Football Finances

[Guest guinness_fiend]

A prescribed debt-to-equity ratio would soon sort the men from the boys. 

 

 

[Matt]

A prescribed debt-to-equity ratio would soon sort the men from the boys. 

 

Football finances are too dependent on the valuation of player registrations for that.

[merlin]

The crunch is most certainly coming for Prem clubs and I'm not surprised at all - I knew this would happen after the Financial crisis , but all that has done is bring things to a head.

Football is NOT immune from problems in the economy and they will have to cut their cloth accordingly.

 

As has been said, Ashley may turn out to be a bit of a mixed blessing as his cutbacks on the club's debts should prove invaluable - in the long run...

However, as with most of what he does, some of this has largely been down to outside forces rather than a good long term pan - still, any silver lining on the cloud is welcome.

 

As for Scudamore - no time for him...he is the idiot that claimed the Prem 'wouldn't miss Newcastle' at all...Not much when clubs like Wigan and Burnley can hardly drum up our average crowd in 2 matches ..!

 

Head of the 'Know Nowt About It' Dept...

[LoveItIfWeBeatU]

31/Jan/10 

 

Debt mountains tower over clubs but football's rulers turn a blind eye - David Conn, The Observer

Debt is football's issue of the moment, propelled into prominence by the revelation of Manchester United's interest payments, Portsmouth's payroll problems and Crystal Palace's fall into administration. This is not, though, a new phenomenon, or surprising: it is one challenge among many that English football, in its unprecedented boom time, has failed, or been unwilling, to grasp.

Those Manchester United supporters who campaigned against the Glazers' takeover in 2005 warned then that this family of so-called billionaires were bringing to United only the massive borrowings they had taken out to buy the club in the first place. Portsmouth are creaking towards the winding-up court because they had an owner, Sacha Gaydamak, who allowed the club – with loans only, from him and banks – to overpay a team of stars way beyond their means. Then he pulled out.

 

After years of windfall TV income, sky-high ticket prices and rollercoaster takeovers, most clubs in the Premier and Football Leagues would be insolvent without the backing of owners. However much money comes in, they pay players too much, because of the nature of competition between clubs of different sizes. Football at the highest level already knew the calamitous cost of "living the dream" but Richard Scudamore, the Premier League chief executive, responded to the Football Association chairman Lord Triesman's warnings about the game's "debt mountain" in October 2008 by arguing that his clubs' debts were sustainable and the owners were managing them "responsibly".

 

Since then, Gaydamak has dropped Portsmouth and Bjorgolfur Gudmundsson, West Ham's Icelandic billionaire, melted down with his country's economy. The Premier League, despite rejecting Triesman's concerns publicly, did introduce some measures on debt, such as a "going concern test" whereby accountants pronounce on whether a club can fulfil their fixtures for a season. It is not clear, however, that this goes far enough.

 

At the majority of Premier League clubs, the accountants will say the debts are being managed provided the owners remain solvent and are putting their money in. When the owner becomes suddenly not very rich, as at West Ham and Portsmouth, or turns international fugitive (as happened to Manchester City's distinguished former owner, Thaksin Shinawatra), the club, immediately, are not sustainable at all.

 

The Premier and Football Leagues, and the FA, the game's overall governing body who should be responsible for these issues, all declined to give their thoughts to the Observer, though they said they may in the near future. Those who have contributed offer some fascinating insights, particularly from within football. Alan Smith, for example, noticed overspending creep in with the Premier League's breakaway in 1992. Football came through 1980s penury and disaster, to realise its true, national game status, then blew its new fortune on making multi-millionaires of this luck-kissed generation of players.

 

The debt problem which has resulted has a clear link with ownership. These sporting institutions, community organisations, cultural assets – define football clubs how you like but do not say they are ordinary commercial outfits such as vacuum cleaner companies – are bought and sold to anybody, from wherever, because they need the next backer with more money. The outgoing owners, too, usually want mountainous profits, which is contrary to English football's historic culture and rules, but has become ingrained and accepted in the Premier League era.

 

The idea that clubs should be mutuals, owned by their supporters, as are Barcelona and Real Madrid and, up to at least 51%, the German clubs, is increasingly recognised as the natural constitution for a football club. It does not guarantee good management, but provides stability of ownership, a strong foundation.

 

Action to restrain overspending is still required, and Uefa's financial fair-play initiative, requiring clubs to live within their means, is remarkable: a substantial measure, not mere words, or fiddly window-dressing, to address a major concern. A concern that led to fans protesting yesterday about the financial state of affairs at Cardiff City, following similar scenes in Portsmouth and a planned march in Manchester. United's debts were the subject, remarkably, of four articles in one ­newspaper's business section on successive days last week.

