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Premier League Debt

Sat, 6 June 2009

Deloitte’s Annual Review Of Football Finance for 2009 was released on 4 June 2009.

As summarized on BBC News:

The Premier League saw its revenues soar by 26% in the 2007/08 season to nearly £2bn ($3.15bn; 2.2bn euros), ….

The revenues of top-flight English sides were £1.93bn, up from £1.5bn a year earlier, Deloitte said.

Despite the downturn, 11 of the 20 top league clubs made an operating profit in 2007/08, from eight a year before.

But Premier League salary costs topped £1bn for the first time, and the clubs’ total net debt was £3.1bn.

Two-thirds of the debt was carried by the big four of Manchester United, Liverpool, Chelsea and Arsenal, but Dan Jones, the editor of Deloitte’s Annual Review of Football Finance, said those clubs all had business plans “that they feel make sense”.

Varying degreeing of “sense”.

Manchester United’s level of debt may be high, but Liverpool’s is worrying its auditors. As also reported on BBC News:

The parent company of Liverpool FC, owned by Tom Hicks and George Gillett, lost £42.6m in the year to August 2008.

The loss was mainly due to the £36m of interest payments that Kop Football Holdings had to make to service the debt taken on to buy the club.

Its auditors warned that the need to refinance loans by 24 July cast “significant doubt” on the future of the group as a going concern.

But they added the club’s owners were confident they would secure the funds.

The US owners bought Liverpool in February 2007, promising to build a new stadium.

In their accounts, they say they are “committed to building a new stadium and actively seeking funding to complete the project”.

But they admit that “the opening of the new stadium will be delayed until 2012″.

It’s got former Liverpool defender Mark Lawrenson worried:

“The great problem is that it looks at the moment as if Liverpool are going to have to sell quite a few players just to get the two or three very high profile match-winners in.”

BBC News also reports that:

… the Anfield club’s two American owners Tom Hicks and George Gillett are fast approaching the 24 July deadline to repay the £350m they owe to banks RBS and Wachovia.

….

The pair bought Liverpool in February 2007 and since then have squabbled with each other, alienated some fans, failed to progress with a promised new stadium, and seen potential sales of the club fall away.

There are many questions surrounding the future of the £350m loans, after the repayment deadline was extended for six months this January.

Football academic and Liverpool fan and activist, Dr Rogan Taylor is highly critical of the pair:

Hicks and Gillett have been scouring the globe to find investors for the club but Rogan Taylor, creator of Share Liverpool FC, a group aimed at recruiting fans to purchase the club, believes the only way Liverpool can move forward is if they are taken over by fresh investors.

“There’s no way anybody is going to lend the Americans that kind of money when the club is in such deep debt,” Taylor told BBC Radio 5 Live.

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8 comments

  1. On BBC Sport:

    West Ham have been taken over by asset management company CB Holding.

    ….

    The new non-executive chairman will be Andrew Bernhardt, a senior director with Iceland’s Straumur Bank, which is the major shareholder of CB Holding.

    He told the club’s website: “I can assure fans we will sanction investment in new players but all within the parameters of sensible budgeting.”

    Bernhardt also made it clear that the football management team of Gianfranco Zola and Steve Clarke remain central to their plans for the club.

    ….

    Hansa, the holding company for the Hammers, had until Monday 8 June to sell the club in order to prevent creditors seizing its assets and forcing the sale of West Ham.

    CB Holding was set up last week by a selection of the club’s major creditors.


  2. On BBC News:

    Liverpool co-owner George Gillett is to sell one of his major assets in a deal which could ease financial pressures at the Premier League club.

    He is selling his stake in the NHL’s Montreal Canadiens in a deal reported to be worth at least $550m (£332.9m).

    Mr Gillett, and fellow Liverpool owner Tom Hicks, have until 24 July to repay £350m they owe to RBS and Wachovia.

    ….

    Mr Gillett put the Canadiens up for sale earlier this year, and the deal includes his 80% stake in the team, the Bell Centre arena, and the Gillett Entertainment Group.

    They are being bought by brewing giants, the Molson family, who already own the remaining 20% share.

    ….

    Liverpool were put on the market last year with a reported asking price of about £500m, but no sale was finalised.


  3. [...] F1 and football are both European-dominated sports which have become increasingly costly to operate, although by [...]


  4. [...] rich owner allows a club to spend big without the dangers of borrowing and incurring massive debt (for which Leeds United provide a good [...]


  5. [...] you have money to splurge on a Premier League club, you’ll get better value outside of the Premier League, and even the [...]


  6. [...] suppose Premier League clubs incurring large amounts of debt is okay then. After all, what happened to the world economy isn’t going to happen to football [...]


  7. [...] debt burden was in the news in June 2009.  Manchester United’s finances have been in the news this week: The ownership of Manchester [...]


  8. [...] has resulted in increasing levels of debt, notwithstanding increasing revenues, not only in the Premier League, but in the Championship and the Football League as [...]



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