By Tony Attwood
An unpublished document within the EPL’s HQ (revealed by the BBC in a Radio 4 programme just over a week ago) agrees that the EPL has club debts of over £3bn, which is quite a lot, really.
One thing that is agreed by most independent analysts is that this is not sustainable – even allowing for the wealth of some owners, and the KGB style manipulation of company names, shares and debts by Chelsea last week.
So, what’s the way out of the situation, before it all implodes?
The Red Knights’ attempt to take over Manchester IOU seems a non-starter and the people inside the Grand Design seem more into in-fighting than problem solving (according to reports, not my inside knowledge), and the Glazer’s won’t talk about selling. But it is always a problem when you put a lot of mega-rich people, who are all used to getting their own way, together. They all expect to be in the chair.
They have put up the vision of the mass boycott of season tickets and banqueting suites, but Man IOU say that they expect sell out crowds next season as this – although they would say that wouldn’t they.
The fact is that the Glazers have spent £450m on bankers and money borrowing – which is more than total ticket revenue (£398m) for five years they have been in charge. The fact that we have almost stopped talking about it, shows how everyone expects football finance to be a pig sty.
The key to everything is how much Sir Alex F Word spends without selling each transfer window. The analysis seems to suggest there is no spare cash anywhere. If he can find some, he’s doing well. Certainly most of the £80m from C Ron Al Do didn’t go out of the club again. Though they did buy Javier Hernandez for about £7m.
Meanwhile, Sir F Word’s favourite corporation, the BBC is about to do another piece on football finance – and Man U. It was after an earlier one years ago that he stopped talking to the BBC because of the corporation’s “arrogance”.
And this comes at a time when the club has shown in its quarterly reports that it lost£66.5m loss in the first nine months of the financial fiscal year which would seem rather careless, if it were not so commonplace.
Among the money was a £9.3m profit on the disposal of players – so quite a bit less than the £80m the year before, but complete confirmation that if there is a selling club at the top end of the EPL it is Man IOU.
Player salaries went up by 7% at Man IOU but the big problem is the forthcoming interest hike on £225m of the PIK loans, which date back to 2005. These go up from a mere 14.25% to 16.25% (compared to 1.5% which you or I get if we put our money in a bank!
The famous February bonds, that every debated sold for around 98p and are now worth around 93p. The only good news for the club is they earned more from TV than before.
Man IOU, along with Liverpool, are (for me – and I don’t expect the rest of the world to share my view) total basket cases when it comes to finance, as are many other clubs in the league which cannot exist without receiving huge donations each year from their benefactors.
But, as we have been seeing in the last couple of weeks, there is word from Spain that the combined debt of the Spanish La Liga is actually above the £3bn that clubs in the EPL owe.
The research by the University of Barcelona professor José María Gay says only Real Mad, Barbar and Numancia made a profit – and all three are in debt.
Whereas players wages in the EPL are coming down a bit (I think from memory Arsenal’s latest ratio is 45% player wages), in Spain it is 85% which is (by coincidence) the same insanity level that British schools work on. At Sevilla, Atlético Madrid and Valencia the wages cost more than the total income of the club. Have fun Mr Merida.
TV in Spain is done on a club by club basis, so Barca and Real Mad get most of the money, and no one else gets much.
“Barça and Madrid will have to make an effort, sacrificing today [their position on TV money] so the league can flourish,” Professor Gay is quoted as saying. “One step back, several forward. If this does not happen, the league will be in its death throes…. Who can win the league? The answer is obvious: Barça or Madrid. Madrid or Barça. Nobody else. Maybe now is the right time to renegotiate the rules of the economic game between all the protagonists.
“Let’s not kid ourselves, Spanish football is in a very difficult situation, like our economy. You can’t spend more than you earn. This is the fundamental rule for economic survival.”
To show how things go in Spain, Real Mallorca just missed out on qualifying for the Champs League on the last day the season, and then went into administration with an 85m Euro debt and no one wanting to buy them.
Real Mallorca’s president Vicenç Grande put his property empire into insolvency in 2008 – no one seems to want the club.
So it goes. A new set up in Spain and England in four years time? More than likely I’d say.
Temporary editor’s note: As Tony is going away for a few days, I have agreed to take over the operation of the site during his time away . If you have an article to submit for the next week please email email@example.com.
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