 

If Uefa succeeds in establishing that rule by 2012-13, it should begin to rein in the overspending. After that, if the big clubs are willing, football can look at how to make the sport more equal, so the richest clubs do not inevitably monopolise the best players. NFL-style equalising of income, with a salary cap, is common sense, and a proven successful combination. There is simply no need for English football, in its richest ever era, to be leaving many millions of pounds unpaid to creditors, and clubs at the brink of ruin.

 

As for Manchester United- and Liverpool-style "leveraged" buyouts, they surely ought to be banned outright. They bring a scandalous drain to flourishing clubs, leaking out money for the benefit only of banks and the buyers, who seek a profit. It is still difficult to believe that in football, and wider business, such chicanery is even legal.

[madras]

mouscron in the belgian top league went to the wall in december.

haarlem in the dutch 2nd division have gone to the wall aswell. (where ruud gullit, johnny metgod, arthur muman started their careers)

[Guest north shields lad]

There is no way ever, that UEFA will ban manchester united, Liverpool, Real Madrid etc from playing european football. For starters UEFA would lose a fortune in tv money, and secondly as someone said, them clubs are powerful enough to walk away and start there own european league.

[Guest optimistic nit]

A lot of text

 

I can't see anyone coming to 'rescue' us from Mike Ashley. He may in fact turn out to be some sort of perverse blessing in disguise!

 

This is quite an interesting thought. Between the top clubs there's a "space race"-thing going on and when the fortune turns on them they're in  trouble. The way Man United and Liverpool are run is not sustainable in the long run and we can see this now both on the pitch and off it. The winners in all this will be the clubs who doesn't really go over the top in the transfer market, a bit more careful when it comes to salaries but mostly whose owners are economically sound when it comes to the club finances, in other words no Glazers och Gillette/Hicks thing with putting the debt on the club with huge interest. I might be way wrong here, but the way Spurs and Aston Villa are being run must be considered good examples? Sure, they've spent a lot in the transfer windows but not excessively on one player and are keeping the wages under the magic six-figure mark...

 

So, with the papers reporting Ashley putting a £30k wage roof, he might be a blessing in disguise but he's most likely a cheap idiot who doesn't know how to run a club

 

quite frankly if we're paying any of our signings apart from routlage over £15K a week then i'd rather we hadn't signed them.

[LoveItIfWeBeatU]

http://www.guardian.co.uk/football/2010/feb/23/premier-league-clubs-europe-debt

 

Premier League clubs owe 56% of Europe's debt

 

• English club's debt mountain reaches £3.5bn

• Uefa's financial report highlights 'clear warning signs'

 

David Conn

guardian.co.uk, Tuesday 23 February 2010 23.00 GMT

 

Concerns over English football's financial wellbeing are set to deepen further with the impending release of a report from Uefa which shows that Premier League clubs owe more money than all the other clubs in Europe's top divisions put together.

 

That finding is contained in Uefa's official report, The European Club Footballing Landscape, a copy of which has been seen by the Guardian, which analyses the 2007-08 annual accounts, the latest available, of all 732 clubs licensed by Uefa. It calculates the combined debts of just 18 Premier League clubs at just under €4bn (£3.5bn), around four times the figure for the next most indebted top division, Spain's La Liga.

 

Total Premier League debts were higher even than that – only 18 clubs are included in the report because two of the most indebted, troubled Portsmouth and West Ham, were not granted Uefa licences that year due to their financial difficulties.

 

The Premier League made much more money from television and other commercial income than its rivals, €122m on average at the 18 clubs; the next wealthiest was the German Bundesliga, whose clubs made an average €79m. Yet despite that commercial advantage, the 18 English clubs were hugely more reliant on borrowed money from banks and club owners than the 714 other clubs combined. "English clubs contain on their balance sheets an estimated 56% of Europe-wide commercial debt," the report says.

 

When it publishes the report in the coming weeks, Uefa will present it as authoritative evidence of the need for its Financial Fair Play rules, agreed in principle by the major clubs and leagues, which will require clubs to break even financially from 2012-13. In the foreword, Uefa's president, Michel Platini, says the figures demonstrate "increasingly clear warning signs" and argues Uefa's initiative is necessary "for the health of European club football".

