So it looks like Liverpool are being further financed by Royal Bank of Scotland (who own Nat West) despite protests from Liverpool’s own supporters.
And Mr Usmanov has (according to the Guardian and the Times today) suggested that there should be a £100m rights issue at the Arsenal. The Times says, “Red & White believes that the club’s £350m debts have made the club uncompetitive”
Both these developments seem odd to me. Not that I am some kind of financial know-it-all, but none of it seems to add up.
If we start with Liverpool – the bank seems to be saying that the current American ownership are great guys, and there is no financial crisis, so why shouldn’t they lend the money? The club is financially well-managed and sound.
Well, not really, when it has £350m debt and no way of paying it back. “No prob” says the bank, “they are going to pay it back,” as if saying it makes it so.
But if that is true the only place those repayments are coming from are the pockets of the owners (who have been selling assets, which suggests it could be so) or from selling players (which seems unlikely given that they are still buying). Which means all that’s happened is that, as we guessed a month ago, the owners are now guaranteeing the debt. The debt is still there, and getting worse (Liverpool are still spending and they have no new forms of income) and they can’t build their new stadium.
In fact – Liverpool is as insolvent as ever, only now the banks are protected.
On the Arsenal front if the statement from Red and White is what they said is true, it is most curious. Mr Usmanov might be many things but he is not financially illiterate. He knows that the annual income at Arsenal AFTER the interest payments on the stadium is considerably higher than the income at Highbury, where of course there were no such payments.
So saying “Red & White believes that the club’s £350m debts have made the club uncompetitive” is nonsense – if he ever said it. The club in simple numbers terms is more competitive financially than ever, because the money from TV has gone up, and the gate receipts have gone up. If there is a pressure on Arsenal it is from player salaries – but not from the stadium debts.
If Arsenal are less competitive it is because Manchester IOU and Liverpool Insolvency have gone mad in spending more and more money, while the KGB has taken over Fulham and are quite probably printing their own money. On that front others have raised their game – again it is not the stadium’s fault.
A rights issue would give the club new money, true, and presumably there are not too many clauses in the way to stop Arsenal paying off the debt. So that reduces the repayment costs and makes more money available for the Lord Wenger. But the risk is that the balance of power could change again, and that might not be good for the club.
The problem is that we don’t really know what Mr Usmanov said. If he says what the Times said he said, then I would not trust his motives an inch, because it makes no sense, and he must know that. The Guardian has no quotes from Mr U – so maybe the Times did make it up.
Which then that leaves a question. Who do you trust more to tell the truth? The Times or Mr Usmanov?
(c) Tony Attwood 2009.
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