Untold Arsenal: Arsenal News. Supporting the Lord Wenger in all he does » EPL owes more money than rest of Euro football combined

18 English clubs owe 56% of the debt of the 732 European clubs licensed by UEFA

Manchester U and Liverpool liable to be excluded from Europe under new regulations

There is a secret UEFA report called “The European Club Footballing Landscape,” which reviews the finances of football.  The latest available edition is that which trawls through 2007/8.

It looks at the 732 clubs licensed by UEFA to play in its international competitions.

Why it is secret, no one is saying.  After all what could be more important in football today than to reveal the extent of the financial crisis which threatens the very existence of the game in its current form?   But that’s UEFA for you – keep it under your hat as long as possible – especially when it turns out that your richest league has 56% of all the debt in European football.

Anyway, the secrecy failed because the Guardian has got a copy.  They say that the report shows the combined debts of 18 EPL clubs at around €4bn.  They exclude Portsmouth and West Porno (or West Iceland as they were then) because they were not licenced, because they were both on other planets at the time.

So the EPL debt is four times the debt of La Liga, the second most indebted league, and La Liga is considered by some to be a basket case in its own right, with Real Mad spending money in a way that is unrelated to any known system of economics, and paying for Da do Ron Ron on the basis of shirt sales.

Simultaneously the EPL made loads more money from TV etc than anyone else.  The average club took away €122m in rights and royalty fees compared with €79m in Germany.

Anyway UEFA are now going to publish this report in full, and come out with a new set of Financial Fair Play rules, which it says are agreed in principle by the big clubs and their leagues.

These require clubs to break even financially from 2012-13. There are suggestions that the loophole of putting money into shares so it doesn’t show as debt is being closed in the new regs.

What’s more the report specifically (and yes it is specific on this) identifies Manchester IOU and Liverpool Insolvency as catastrophic in its own right, and there is implied criticism of the way the EPL and the FA have simply closed their eyes and said and done nothing about the disaster.

According to the Guardian the report says, “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, so far acting principally as a burden rather than to support investment or spending”.

Amazingly (and this is really taking us into fairy land), the EPL has responded to the news of the report by defending the EPL club debt saying that as they earn more they can borrow more.  In other words the EPL is resisting the reforms (tiny though they are) at UEFA.

According to the report 47% of the licensed clubs made a loss in 2008.  Now let us compare that with the EPL, where as far as I can see only about 15% made a profit, and some of that is dubious as the accounts are hidden in the Virgin Islands.

So the EPL and FA have now cobbled together a new plan, which is to accept UEFAs new rules but to seek an amendment so that “benefactors” can put in money without being accounted for in the new rules.   This would allow not only the KGB in Fulham and Manchester Arab to continue as before, but also to allow Aston Hold Your Head Villa, Bolton, Everton and others to continue using their system in which the owner lends more and more money to the club each year.

This is not to suggest that the head holders, for example, spend all the owner’s money on wages – they have built new training facilities and new facilities for supporters – which is what UEFA wants.  But as the UEFA model stands that would make no difference unless there were to be a fixed repayment plan (as in a conventional mortgage), and I am not sure that is in place.

AV could find a way out of this if they could fill their ground for each game and get into Europe, without spending any more money (and then avoiding the idea of deliberately getting kicked out of Europe by fielding a weakened team), especially if they schedule the debt repayment over a very long period of time, but that depends on getting an amendment to the rules – which UEFA seem unwilling to give, not least because of the intransigence of the EPL and FA overall.

Arsenal will continue to be safe because the debt on the stadium is being paid off on monthly repayments of the mortgage, and the club is far more profitable as a result of the development of the ground than it was at Highbury.   Tottenham will be safe because their accounts are in part hidden off-shore.

Quite what Manchester U and Liverpool can do is unclear.   Chelsea and Man City can hope for a rule fudge to allow them to hide the money from the owner, but the condition of Man U and Liverpool is so awful, and they are so flagrantly bust, there is, under the present rules, no way in which they can get a licence to compete in Europe.

Tony Attwood.

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UNTOLD RUMOURS of a financial nature

Peter Ridsdale: “We haven’t borrowed a penny from the bank since I came here: we’ve been self-sufficient and we don’t have a bank overdraft.”

Untold Rumours hear that there is no bank overdraft because Barclays is so frightened of the state of Cardiff and its impending implosion that they won’t loan the club a penny more.

This is because when Cardiff sell a player the money goes to two directors of the company that owns the club’s stadium.  The club have even borrowed from Barclays the money equal to what the club hope to get at the end of the season for ending in the top six.   They also have another debt of which £10m has to be repaid in December.

Mr Ridsdale is rumoured to earn £1m a year.

Notts County’s latest creditor arrangements look like they might be a way of getting around the point deduction arrangements.  If so the FA and League will spring into action.   “If they have debts equal to those of a smaller nation then we wouldn’t blink.  If they were trading with North Korea we’d love it.  If we had no idea who owned them, well who cares.  So no administration, no problem.”

Portsmouth could fare worse. If they go into administration they could lose 9 points this season, and then 20 more next season for failing to reach an agreement with all their creditors.  To avoid this second hit they have to pay all the football creditors in full, paying Revenue and Customs (that’s you and me) in full, and then pay a few farthings to the rest.   It’s tough, isn’t it?

AS FOR THE REST OF HUMANITY

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