 

Uefa's leadership makes a marked contrast with the silence at the Premier League and the Football Association over the debts at Manchester United and Liverpool, which now add up to more than £1bn collectively. Those huge debts were loaded on to the clubs by their North American owners' "leveraged" takeovers, yet despite the furore and mass supporter protests particularly over United's £716m debts, neither the Premier League nor FA have voiced any concern. Uefa, in its report, identifies United and Liverpool's debts as highly significant to the Premier League's overall indebtedness, and criticises the effect it has had on the clubs financially. "Just over half of [the Premier League's] commercial debt has been placed into the [relevant] clubs [or at a holding company level] recently as a result of leveraged buyouts," the report says, "so far acting principally as a burden rather than to support investment or spending".

 

The Premier League today defended the amount of debt carried by its clubs, arguing that as they make the most money of any in Europe, they can be expected to borrow more too. A spokesman pointed to the rules introduced by the league last summer, including a "going concern" test by which accountants will inspect clubs' books and financial projections, as evidence that the league is concerned about the issue. "The critical point is not the absolute size of any debt," he said, "but how sustainable it is."

 

However, the meltdown at Portsmouth, which followed the standard Premier League practice of borrowing from an owner and banks to pay high wages for otherwise unaffordable players, has seriously shaken the credibility of the English league's model.

 

Gianni Infantino, Uefa's general secretary, cited the report's finding that almost half of Europe's top clubs, 47%, made a loss in 2008 despite record revenues, together with the Portsmouth crisis and scale of Premier League debts, as evidence of the need for reform. "The Portsmouth example shows something must be done to help the clubs be more sustainable," he said. "The English Premier League clubs have higher revenues, but it is worrying to see such huge debt. If it is borrowed to fuel spending on players, the problem comes when you cannot borrow any more money and can no longer pay the debts."

 

The Premier League and FA have accepted Uefa's break-even rule, but continue to argue that owners, so called "benefactors", should be allowed to put money in to fuel spending on players. Infantino, however, was adamant that when the rule is implemented, clubs will be expected to run within their income, not have backers enabling them to overspend.

[PCW1983]

Found this on another forum.

 

http://www.equifax.co.uk/About-us/Press_releases/2010/POOR_SCORES_FOR_CHAMPIONSHIP_LEAGUE_CLUBS.html

[Liam Liam Liam O]

 

Footballers' image rights investigated by tax inspectors

 

Dozens of footballers, including England star Wayne Rooney, are being investigated over alleged tax avoidance of up to £100 million on image rights.

 

By Richard Edwards, Crime Correspondent

Published: 2:44PM GMT 21 Feb 2010

 

Inspectors from HM Revenue & Customs (HMRC) are investigating the ways top players, who earn upwards of £100,000 a week, avoid high levels of income tax through receiving separate payments for their off-field earnings — such as replica shirt sales, endorsements and promotional work. Up to a third of earnings for some players now come from the lucrative payments.

 

Because payments are typically made into a company set up for the player, they are subject to corporation tax, levied at 21 per cent or 28 per cent, rather than National Insurance and income tax — currently paid at up to 40 per cent, but with a new top rate of 50 per cent from April.

 

According to HMRC sources, the inquiry believes such arrangements may have allowed players lawfully to escape paying more than £100 million in tax.

 

A team from HMRC’s civil investigations unit is investigating all image rights deals of Premier League players. Peter Fairchild, private client tax director at accountancy firm Vantis, which represents all Premier League players, said: “Around 100 players from the league have had inquiries launched into their image rights arrangements.”

 

Players’ agents would not confirm they were under investigation but said that their arrangements complied with tax rules.

 

 

http://www.telegraph.co.uk/news/newstopics/politics/lawandorder/7285086/Footballers-image-rights-investigated-by-tax-inspectors.html

[Guest neesy111]

Aresenal have reduced net debt from 332M to 203M, WOW 

 

show's you how a football club can be runned properly

[Guest Roger Kint]

Aresenal have reduced net debt from 332M to 203M, WOW 

 

show's you how a football club can be runned properly

 

As long as they continue to reach the Champions League quarters each year that will remain a trend as they get £3m a home game making £70m+ a season domestic cups aside simply on gate receipts plus a well kept wage structure and obvious transfer policies.

 

The arguement as to whether this should be eased slightly will rage on until they win something though, its clear they need a little extra quality in key areas. Suppose in 3/4 years the club could be profitable and bigger hitters in spending at the rate they ae going.

[Guest neesy111]

Aresenal have reduced net debt from 332M to 203M, WOW 

 

show's you how a football club can be runned properly

 

As long as they continue to reach the Champions League quarters each year that will remain a trend as they get £3m a home game making £70m+ a season domestic cups aside simply on gate receipts plus a well kept wage structure and obvious transfer policies.

