Despite His White Boots

Football, football, football and, if the mood takes me, more football.

Saturday, June 06, 2009

The League Table Of Debt

Obviously I knew that Premier League clubs have a lot of debt, but here it is in black and white, and I find it just incredible :

Premier League clubs boast £3.1bn of debt

All the information is there, I'm just collating it here to draw attention to the most interesting bits. First of all, here's the league table of debt

Club Debt/£m
Chelsea 701
Man Utd 699
Arsenal 416
Liverpool 280
Fulham 197
Man City 147
Newcastle 106
Middlesboro 93
Aston Villa 73
Sunderland 70
Wigan 66
Tottenham 65
Portsmouth 58
Bolton 52
Everton 39
West Ham 36
Blackburn 17
West Brom 9
Stoke 2
Hull 1

All these figures were as of the most recent filed accounts, most of which were in summer 2008. No doubt the promoted clubs at the bottom will have different figures as of this summer, although hopefully (for their sake) not much bigger debt !

Greatest "overachievers" in terms of league position vs "debt position" were Everton (+10), not Stoke as I would have assumed, who were joint second with West Ham on +7. "Overachievers" Fulham finished 7th but have the 5th biggest debt in the league, so there goes that one. Not surprisingly, Newcastle and Middlesboro prop this one up on -11.

If you make a "wages" table it looks remarkably like what you would come up with if you subjectively compiled a "biggest club" table. Fulham come out of this much better, with the 14th biggest wage bill for +7, but Newcastle are the real dogs with the 5th biggest wage bill for -13.

OK, you say, so these clubs have debts. But at least money's coming in, right ? Well, you would think. 7 clubs made a profit (we have to count Everton's £26 thousand profit technically). In only two cases did that profit amount to more than 10% of the club's debt : Blackburn (£3m cf. £17m) and West Brom (£11m cf. £9m). Even also-rans like Bolton, Wigan and Middlesboro are losing £10m a year. Manchester United lost £45m but I assume that includes interest payments of £69m. Chelsea lost £85m even though they pay no interest at all.

So what do we conclude ? Well football does seem to be something of a special case. If a business with figures like Newcastle United's [1] (or half the other clubs) was up for sale no one would go anywhere near it. With a few exceptions [2], established Premiership clubs are entirely dependent on their backers to avoid complete collapse, never mind to compete. The healthiest position by far appears to be West Brom's, which kind of makes sense ; you can disparage the "yo-yo" clubs if you like but the way it's set up if you get promoted, don't go mad on wages, accept relegation, pick up parachute payments and repeat, it seems to be just about the only way of actually making money. And it's not bad for fans either, one season of crushing and scoring lots of goals, one of watching top players rip you to bits.

Anyway, this was all an eye-opener to me. I've generally assumed that the top four were so far ahead because of their Champions League income. However, it's really because of the huge levels of debt they have incurred and continue to incur [3] just to keep up with each other. House of Cards anyone ?

[1] To summarise, £106m debt, £75m wages, £34m loss last year.

[2] Blackburn and Everton seem to be reasonably well run but of course Blackburn only dragged themselves out of the bottom end of the second tier thanks to a huge private investment

[3] Arsenal are probably exempt from this as most of the (£416m) debt was to finance the new stadium and they did make £36m profit last year, But of course then their fans are up in arms because they don't spend enough !


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