Three of the “Big 4″ are in real financial trouble – and there’s no way out!

It is possible that you might have seen some financial statements recently purporting to show that  the American club “Manchester United” has got huge profits this past financial year – £93 million in fact.

These self same figures also seemed to show that the ManYans have shot up in terms of turnover – where they now claim an annual £245 million, having previously been smaller than Arsenal in turnover terms.

So what are we to make of this.  Has Arsenal shrunk?  Has Manchester America grown?

No to both.  Accountants have a lot of flexibility in the way they present figures, and each club has gone about presenting its figures in different ways. 

Compare like with like and a very different picture appears. Huge sums were cut out of Arsenal’s figures by the accountant – for example £23 million that they have got in the past year from selling off bits of land that the club bought when they were buying up land for the Emirates, and which they needed in order to do the redevelopment, put the bridges in place, sort out access etc.

They still declare this profit of course, but in a different section away from the football figures, because they say that it is a property profit, and Arsenal FC plc is a football company not a property developer. 

But still, with the work done, they were able to sell on the land – and that £23 million is pure profit.   But the accountants set it aside as a one-off and so did not put it in the main accounts. Meanwhile the USA Devils were busy doing the opposite, pushing together every penny they could find that was positive, and pulling out all the negatives.  So these wonderful accounts don’t in any way at all include any cost – no really, not a penny – for the interest on the £600 milliion debt that the Yankee owners have generously donated to the club.  

Now Red America like to argue that Arsenal have debts too – but those debts are being paid off at a stupendous rate – not just with the £23m from land, but also from the huge income that will come in next year from the sale of the Highbury apartments and the genuine profit Arsenal make on every home game, every TV deal and every European campaign.  

Red Football (and actually that is the name of the company not one that I made up) has been set up to hold the Manchester debt, so that the club’s figures look bright and chirpy.  But Red Football will have to declare its accounts sometime, and when they do we will all see the extent of the disaster facing Manchester Untidy. At the very least they will be paying £42m from the club and over £27m in higher interest payments. 

What has gone wrong (and what has been kept very very quiet) is that the club’s attempt to refinance has run into trouble – just as Liverpool’s did – but in the Red Football case, they never found a way out and have abandoned the attempt.  

 All of Manchester’s profits are going on interest – so every penny that Ol’ Rednose spends takes the club deeper and deeper into debt.  One bad season, just one, and the club is in really big trouble. 

Chelsea and Liverpool are playing the same game.  Chelsea’s turnover went shooting up, but that is simply because Mr Abramovich is still pumping money into the club – there is not the slightest hope of Chelsea ever making a profit under its current system, because they keep spending £30m a throw on players – money they don’t have.  If Mr A got bored, or decided to go to a country with a nicer climate, the club would collapse. 

Liverpool Reds have got the problem twice as bad and then some.  They have managed to get the money they need to keep going, the financial crisis is just going to get worse and worse.  With none of the world-wide scouting of Arsenal they too are forced to pay over the top for players. So there we are – for Manchester, Liverpool and Chelsea, football is being played on a knife edge.  This explains why Manchester don’t sort their pitch out, and why they demand that season ticket holders pay for cup games they don’t want to watch.  Liverpool are really teetering on the brink, and Chelsea remain ludicrously in debt, with an eternal requirement that Mr A doesn’t think that yachting is more fun.  Arsenal however are secure.  Even without European football they would have enough to pay for the stadium year by year – and that is without taking into account the windfall of the sale of the apartments.  Year on year the club make a profit from the transfer market – no one else in the EPL does that. 

One day soon, one of those wannabe clubs is going to collapse like the pack of cards it is built upon.

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