 

The arguement as to whether this should be eased slightly will rage on until they win something though, its clear they need a little extra quality in key areas. Suppose in 3/4 years the club could be profitable and bigger hitters in spending at the rate they ae going.

 

Apparently they also have 50M in cash for transfers, but wenger won't spend it

 

They on turnover are the 4th highest

[Guest Roger Kint]

Yeah i read that too, have a lot of respect for what Wenger has done but his stubborn unwillingness to chance that next step is getting to fans and it baffles me tbh. Its not even major stuff: Good CB, Good CM, Good ST, the rest of the team are pretty strong but steel and goals down the middle could have made this their year and ST aside wouldnt be huge money.

[Guest neesy111]

Yeah i read that too, have a lot of respect for what Wenger has done but his stubborn unwillingness to chance that next step is getting to fans and it baffles me tbh. Its not even major stuff: Good CB, Good CM, Good ST, the rest of the team are pretty strong but steel and goals down the middle could have made this their year and ST aside wouldnt be huge money.

 

yeah i agree, arsenal fan's should expect their ticket money invested in new players

[Guest Roger Kint]

Yeah i read that too, have a lot of respect for what Wenger has done but his stubborn unwillingness to chance that next step is getting to fans and it baffles me tbh. Its not even major stuff: Good CB, Good CM, Good ST, the rest of the team are pretty strong but steel and goals down the middle could have made this their year and ST aside wouldnt be huge money.

 

yeah i agree, arsenal fan's should expect their ticket money invested in new players

 

Well not even that. They got £40m at least from Man City while only buying Vermy for £10m. Maybe Arsene will point to Arshavin in the previous January window but thats still a big profit alone.

[Guest Brazilianbob]

The root of all this goes to the vast amount in wages players demand "because they have such a short playing career".

 

Where the hell does it say that footballers should simply be entitled to retire when they stop playing, or have enough dosh set by from inflated wages and lump sums from transfers, to buy a portfolio of properties to support them and their families without having to work until retirement age like the rest of us.

 

They only train for half a day on say 5 days a week at most, so there is absolutely no reason why they cant earning qualifications so they have a career to fall back onto when they do stop playing.

 

Most of them are so greedy they take the easy option of taking coaching badges because it is readily familiar to them and they know that once the playing gravy train comes to an end there is the coaching/managerial gravy train just waiting at the platform for them to jump aboard.

 

Granted some if not most in the lower divisions do study to earn qualifications, but they are not the ones bleeding the clubs dry in terms of wages.  Our own Michael Owen is a prime example of this (£43m?) and I suspect many of us would be shocked to find out exactly how much our beloved Alan Shearer screwed out of NUFC during his playing and brief managerial career.

 

As for agents don't get me started or I'll never stop!  Suffice to say they are quite clearly genetically linked to the worst sort of parasites known to mankind!!!!!

[Gash]

I agree with the earning qualifications thing.

A Blackpool striker is on my mates course at Staffs Uni doing his qualifications to be a P.E. teacher. Good on him.

[Taylor Swift]

Arsenal will be in a very good place in a few years' time. Their debt was over £300m when they moved into the Emirates, which meant that they were paying in excess of £15m a year in interest alone, but because they've remained in the CL and have operated on a good budget transfer-wise, they'll be paying less than £10m in interest now, and I suspect they'll also be paying less principal year-to-year, meaning they'll have a shit load of money to spend in the future.

 

Basically, they gambled on being able to stay in the CL and it's paid off. Their reward is pretty much a significant transfer budget for the foreseeable future, so it's just up to Wenger to spend it wisely.

[bealios]

Arsenal will be in a very good place in a few years' time. Their debt was over £300m when they moved into the Emirates, which meant that they were paying in excess of £15m a year in interest alone, but because they've remained in the CL and have operated on a good budget transfer-wise, they'll be paying less than £10m in interest now, and I suspect they'll also be paying less principal year-to-year, meaning they'll have a shit load of money to spend in the future.

 

Basically, they gambled on being able to stay in the CL and it's paid off. Their reward is pretty much a significant transfer budget for the foreseeable future, so it's just up to Wenger to spend it wisely.

 

Arsenal - The club Newcastle could have been if they had appointed the right man after Keegan in 1997 (or Keegan had stayed).

[Guest optimistic nit]

The root of all this goes to the vast amount in wages players demand "because they have such a short playing career".

