By Tony Attwood
Untold has been arguing for quite a while that there is a profound financial crisis hitting the clubs which has been caused by their tendency to spend money they don’t have in order to reach the top seven and get into Europe, or to avoid relegation.
The example we have repeatedly given is Wolverhampton, not because they are the only club doing this but because the evidence about this was made public after they borrowed a sum equivalent to next season’s first TV payment, just before the coronavirus struck.
The point about this event, which it appears is not uncommon, is that the club supposedly has a wealthy investor and yet they were nevertheless forced to make this arrangement this season. Now, of course, the club is faced with much greater debts than it was facing when that loan was made, because of the lack of gate receipts, the need to refund season ticket payments, and the requirement to pay back TV and sponsorship money from this season.
Despite all these fairly obvious facts the media has been very restrained in talking about financial problems in the Premier League. Indeed as I mentioned a few days ago, it is hard to find any suggestion that Tottenham has any financial issues, despite having loans which must far exceed half a billion pounds and on which interest is now being paid, as a result of building the new stadium, and with no income and possible TV repayments.
And so it has remained an Untold story by and large – at least until the Sun and the Mail picked it up and started to run with it today, with the piece in the Mail reading, “Premier League clubs ‘considering payday-style loans with huge interest rates’ to stop them going BUST due to coronavirus cash crisis.”
Below that bold headline there is more boldness of the type so beloved by the newspaper…
- City investors are intent on charging 25 per cent on borrowings up to £100m
- Firms are offering loans way above Bank of England’s 0.1 per cent base rate
- They are bidding to cash in on the economic uncertainty, according to reports
This story has broken this morning, and it is only “according to reports” – a phrase I have often poked fun at, but this time it appears to fit with the facts we know as the piece argues that the loans are being sought just to allow the clubs to stay in business, not for any adventure into the transfer market.
The Sun, venturing into the same territory says that at least four Premier League clubs are ‘at the mercy’ of private equity or venture capitalist firms which are finding takers for these loans even at this insane level of interest (which they have no means of repaying) simply to avoid collapsing now. The implication is that they can’t pay May’s salaries.
And this is simply because they have virtually no revenue stream, and no one else is willing to lend money to companies that are so very obviously in desperate trouble.
Part of the problem for the clubs is that they are unable to say to lenders not just when they will be able to repay any loan they take out, but also how they will be able to do so. As you may know, if you have ever sought to take out a loan without having a solid job or a house or something else that shows how you can pay it back, you quickly come at the mercy of the money lenders.
These companies charge huge interest because a) some of their loans will turn bad and they will lose their money and b) no one else is offering to lend money.
The fact is that returning to playing behind closed doors, will not itself bring in any more money – it will simply reduce the size of the claim being made by Sky, BT and the overseas rights holders against the clubs.
That debt is currently being estimated at £762 million spread among the PL clubs. Since the games cannot be played at their proper time, nor with crowds present, the broadcasters will still have a huge claim to make at the end of the season, and these debt-laden clubs have no way to pay it.
Of course it is not just a Premier League issue. As Huddersfield owner Phil Hodgkinson was quoted as saying in a BBC interview, “The problem is not whether we finish [this] season or not, it is what happens after that.
“If we don’t come to an agreement there will be no football pyramid. There are clubs I know of that are only still trading because they are deferring wages, tax payments and other creditors. They will need paying at some point.”
- Transfer news: the 93 players Arsenal are looking to be (according to reports)
- Arsenal: where has it all gone wrong and how can we put it right?
- Which Premier League club is in the greatest financial trouble?
- Another huge football scandal – and why the mass media in England won’t cover it
Well, maybe in the end a few PL clubs will take part each in a different european championship : Arsenal in the Bundesliga, City in the Seria A, United in La Liga and Liverpool in Ligue 1, Chelsea in Russia or Portugal….
I always thought that the demise of PL football was going to be when Sky and BT had had enough of showing live football because it was costing them too much , compared maybe with showing other European leagues , what little did I/we know what would come along .
Didn’t prepare for the unforeseen circumstances? Sold your souls to the evil that is money? Football has zero sympathy from a large and ever growing public audience. Hopefully this evil times will correct the greed that football has become.
I’m not a doomsday merchant, just an observation.