It’s not the virus that is shaking football, it is the astronomic debts.

By Tony Attwood

These are, to say the least, strange times in football.  ZZ has just resigned as Real Madrid manager, which is quite a turn up – true he didn’t win them the title this season, but he did last season, and his contract still has time to run.  Something about finances maybe?

And Antonio Conte has left Inter Milan, having just won the league for them – their first in 11 years or so.   The reason there is clear – they appear to be selling about £75m worth of players to help pay the interest on their debts.

Plus the three clubs left in the Super League are suing Uefa.  Their case has gone to the European Court of Justice, and their argument is that Uefa should not be pursuing action against the three clubs while the court case against Uefa is still pending.  Why are they still following the SuperLeague vision?   Something to do with debts I think.

And the Chinese Super League champions Jiangsu FC have announced they are ceasing operations with immediate effect – just three months after they won the league for the first time.   They are owned by Suning, a retail giant, who by chance also have a majority shareholding stake Inter Milan.  Jiangsu lost their sponsor.

Thus when one recalls that the last season for which full figures are available show that Championship clubs in England lost well over half a billion pounds between them, we might think one or two things are amiss here too.

Many clubs have debts – mostly to other clubs, because of the way transfers are paid for over a number of years.  Now many of these debts are covered by owners, as in the case of Roman Abramovich and that by and large gets around the finance regulations in the Premier League.  Anyway, one might not think that matters too much because interest rates are at an all time low, it does matter if loans at the low rates are no longer available.  Or Mr A is not available.  Chelsea as a result owe about £1.3 billion to Abramovich’s company Fordstam Limited.

Now the people who complain about the Kroenkes are in effect often complaining about them not doing the same thing.  I know the AST have gone further and said the owners are taking money out of  the club, but they provided no evidence for this, and its an allegation that sits there just waiting for the owners to sue.  Lucklily for AST the owner’s have chosen not to sue.

Other clubs have dug different pits for themselves to fall into, and we reported how last year Wolverhampton borrowed against the next TV payout, in order to settle some debts – only to find that the coronavirus came along a little later, and disrupted the tightrope.

So let’s see how this works in practice.   Burnley after 139 years of being owned by Lancastrians was sold to a group of American bankers who then mortgaged Turf Moor to an American private investment firm MSD Capital at a rate of interest reported to be about 15%.  MSD is owned by… well you can guess.

This is the same sort of deal as Southampton, Derby and Sunderland have done.  Southampton’s accounts show them paying MSD 9.14% interest on the loan of around £80m they took out last year and which – as things stand – they have no chance of paying back ever, unless they sell their ground.

In short, if you have a load of money, buy a football club, make the club sell its prime asset to another of your companies, and then loan the club more to pay the debt to your other company at a rate of interest 1500% above what you could get in a normal bank.  Clever isn’t it!

Of course I don’t have proof that this is what has happened to any club; I merely speculate based on the information available, but I am quite sure nothing illegal is happening.

But I do think debts are not always quite what they seem.  Capitalism after all is based on borrowing, and the issue arises when the debt is so great you can’t borrow any more and you can’t even afford the interest.  Then you sell the ground for housing.

Interest rates will rise eventually and some clubs will fail because they can’t pay the interest on their borrowings; that’s a given.  But if, in failing, these clubs default on the money they owe other clubs, then the pyramid begins to wobble.   

Here are some debt figures from the Premier League.   The debts of the Championship clubs are even more frightening, not because of their size, but because of the problem of paying the money back for those clubs that don’t get promoted…

It’s that old thing about the pack of cards.  All of which makes the Kroenke ownership of Arsenal look quite a good deal at least compared to some clubs.

Position Club Net Debt
1 Chelsea £1.3 billion
2 Tottenham Hotspur £534 million
3 Newcastle United £384 million
4 Brighton and Hove Albion £279 million
5 Manchester United £204 million
6 Liverpool £157 million
7 Wolverhampton Wanderers £103 million
8 Watford £97 million
9 Bournemouth £90 million
10 Leicester City £80 million

Arsenal do have factors that could stop their return to trophy winning, as  the articles below show, but debts are not one of them.  (Oh and Man C have no debt… I am sure you understand how and why).

The pic at the top is the Bank of England.

