I reported that Roma have been put up for sale even though they came second in Italy – and that they have loads of debts.
Now I find (in an article on Italian-Calcio Blog) the Italian football federation has announced that Serie B side Ancona and 20 Lega Pro sides have been kicked out of football will not be readmitted to their championships. All clubs in Italy must prove their financial stability to the Covisoc financial committee before they are allowed to register for the year. It was announced that 42 Series B, Lega Pro Prima and Seconda Divisions failed to pass muster.
The federation board meeting which decided on the new measures was not attended by representatives of Serie A or Serie B in protest at the recent decision to allow clubs to only buy one non-EU player this season rather than the previous two and there is talk of strike action.
Changing countries, Ajax in the Netherlands are 25 million euros in debt apparently. IM Scouting says so and it was on Radio 5 too.
As for Spain, well we know really, but here’s Football Economy’s take on it this week: “La Liga is in a worse financial state than the Premiership according to Stefan Szymanski, football economics guru at the Cass Business School… He said that apart from Real Madrid and Barcelona, all the teams in La Liga were in financial trouble (and even Barcelona have their problems). Asked why Real Madrid were able to splash out so much cash year after year, he said that their finances were not very transparent but there were evidently political considerations involved.”
Moving on, I’ve talked about Scotland before – particularly Rangers who are seemingly run by their bank, like Liverpool. Here’s what Herald Scotland said this week…
“This summer, football finances have hit an extreme low. It is hard to remember a more austere time for our game, with fewer jobs for players available. For many years I have been encouraging players of all levels to look at football abroad. Now, this may be a necessity for some.
“Of course not all players can play at that level but countries such as Cyprus, Iceland, Finland, Australia and even India now are looking for Scottish players to play in their domestic league. A decent living awaits those who are bold enough to try something new.”
Back to Football Economy, and try this one for size…
New research published by the International Journal of Sports Marketing & Sponsorship suggests that football clubs are using insolvency as a business tactic.
“The research, which analyses insolvency events in UK football in the past 20 years, shows that many clubs have gone into administration more than once and that there is little regard for creditors, particularly government agencies such as the Inland Revenue and Customs and Excise.
“Lead author of the report, John Beech, head of Sport and Tourism at Coventry University, concludes that the inference is undoubtedly a willingness to enter administration as a business decision.
“‘Among members of the Football League Division 1 and 2, more than half have suffered an insolvency event in recent years. Because the process of entering Administration is designed to help ailing businesses rather than hard-pressed creditors, it is seen as a relatively soft option by football’s governing bodies.’
“The findings suggest that there are five basic triggers that lead to financial difficulty:
1. Clubs fail to cope with the financial consequences of relegation;
2. Clubs fail to pay government authorities such as the Inland Revenue on time resulting in cashflow problems and in consequence suffering winding up orders;
3. Soft debts, such as those from wealthy benefactors, become hard debts, which clubs have not budgeted to repay;
4. A loss of stadium ownership and the consequential reduction in revenues;
5. Repeat offenders, which have difficulty recovering from the impact of earlier insolvencies, or which decide insolvency is an acceptable process to clear debt.”
The research shows that 62.5 per cent of clubs in League 2 had suffered an ‘insolvency event’, whereas only 20% of Premier League clubs had done so and only Portsmouth had while actually in the Premier League.
47% of repetitions happened with four years and 68% within seven years.
Looking at repeat offenders the web site says,
‘It might be argued that the clubs had not learned their lessons. In only four cases (Darlington 2009, Luton Town 2007, Swansea City (2003 and Swindon Town (2002) were debts at a lower level than in the preceding insolvency event.’
So what of Portsmouth? Sad to say they have another problem because the newly active Revenue and Customs (the UK taxman) has challenged their administration, alleging “material irregularities” in the creditor vote that led to the company voluntary arrangement being approved last month. The Company Voluntary Arrangement (the move out of administration), prepared by the administrator proposed 20p in the pound to all creditors over a four-year period, which would have allowed the club to exit administration.
However the jackbooted tax man (more powers than the police so don’t rub them up the wrong way) believes Andronikou overlooked its legitimate claims and is pressing for the CVA to be revoked. If the high court appeal is sustained, Portsmouth would then have to set up a new company through which to make an application under “exceptional circumstances” rules to be admitted to the Football League. Even if that was approved, the outcome would be a huge points deduction for still being in admin at the start of a season.
The almighty Leeds United went through this in 2007 and got a 15‑point penalty for their pains.
But there is a bigger implication – if Revenue and Customs win then that’s the end of football debts getting priority over Revenue and Customs, and that changes the whole landscape.
So what of our old friends, Liverpool Insolvency. They have bought Mr Cole for zero but are paying him £90k a week until he is past his sell-by date (well over 33). How come if they are bust.
The answer is that the bankers who run the club want their £300m back, and another £90,000 a week going out is neither here nor there given that they are releasing and selling players, and they need to keep the operation afloat while they continue to look for a bidder. The worst thing for the bankers would be for Liverpool to sink into the relegation mire, so they are propping up the edifice, in the hope that an angel appears sometime soon. they have managed, through this free transfer to get Radio 5 talking about Liverpool returning to the top four, which is obviously good for the banking business, although more than likely a load of footballing tosh.
And to end…
Manchester United remain the most valuable sporting club in the world, according to Forbes.com despite their insane level of debt.
The publisher released its fantasy league of the world’s most valuable teams yesterday, with the Premier League club having a positive rather than a negative value!
The Dallas Cowboys were second followed by the New York Yankees, Washington Redskins, New England Patriots, Real Madrid, New York Giants, Arsenal, New York Jets and Houston Texans.
Ah fantasy economics. Doesn’t it just remind you of the criminals and crooks in the banks. I am told that there is a campaign to bring back hanging for being a banker. Seems fair enough.
Untold Arsenal – everything you never wanted to know and more
Untold Woolwich Arsenal – everything you never even imagined happened to our club in the past.
Untold Making the Arsenal. Historical fiction on acid.
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