By Forkout N By
It is always good when Deloitte comes into the financial fray in terms of analysing football, since they have about 1000 billion times the resources that Untold has for doing financial analyses, and their calculators tend to go wrong less often than mine.
But it is double good when they agree with what Untold has been saying for a while – in this case that football in England is in such a pickle that it is hard to see a way out in its current form.
As their table of club finances shows, Arsenal’s strategy of giving in to the placard wavers and having three managers in the space of two years has meant the club has sunk down the money league table as well as the football league table, overtaken by Tottenham, due mostly to their appearance in the Champions League final.
|Club||Turnover (million euros)|
|5||Paris St Germain||635|
Appearances in the Champions League are the key to the finances, and that was of course what Mr Wenger delivered the most consecutive appearances in the Champions League of any English club, and indeed second on a European wide scale only to Real Madrid. But for the placard wavers, getting knocked out in the knock out rounds was not good enough so he had to go.
It is also ironic that just as Barcelona reach the top of the Money League for the first time and become the first club to break the €800m barrier in terms of revenue they then have a financial collapse as a result of the coronavirus, and their policy of spending far more than they have got has come unstuck.
It is also interesting that Tottenham Hotspur are eighth, their highest ever position, and the first time they have become London’s highest revenue generating club since 1996/97. Further irony in fact given that they have just gone cap in hand to the Bank of England for a loan. A loan which allows them to pay the monthly interest on the loan they took out to build their stadium.
And generally a loan to pay off a loan is not a very clever idea.
But it is what is to come that makes the really terrifying reading in the Deloitte report.
For they are predicting not just £1bn drop in turnover for Premier League clubs in 2019-20 but that even after the recovery following the end of the virus affair (assuming it doesn’t mutate into something even more troubling) the clubs will still be £500,000,000 worse off.
Now in one way this could seem ok since if everyone is suffering the same percentage losses the hierarchy could be expected to maintain itself. But it is not like that because everything depends on the level of debt each club has, and its ability to repay that debt.
Of course this will be offset in part by next season’s new TV deal which has already been agreed and is as ever a record breaker. But clubs were already taking this into account before the virus struck – and “taking into account” is in fact accountancy speak for spending it before you’ve got it.
Tottenham have taken on a £1bn debt and as noted above are already borrowing money to pay the interest. Wolverhampton as noted many times have already borrowed a sum equivalent to next season’s first TV payment, and spent it paying off this season’s debts.
The prediction is that all clubs not funded by the middle east will run into financial difficulty – and those funded by the oil rich nations might do, if Uefa find a way to hold them back. We await the Man C findings in July, with interest.
Deloitte reckons that matchday income next season will drop by 50% – and that is on top of the losses carried forward from this season due to the refund to TV companies and lack of match day revenue.
What will make it confusing is that the revenues will go up, and undoubtedly some commentators will focus on this rather than the accumulated debts.
But there is worse, because although you might not think it, the Premier League does need a vibrant Championship, which needs a vibrant League One which….
The EFL all together had their greatest even income in 2018-19 but still managed to spend more money on wages than they received from all sources!
You might want to go back and read that last paragraph again, and then check it against Deloitte figures but I’ve just read it twice and it is true.
They spent 7% more on salaries than they received from all sources.
So where does the money come from to pay the electricity bill and the transfers? That a good question.
There is talk of a salary cap, but of course what will happen then is that clubs owned by companies whose prime activity is outside the UK will find ways of getting around that.
What’s worse, for the lower tier clubs, the prime source of income is not TV but money taken on match days. And that has stopped and is not being recovered.
TV will make sure that all the focus is on the restart of the Premier League, because that is where TV makes its money. But they are misleading us. The issue is what happens with the rest of the leagues because without them, the whole structure of football comes unstuck.
- The home and away scandal: ignorance, or cover up?
- The reason why Liverpool and Man C are ahead of Arsenal.
- How which referee a club gets has a major impact on the result of each game
- The statistical evidence that shows PGMO are biased against Arsenal
- How European football has taken up the fight against clubs breaking FFP