The four dangers that could stop Arsenal’s return to greatness

6 Replies to “It’s not the virus that is shaking football, it is the astronomic debts.”

  1. And this type of article is the reason why when I stumbled unto this site, I refused to let go. It breaks down footballing conundrum like no other site can. Kudos Tony.

  2. Tony

    Thanks for another enlightening article.

    Regarding our owners. As you and others may of read, I have no problems with them.

    They obviously haven’t got everything right or, given the money they have made available for transfers, we would be top 4. We obviously are not. But even then, as shown recently in the Sun of all places, without the intervention of VAR we would actually be in the top 4, but that’s another story.

    Personally I think, like you do I believe Tony, we are in a pretty good place.

  3. I find it incredulous that there are so called fans out there who are under the impression that the owners owe it to them to keep them happy , and spend more fucking money as they demand. That they are are in some way entitled by birth,geographic location or familial association /affiliation, to order around the owners ! That the club belongs to them exclusively , and that the owners better know that . Or else ! And will they chip in to help when the club is mired in financial trouble ? Stop laughing !

  4. Brickfields Gunners


    This is what I said back on the 5th of May:

    “Personally all I want the owners to do is run the club.

    By that I mean provide every aspect of the club with the tools they need to carry out their job to the absolute best of their ability. From the cleaners, to the ground staff, to the coaches the players and the manager.

    They should constantly be looking to develop, improve and evolve the club in all these aspects, and they should do this with prudence, sound judgement, imagination and foresight.

    And they should do all this within the financial framework of the club. Within the capabilities of it’s business model. They should never put the club into a financially vulnerable situation.

    Although I don’t believe they do all of these things brilliantly I do believe this is a least what they try to do. I don’t doubt for one second that they have the best interests of the club at heart, after all it is to their benefit that they make the club as successful as it can possibly be”

    And I stand by every word of that, especially as it’s so relevant to this article:

    “They should never put the club into a financially vulnerable situation”

    Which is exactly what they could of done had they followed the agenda of the media and some of the fans.

    And talking of fans, I’m with you regarding how some of them seem to have such a sense of entitlement as well as an utter detachment from reality. This is what I said around the same time:

    “……….As far as I can see all this whinging about the Kronkes not understanding the game. Not communicating with the fans. Is just a smoke screen. What they are really moaning about is the fact the Kronkes aren’t pumping Billions of their own money into the club, a la Man City’s and Chelsea’s owners. These fans are not interested in this ‘self sustaining’ model nonsense. They want to see the Kronkes money. Well I’ve got news for them, it ain’t going to happen, and this Super League fiasco was proof of that. Okay the format they came up with was ill conceived and was always destined to fail, and it was a mistake to join, but I’m telling you it hasn’t gone away. If certain clubs continue to be financially doped to the extent they are currently, then this situation will return, one way or another”.

    “…..Yes prices are high but it’s a business. A very expensive business. You (a poster at the time) have seen how much these players cost and get paid haven’t you ? Either way you don’t have to go, buy a shirt or eat one of their pies, not yet anyway, but that’s another story.

    But that’s the point isn’t it. Fans want all that. They want the best players. They want to win trophies. But they don’t like paying for it. No, they don’t want the owners to just be that, owners. Not even a good ones. No they want THEM to pay for everything as well”.

    As I say, it ain’t going to happen, and thank god for that”.

    Then the brilliant Mikey typically went and summed it all up in one paragraph:

    “I want us to be better, of course I do but I don’t expect it. I have no right to. But then I’ve supported the team through much worse so maybe that’s why I’m more pragmatic about how change works and that it takes time. What we have now are fans who can’t accept defeat and instead perpetually spread negativity believing it will help. My view is that as supporters, we support. The clue is in the name!”

    As I say, I think, despite the endless media negativity, we are well placed. All we need is for the club to hold their nerve, make a few unavoidable or desired tweaks during the summer and we should be set fair for a pretty decent season ahead. Fingers crossed.

  5. I think the Kroenkes lack of football understanding has been exposed since Wenger left.

    Stupid Arsenal supporters decided to hound Wenger out, now these are the consequences.

  6. Tony

    “Oh and Man C have no debt… I am sure you understand how and why”. Not really.

    Over the last 12 years Man City’s Nett loses on transfers alone is £1045 Million or just over £1 Billion !!

    That’s an average loss of £87 Million every season. That doesn’t include wages or any other ‘costs’.

    How under any circumstances can they balance that in the books ?

    No wonder they don’t like any rules.

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