Arsenal News » Liverpool and Man U approach meltdown

Clubs can have financial problems.  Clubs can have people problems.  Club can have squad problems.  And clubs can have supporters who have fallen out of love with the board.

We see it all the time.  And I mean all the time, because at the moment on the Making the Arsenal blog (www.blog.woolwicharsenal.co.uk) I’m covering Arsenal’s own financial catastrophe.  Fortunately for us all it was 100 years ago, and we learned the lessons.

But now it seems Liverpool and Man U are approaching their biggest challenges of all.

Let’s take Liverpool first.

The current crisis came about as it emerged that it was true that the manager would not only have to sell players, he would also then only get a small percentage of the money he raised in the sales, for new purchases.  10% seems to be the amount being talked about.  The rest goes to the banks.

For Liverpool this is a disaster.  The club has no strategy for success other than paying big money for players, in that they don’t have Arsenal’s world-wide scouting and world-wide reputation for developing young players, and they don’t have the Man City or Chelsea strategy of using the fortune of a billionaire.

The Liverpool manager has raised £6.4m so far, selling Voronin and Dossena.   Babel is next up.

But that’s not all.  Hicks Jr (a board member) has been sending obscene emails to fans who question the Liverpool approach.    Spirit of Shankly got hold of the story (and they are no angels themselves, allowing a stand up comedian to do the Munich song at their end of year festivities last summer) and they demanded Hicks Jnr should resign.  He has done so.

Just for the record, what Hicks Jnr said was, “Blow me fuck face. Go to hell. I’m sick of you.”  Of course I can sympathise with his views, but then I am not a director of Liverpool.

Meanwhile just along the road Manchester United have released their end of year figures, and what interesting reading they make.

They made a profit of £48.2m.   But that included the sale of Ronaldo.  Without that they would have a lost of £31.8m

What is so interesting is that this is exactly the position of Everton.  They made a pre-tax profit in the year of the Rooney sale, as I pointed out the other day.  The rest of the time they make a loss – exactly like Man U.

Interest for the year was £41.9m – a sum that you could buy several players with.  But, oh dear, they don’t have the money, because it has all gone in  interest payments.  (And that’s apart from the PIK loans where the interest is rolled over into the loan, and not paid).

And to be  clear, Arsenal are spending a similar amount of money on interest – but they are using it to buy a new ground.  Man U are using it to pay for the owners buying the club.

What’s also amusing is that the club has now said that the new bond issue will be used to pay off the bank debt – not the PIK debt – but it is the PIK debt at 14.5% that is destroying the club.

Sir Alex spoke about the situation thus:

“I don’t have any concerns about the financial situation.  There is absolutely no issue at all. I am really confident about that.

“Concerns of the supporters are down to the fact that I haven’t moved in the transfer market. But that is nothing to do with the Glazers or with David Gill. It is simply because I am not going to pay £50million for a striker who is not worth it.”

That’s ok then.

The fact is that the bond scheme just moves the debt from one place to another – it doesn’t get rid of the debt.   It’s actually not looking very bright for either club.

Main Sources: Guardian, Telegraph, Arsenal.com, Wikipedia, Making the Arsenal.