[Archived] Credit Crunch To Hit Football?

[Billy Castell]

Now if we can hold on and keep our budget nice and tight, we can profit from the chaos. The latest interest rate cuts may get things going in the short term, but who knows what will happen next. Add to that the UEFA statement that they intend to get tough on clubs in debt, we may have some big clubs in trouble. West Ham have been destroyed by the Icelandic drop, the debts Man U have are close to being hideously overwhelming and Liverpool are also needing to look over their shoulder. Providing things stay this bad, and their owners stay generous, Man City, Villa, Chelsea, Boro and other clubs with loans from owners will be in a good position, as will smaller teams that have little debt (e.g. West Brom? Hull? Rovers?).

However, I'll believe the likes of Man Utd will be excluded from the champions league when I see it. I also believe some clubs will be liquidated when I see it. Some rich foreigner will take on Man Utd or Liverpool on the cheap.

Now the questions:

1. If Man Utd found their debt overwhelming, would those who are owed the money be in the position to take over and recover as much money as possible by selling the family silver (i.e. players, commercial rights, stadium)?

2. Would UEFA count debts such as those Chelsea have to Abramovich, or the funding that Real Madrid may get from local government on occaision in their quest to get tough?

[philipl]

Grr, I don't know how many times I had to explain where the £10m came from based on the 2007 published accounts.

Going into the summer 2008 window, the Rovers could have been able to maintain their overdraft at £15m which is where it had been at since 2001 (with a temporary jump to £21m in 2006 whern the Board brought spending forwards to avoid the transfer fee inflation caused by the new Sky deal), maintained wages at a budgeted £40m and have £10m available for transfer fees.

These UEFA comments on debts will be terrifying Liverpool and Man U. The clear implication of Taylor's comments is that national associations will be instructed not to issue licenses for indebted clubs to play in Europe with effect from next season. There are no details of how this will work but whereas Abramovich can issue new shares to himself in Chelsea in a paper transaction to eliminate debt, Man U and Liverpool are deeply stuck.

[BuckyRover]

I would absolutely "LOVE IT" if that came to pass.

(I don't for a second think it will though)

[gumboots]

Grr, I don't know how many times I had to explain where the £10m came from based on the 2007 published accounts.

Going into the summer 2008 window, the Rovers could have been able to maintain their overdraft at £15m which is where it had been at since 2001 (with a temporary jump to £21m in 2006 whern the Board brought spending forwards to avoid the transfer fee inflation caused by the new Sky deal), maintained wages at a budgeted £40m and have £10m available for transfer fees.

These UEFA comments on debts will be terrifying Liverpool and Man U. The clear implication of Taylor's comments is that national associations will be instructed not to issue licenses for indebted clubs to play in Europe with effect from next season. There are no details of how this will work but whereas Abramovich can issue new shares to himself in Chelsea in a paper transaction to eliminate debt, Man U and Liverpool are deeply stuck.

I'm really dumb about finances Philipl Does that mean what I said? tThat the money wa something we could have borrowed but don't actually have so if we didn't spend it we don't have it as cash to pay debts but nor have we increased our debts and with repayments if we've made any may have actually reduced them. If not tell me what it does mean in idiot proof terms because despite my degree in languages which shows I'm relatively intelligent, I really don't understand facts and figures as spoken by accountants.

[SIMON GARNERS 194]

Rovers appear to be sitting very pretty here folks,well done to the money men at Ewood AND to the continued financial support from the Walkers.

Like them or loathe them the fact Utd were sold to businessmen who are simply using the club to service their huge debts(and failing miserably by the looks of things!) was scandalous,how did it pass the 'fit and proper' test?

P.S.

If Utd,Chelsea, Liverpool or Arsenal are ever excluded from the Champions league for being in debt pigs will fly.

[philipl]

I'm really dumb about finances Philipl Does that mean what I said? tThat the money wa something we could have borrowed but don't actually have so if we didn't spend it we don't have it as cash to pay debts but nor have we increased our debts and with repayments if we've made any may have actually reduced them. If not tell me what it does mean in idiot proof terms because despite my degree in languages which shows I'm relatively intelligent, I really don't understand facts and figures as spoken by accountants.

