to me like a win win situation all round for these guys with very little risk.

    Of course they also have the kudos of owning the club in the meantime – of course not as much as if they owned the Arsenal and thank F**k they dont

Comments are closed.