 

Where the hell does it say that footballers should simply be entitled to retire when they stop playing, or have enough dosh set by from inflated wages and lump sums from transfers, to buy a portfolio of properties to support them and their families without having to work until retirement age like the rest of us.

 

They only train for half a day on say 5 days a week at most, so there is absolutely no reason why they cant earning qualifications so they have a career to fall back onto when they do stop playing.

 

Most of them are so greedy they take the easy option of taking coaching badges because it is readily familiar to them and they know that once the playing gravy train comes to an end there is the coaching/managerial gravy train just waiting at the platform for them to jump aboard.

 

Granted some if not most in the lower divisions do study to earn qualifications, but they are not the ones bleeding the clubs dry in terms of wages.  Our own Michael Owen is a prime example of this (£43m?) and I suspect many of us would be shocked to find out exactly how much our beloved Alan Shearer screwed out of NUFC during his playing and brief managerial career.

 

As for agents don't get me started or I'll never stop!  Suffice to say they are quite clearly genetically linked to the worst sort of parasites known to mankind!!!!!

 

 

 

to be honest why shouldn't players be getting paid the money they get paid? considering how much money there is in football. the footballers are the ones who earn the money, so it is them who should take the wealth that comes with it.

 

all the main problems with football financially are caused by the employees of the club in the boardroom and people like abramovic and the man city lot. its their responsibility to ensure the club balances the books, not the players. they set the ticket and merchandise prices and they are responsible for the financial well being of the club.

[madras]

The root of all this goes to the vast amount in wages players demand "because they have such a short playing career".

 

Where the hell does it say that footballers should simply be entitled to retire when they stop playing, or have enough dosh set by from inflated wages and lump sums from transfers, to buy a portfolio of properties to support them and their families without having to work until retirement age like the rest of us.

 

They only train for half a day on say 5 days a week at most, so there is absolutely no reason why they cant earning qualifications so they have a career to fall back onto when they do stop playing.

 

Most of them are so greedy they take the easy option of taking coaching badges because it is readily familiar to them and they know that once the playing gravy train comes to an end there is the coaching/managerial gravy train just waiting at the platform for them to jump aboard.

 

Granted some if not most in the lower divisions do study to earn qualifications, but they are not the ones bleeding the clubs dry in terms of wages.  Our own Michael Owen is a prime example of this (£43m?) and I suspect many of us would be shocked to find out exactly how much our beloved Alan Shearer screwed out of NUFC during his playing and brief managerial career.

 

As for agents don't get me started or I'll never stop!  Suffice to say they are quite clearly genetically linked to the worst sort of parasites known to mankind!!!!!

 

 

 

to be honest why shouldn't players be getting paid the money they get paid? considering how much money there is in football. the footballers are the ones who earn the money, so it is them who should take the wealth that comes with it.

 

all the main problems with football financially are caused by the employees of the club in the boardroom and people like abramovic and the man city lot. its their responsibility to ensure the club balances the books, not the players. they set the ticket and merchandise prices and they are responsible for the financial well being of the club.

this isn't down to the players or agents. yes they greedily take money out but it's simple for the people running the clubs to say "no, we wont pay you that much". if that means they can't compete with citeh and chelsea then so be it.

 

it looks like the pigs in the trough attitude of many (mainly premiership) footballers is coming to and end.......................and as far as i'm concerned it won't come a moment too soon.

[ikri]

all the main problems with football financially are caused by the employees of the club in the boardroom and people like abramovic and the man city lot.

 

That's my take on it too.  Transfer fees were settling down around 2003 and would have probably dropped down a bit if Chelsea had gone under (they were rumoured to be 2-3 weeks from going into administration in the summer of 2003) but the moment Abramovich appeared and Chelsea started paying out even larger wages and higher transfer fees the system was screwed since the other clubs had to offer similar wages to keep up.  They ended up buying players they didn't need and paying them a fortune, why would a player turn down Chelsea's bench if they're offering double what they could get playing for someone else's first team?  The moment the market begins to dip again, with even Chelsea backing off on transfer fees, along come the Abu Dhabi lot and start it all up again at Man City.

 

Nothing is going to be fixed until either UEFA pass the new rules on European competition entry conditions or a Champion's League club goes into administration.

[quayside]

Aston Villa’s 2009 accounts have been filed today.

 

On turnover of £84m they racked up a loss of £46m. That’s quite a result 

 

Their wage bill is £70m, which is 83% of their turnover.

 

Lerner funded it all of course and has now invested a total of about £260m in the club.

 

 

[Ocho]

How did you access their accounts quayside?