The club had a £21m overdraft at the end of 2006/7.

Excluding transfer values the Rovers were roughly at break even in 2006/7 but projected wages would rise by £4m in 2007/8.

However, Sky money coming in rose by about £20m in 2007/8 (this has been published) so if you knock off from that £4m for the wages rise and £6m to reduce the overdraft back to £15m which is where it has been most of this decade, it leaves £10m for transfers.

Obviously there was a lot more going on than that but when nicko said £10m transfer budget, it stacked up.

In the event, Rovers seem to have contracted about £8m net on transfers excluding Bentley, received about £4m net on the management-go-round, saved about £1m in wages (Bentley not signing his new contract plus no Managers to pay in June!) and let's say they have received half the net Bentley fee at about £5m.

So £15m overdraft less £6m savings on transfers against budget (not spent £10m and I assume the cash out is only 50% of the £8m paid so far), less £4m manager income, less £1m wages not paid, less £5m cash so far received for Bentley suggests Rovers' bank position might have been around £1m in the black at the time the new 2008/9 season started.

The moot point for the January transfer window is going to be the extent to which the bank will allow new borrowing.

But that is a far better position to be in than Liverpool having to find £250m to pay back to RBS in January and no doubt all the other clubs are being called by their banks at the moment to be told their lending limits are being reduced and no new transfer spending will be bank backed until the lower figure has been achieved.

Only Tottenham are sitting on a decent pile of money on deposit but that is because they have no forwards.

[gumboots]

Thanks. Think I more or less get that now. So if they allow us to borrow a bit in Jan there's a chance of some transfers? Otherwise we like many other clubs will have to sell to buy? However, we don't have any significant debt that we know of, and may, provided costs don't spiral, even have a tiny bit of actual cash?

[thenodrog]

Only Tottenham are sitting on a decent pile of money on deposit but that is because they have no forwards.

I'm amazed that their level of debt is smaller than ours.

[OscarRaven]

Lets hope transfer prices are depressed by the clubs needing to sell and diminished transfer activity. Then it really would be good for Rovers.

[AndyC]

Guardian report

The Chairman of the FA talks about toxic debt and English clubs being £3bn in debt.

He adds that the top 4 owe £950m which makes me think his numbers are both out of date and exclude Chelsea's debt to Abramovich. The balance sheet debt of the top 4 is now probably £2bn between them.

The fact that Blatter has talked about ownership then Triesman has talked about debt 24 hours later makes me think there might even be an attempt to do something- unlikely but wsho knows?

I was at that conference philip and it sounded more like coincidence that blatter was also talking about.

Lord Triesman was very passionate about wanting to clean up the 'fit and proper person' test, and mentioned that its crazy that mugabe could potentially be an owner, yet mandela couldnt!

[tchocky]

P.S.

If Utd,Chelsea, Liverpool or Arsenal are ever excluded from the Champions league for being in debt pigs will fly.

And pigs will never fly. Period.

[philipl]

INteresting stuff from Prof Tom Cannon; expert in football finances.

- Change in football regulation will happen when a major club gets into serious difficulties. At present there are six or seven clubs that could be that one.

I will offer you West Ham, Man U, Liverpool, Everton, Newcastle, Fulham (if Al Fayed gets bored again), Man City (if ADUG realise they've bought a bit of a dog of a club)

- The current domination at the top of football will last one, at most two more seasons.

I offer you Liverpool and Man U again- both have massive re-financings looming and nowhere to go for the money with their current ownerships. Chelsea are dependent on the cotinuing indulgence of Abramovich which certainly seems to be longer lived than most were willing to give him credit for when he arrived.

[philipl]

Masterful article by Martin Samuel taking a contrarian position on foreign ownership

[philipl]

After Lord Triesman calls football's debts unsustainable, at least three Premier League football clubs admit to being rung up by their worried bank managers.

[colin]

I've unashamedly nicked this. But I thought it was good:

"I see that Lord Triesman reckons that the top three Premiership clubs are £1bn in debt

I don't know about the other 2 clubs but I'd just like to reassure him that Hull City don't owe anything like that much money."

