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Football's rising burden of debt

Premier League
by Mark A (U5611457) 04 August 2009
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How worried are you about the financial state of football?

The world is supposed to be clouded by recession and economic misery, yet some clubs are splashing the cash, with Manchester City and Real Madrid in particular spending millions this summer.

Many of the top sides, including Manchester United and Liverpool, are operating with huge debts.

Football’s European governing body Uefa has spoken out, and it seems they are very concerned.

Uefa general secretary David Taylor thinks more big clubs could, like Leeds United, fall into administration, and admits there is "disquiet" in the corridors of power over the recent massive transfer payments.

Should there be wage caps, a limit on transfer fees or new rules restricting the amount of debt a football club can carry?

Or should events be allowed to take their natural course - economists would call it laissez-faire – and if the odd club goes bust, then they should be better run – right?

What do you think?

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posted Aug 4, 2009

Again, all the focus on English clubs and none on the Spanish club finances. Real are heavily, heavily in debt and have borrowed to fund the current spending spree. Barca are heavily in debt, as are Valencia, Athletico Madrid the list goes on. But no mention is made of this as the Spanish media don't seem concerned by it. Partly the English media have an obsession about it in England. I remember journalists saying that incredibly, no one in Spain appears to be asking how Madrid are funding these purchases, they just lap up the Galactico's atmosphere.
City are an unusual case. They are backed by the wealthiest state in the world, certainly the most cash-rich. Whether or not they are in it for the long term, their investment so far would appear to indicate they are. I don't know for sure how it's structured but they appear to be providing the money for signings in the form of soft loans, with zero interest. Madrid are completely different, a basket case! Here they are borrwing from commercial lenders like Caja Madrid, Santander which must be attaching interest rates to the loans, they are listed companies not state owned apparatus or charities. Madrid must achieve success, or they really will implode, as they will have high interest repayments like United and Liverpool do. I hope they fail, I think they won't enjoy the anticipated success and will pay a heavy price.

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posted Aug 4, 2009

what about real madrid! they have a loan 280million euros,but they got a tv deal 1.2 billion over 5 years,they get 50-60milion from betwin and adidas,80000 spec.every game. man u,700-750milion £ debts, liverpool 340-390£ debts. real has a ground just outside madrid its going to build a golf place,hotel and it is worth just the ground now over 40 milion€. man city and chelsi they can spend what they want, its privat money, but some other clubs in epl in 2-3 years they will go down i am afraid. FA should take some action against some clubs.

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posted Aug 4, 2009

Arsenal may be doing it the right way but if they dont sustain their current success then they may be faced with a situation that requires outside investment.

I dont think top clubs will go to the wall, there will always be enough rich people willing to invest in Football, it is the biggest sport in the world & has such huge glamour attached.

I used to think that I shouldnt worry about other teams spending money as it is not mine to worry about but at the same time Leeds fans didnt want their club to be run into the ground & they have suffered as a result.

I think clubs should be more transparent with their debt obligations & have members who vote to see if that is the way the club should be ran going forward.

UEFA's job is to govern European football & I think we need to forget this little England mentality where we think they have it in for us, they say the same things in other countries but our media does not pick up on it, a little research yourself & you will find quotes from UEFA being concerned about Madrid's sepnding this summer.

We probably feel like they are interfering too much for our liking but this is because, at present, we are enjoying a boom in English football but if you asked an Italian fan if they think it is a good idea then they would agree that spending needs to be controlled.

Teams like Lazio lived well beyond their means & now they are suffering as a whole in Italy as it is unsubstainable.

Should Liverpool or Arsenal miss out on top 4 football then they too would face uncertainty going forward.

Clubs should not be allowed to borrow money on thinking they will maintain a league position & get Champions League football as an offshoot of that.

What is to say that the tv money wont reduce or that the prize money will stay the same?

I also believe that in order to purchase a club you have to show that YOU have the finances to do so & also will not 'loan' the club the money or mortgage the debt you used to buy it against the club itself.

Anyone could have borrowed £660 million to buy Manchester United & then secure the clubs balance sheet as the collateral on that debt, the Glazers lose litt;le if it goes wrong yet would profit immensely if the club is succesful & later sold.

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posted Aug 4, 2009

A restriction on the number of players in a squad would certainly sort the wheat from the chaff of managers.

You can't help but wonder how Martin O'Neill can manage a regular squad of 18-20 players & Harry Redknapp needs twice that.

Every club he is at - the sotry goes the same way - he turns up, moans about the lack of sqaud depth and only having five right-backs to pick from (despite all the previous twelve managers coping fine). He'll then proceed to buy half of small nation.

I really cannot see in the current climate how he is able to outspend all of the big four, probably everyone except City.

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posted Aug 4, 2009

its wages that cripple clubs and then that gets passed on to the joe bloggs fan. the more players demand the more we pay for tickets.

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posted Aug 4, 2009

Karim said "The moment you turn football into the NFL/NHL/MBL/NBA and put wage caps and stuff, you will ruin football. The american sports fields are all the same sizes just with different capacities."

Incorrect- baseball fields vary widely. Just needed to point that out
http://en.wikipedia.org/wiki/List_of_Major_League_Baseball_stadiums

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posted Aug 4, 2009




comment by BristolCity_1985 (U9556412)
posted 1 Hour Ago

its wages that cripple clubs and then that gets passed on to the joe bloggs fan. the more players demand the more we pay for tickets.

************************************************************

If Bristol City signed Joe Cole tomorrow, 100% of the fans would be jumping for joy not outside the chairmans office questioning how much he's getting paid.

Your line should read.....

"The more fans demand, the more pressure is on the board to satisfy them so better players are brought in on better wages which will be paid for by higher ticket prices"



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posted Aug 4, 2009

debt is huge and a lot has been said in this forum. however bad a club performs, those clubs will have loyal fans which will form groups and will take over the team.
id say that clubs will slow down they crazy spending. i mean look at chelsea... they went nuts for 3-4 odd years and in the last 2 couple of seasons havent gone nuts and every now and again a man city will come along and freshen the game up... its all exciting to see what happens... bring on next season and see the fallout of this magnificent summer of selling and buying players have turned out

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posted Aug 10, 2009

I think wage caps/transfer fee caps etc. would be a bad move. An alternative may be to have FIFA/UEFA/FA-appointed auditors who can examine each clubs' finances and if they feel a club is in danger of over-extending themselves they should have the power to demand that the club reduce expenses/sell players etc. to restore financial security. There can be a arbitration panel for clubs to appeal to if they disagree but the final decision should be enforced.

Debt is part of good business if managed properly. Man Utd have a big debt but it is realistically serviceable and manageable. Leeds lived on the edge and paid for it. If you want a good example of well-managed finances then look at Aston Villa, who despite a wealthy owner haven't gone mad and taken on huge debts.

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posted Aug 11, 2009

There will be more casualties. As with the housing market, the banks etc. human nature, if left to its own devices has a tendency to implode through greed and recklessness. Leeds Utd being the football example.

Clubs are in a precarious situation where they have to take on eye-watering debts to stay competitive now; and are all competing for the same merchandise markets. It doesn't work in business and it will not work here.

The media attempts to call the end of the recession are pretty desperate and there is a lot of risk out there still. We've also pretty much been guaranteed a stronger wave of swine flu in the winter, which could shut down some stadiums and hurt the balance sheets.



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