The debts of English football clubs are racking up, with teams both big and small in deep trouble. John Davidson explains how the debt issue in England is spiraling out of control and what the dire consequences could be.
It makes for alarming reading. The total of 18 clubs in the English Premier League are responsible for 56% of the money owed by all of the clubs licensed by UEFA, which is 732 clubs in total. This does not include debt-stricken West Ham, who was recently sold to new owners, or the more damaged Portsmouth. English clubs have a combined debt of GB$3.5 billion pounds, which is four times higher than the combined debt owned by clubs from the Spanish La Liga.
So far this season Portsmouth and Crystal Palace have felt the sharp blade of administration. Pompey was the first Premier League club to go into administration, and will surely be relegated. Depending on how well the club’s financial situation is handled now, it is unlikely they will be back in the top flight for many years. It was only two years ago that Portsmouth won the FA Cup, the first club outside the big four to do so in quite a while But the big budget signings and financial mismanagement could not be sustained and now Pompey is in for a lot of pain.
How can the situation in England have gotten so bad? Has nobody learnt the lesson of Leeds United? The simple answer, is no. Leeds’ dramatic fall, from the semi-finals of the Champions League to League One, contained many lessons for English football but they don’t seem to have been heeded. At the moment Manchester United have a debt of GB$716 million pounds. Liverpool have a debt of GB$350 million pounds. Chelsea have been propped up by the deep pockets of Roman Abramovich, while Arsenal has GB$203.6 million pounds.
The English Premier League is big business, but the inflated players salaries and inflated TV deals are starting to dent the EPL bubble. The current model, where clubs spend more and more each year in an attempt at success, and rights money from TV continues to increase, cannot last. The flood of foreign owners into the Premier League, from everywhere from the Middle East, the US, Thailand and Hong Kong to Russia, has not been the savior some predicated. In some ways it has added to the problem, as solid financial planning and the importance of local knowledge has gone out the window. English clubs also cannot blame all their problems on the recent economic crisis. While this has certainly not helped, and exacerbated the problems at clubs like the former Iceland-linked West Ham, it is not the root of the cause.
FIFA general secretary Jerome Valcke recently claimed that the Portsmouth financial situation crisis stands as a warning to the rest of football. And it does. But so did the example of Leeds United. A club with European, league and cup titles to its name, a club with a passionate fan base, which collapsed in a heap. And it seems nobody heeded that warning. With players wages continuing to skyrocket and most clubs seeing the only way to attain success is to spend more and go into further debt, Leeds and Pompey wont be the last clubs to go down. There’s more fuel to be burnt in this fire. It’s not unimaginable, nor impossible, for a Liverpool or a Manchester United to find themselves in a similar situation in a few years time.
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