[philipl]

Love it, Colin.

Having read some more, the fingers are pointing directly at Liverpool and Man U.

Oliver Kay has come straight out and said that Liverpool has got to be sold "hopefully to owners who will get rid of their debt". To be honest, if you are a potential purchaser, are you going to take on the £350m debt which has bought the club itself precisely nothing or would you rather talk to the administrators and probably pick it up for an all up cost of perhaps £100m?

A season not being in the Champions League because of a 10 point deduction is not going to cost you anything like £250m- in fact winning the Champions League earned Man U about £32m last season.

I would think the lawyers and accountants around Anfield this week are shifting towards discussing whether the club is trading illegally or not. Never mind the RBS January deadline to repay the £250m, if it is apparent now that there is no way it could be repaid, Rick Parry has to call in the administrators now. A lot depends on whether the players become free agents contractually if Liverpool go under.

Man U are clearly being fingered by the comment that paying more interest than you are making profit is not sustainable.

David Gill countered by saying that the Man U business model can sustain last year's interest payment of £42m. The fact that such a flimsy comment is his defence screams that Man U are in deep ######.

They paid £42m interest but their actual interest charge was around £70m. They borrowed the difference, added it to the total debt and are now paying interest on the interest charge they could not afford to pay.

[thenodrog]

Masterful article by Martin Samuel taking a contrarian position on foreign ownership

He's WHU... he would say that wouldn't he?

[doctorryan]

Setanta will not be an independent company 12 months from now. Disney the likely buyers of the wreck.

If true that gives ESPN (a Disney Co.) an even bigger pile of chips to play with at the poker table when the next round of TV negotiations comes around. They were rumored to be interested in both domestic and international rights before this. Positioning themselves in by purchasing somebody who already owns half the FAPL rights gives them the potential to package Setanta or a "Setanta-like" ESPN with their other channels in the "ESPN family of networks" with the purpose of forcing cable and satellite providers around the world to purchase all of them in order to get the PL matches. Big, BIG $ making potential for ESPN if they can pull it off.

[trs]

Premier league table of debt

http://www.independent.co.uk/sport/footbal...ban-955356.html

[Hughesy]

More daily funnies here:

West Ham are preparing to sell as many as eight senior players during the January transfer window. (Daily Telegraph)

West Ham have broken Premier League rules by allowing an unregistered doctor to treat their players. (The Sun)

At least three Premier League clubs received cautionary calls from their banks on Wednesday about their debts. (Daily Telegraph)

Platini kicking off about English football againPlatini at it again

[iamarover]

I sat watching the Rovers United match on TV with all United mates on Saturday.

Just before the kick off the commentator made a comment regarding Blackburn not being one of the most affluent areas of the country.I hardly heard the comment and did'nt want to dig deeper at the time as all the United mates ??? were falling about laughing .Two from Rochdale one from Goole I might add.

What was the comment anyone?

The commentator noted that Blackburn was not one of the most affluent areas as you say, then went on to say that given the town's population was only around 130,000, that a crowd approaching 30,000 was proportionately a good one.

First time I have ever heard that on TV.

[Billy Castell]

I bet someone will come and rescue these big clubs, be it empty talk over a ban from UEFA competitions or some other rich idiot will buy up the team and sort out the debts. I'll believe the meltdown when the gates of Anfield are chained up and 1,000 scousers are rioting.

[thecomebackid]

I bet someone will come and rescue these big clubs, be it empty talk over a ban from UEFA competitions or some other rich idiot will buy up the team and sort out the debts. I'll believe the meltdown when the gates of Anfield are chained up and 1,000 scousers are rioting.

At this rate, FIFA might have to introduce a transfer window for the buying and selling of clubs

[92er]

At this rate, FIFA might have to introduce a transfer window for the buying and selling of clubs

Now that made me laugh.

[SIMON GARNERS 194]

They paid £42m interest but their actual interest charge was around £70m. They borrowed the difference, added it to the total debt and are now paying interest on the interest charge they could not afford to pay.

The financial politics of the madhouse but yet again I ask how was this lunacy allowed to happen in the first place?............................