Record losses, and disaster awaits. The Premier League crisis « Untold Arsenal: Arsenal News, supporting the club, the players and the manager

By Tony Attwood

The 20 clubs in the Premier League were very careless last year.  And I mean very careless.

I mean if  lose a £5 note I am fairly pissed off.  And these guys lost 100 million times that amount between them.  £25 million per club on average.  Lost. Gone.  Down the plug.  Vanished.    In the richest league in the world the losses in one season were £484m.

Doesn’t that suggest either something is very seriously wrong, or someone is being careless.  Or maybe someone is really trying to screw the whole operation up?

Doesn’t that suggest that this can’t go on?

What is the power than runs this league?  At least on this one I can give you the answer – although of course you know it already.  Wealthy owners is the answer.  16 out of 20 of the clubs have them.

The clubs’ problem comes most from wages – 68% of their turnover went on wages.  Football clubs are not the only organisations that put all their money into salaries – in the UK schools and GP surgeries do the same, at the same percentage level.  I don’t know much about GP surgeries (the place where you go to get first line medical treatment when your hangover starts to last for weeks rather than days) but I know that this approach to schooling causes endless problems in British education.  But that’s another matter.

There is a growing awareness that this situation in football is unsustainable, an awareness that is especially strong among MPs in Britain who are currently investigating football.  One senior figure even called for the financial fair-play rules (which require clubs to move towards breaking even by 2014) to be introduced across all of English football.

The point is now being made that this financial issue is the key to our future footballing happiness, and that the FA should start to act as a controlling influence.

Except… this is the FA we are talking about.  The organisation that went cap in hand with a royal prince, the Almighty David Beckham, and the Prime Minister of the United Kingdom of Great Britain and Northern Ireland, to Fifa to ask for permission to spend billions on the world  cup, and then, when only getting one vote, suddenly discovered Fifa was corrupt, and started to make a fuss.  It doesn’t give one much confidence.

Hugh Robertson, the Conservative minister for sport in the Coalition government that runs Britain has said he is awaiting the select committee’s report before deciding what to do, although he has said that football is “the worst governed sport in the country”.

In a statement of mind-blowing stupidity, ineptness and crass ignorance, which has only be surpassed by other statements from the same organisation, the Premier League issued a non-attributable statement saying  the league is encouraging “sound financial management” by introducing a “sustainability test”.  Clubs have to present their accounts and future budgets to the league, to demonstrate how they will fund themselves next season.

You can imagine how it goes.

“Ah yes, Bolton,” said Mr Prem League Committee man.  “How will you sustain yourselves next year?”

“The owner will pay.”

“OK fair enough,” says the Committee man.  “Next…”

The Parliamentary Select Committee to which Untold made a submission, written by Phil Gregory, has finished taking evidence and will publish a report at the end of June.

Meanwhile we have the Uefa financial regs which apply to clubs entering the Euro competition.  This says EPL clubs can make a cumulative loss of €45m (£39.7m) altogether over the next three seasons and can’t rely on owners’ subsidies to cover those losses.

Given that it is interesting to note that all the top seven clubs except Arsenal lost money (Arsenal made £56m).   Manchester City lost £121m, while Man U lost £79m.  But slightly more worryingly we lost £6m between May and November last year.  Let’s hope that was a one off.

Chelsea lost £78m. Tottenham lost £7m loss and took £15m from Joe Lewis.  Next season without Euro football will be tough for them, and Arry’s supply for new player money will dry up just as he has to toddle along to the court to explain himself in that long running legal case of his.   Aston Villa lost £38m  while Liverpool lost £20m.

Wolverhampton Wanderers, Birmingham City and WBA were the only others (beside Arsenal) making a profit.  WBA made it in a lower league while Birmingham City are tipped to go bust if they go down – showing that their tiny profit was a little blip in an otherwise disastrous financial screw up which Untold has mentioned from time to time since the current owners bought the club.

Only four clubs did not take money from owners: Arsenal,  West Bromwich Albion, Everton and Manchester United.    Man U in fact did the reverse by paying its owners £42m to cover interest and £65m on refinancing fees.  (Quite a clever ploy if you can manage it).

At Manchester City, they managed a different trick – taking a stadium built with £132m of tax payers money and then throwing multi-millions at players.  Actually as a UK tax payer I feel rather miffed about that.

So, what next?

Quite honestly, no one knows.  Putting faith in the FA seems pointless and pathetic, and the EPL itself denies anything is wrong even though the churn rate in the EPL is phenomenal (as I have mentioned elsewhere).  Under half the teams who were in the Premier League when Mr Wenger came along to Arsenal are now in the Premier League.  Financial and footballing survival seems quite a trick in itself and very few clubs are pulling that off.

Whether Parliament has the power and the will to regulate football in England seems highly questionable, and it is most likely that the free market will be left to itself – especially as we have a Conservative Party dominating the Coalition.   (Very pro the free market are the Conservatives.  It is the party of Margaret Thatcher).

Which means, more of the same.  More sky high wages, more clubs at the bottom going bust, more hopefuls coming up.  It can’t go on like this forever, of course, but for the moment, everyone pretends it can.

One little thing will tip it over the edge.  My guess is it could be the new Euro regulations on selling TV rights by country, but it could be the collapse of the Glazer empire, a revolution in a certain oil rich country, or… well practically anything.  It’s on teetering on a knife edge.