Untold Arsenal: Arsenal News » Clubs in debt: you ain’t seen nuffink yet
Clubs in debt: you ain’t seen nuffink yet
Trying to stay in touch with the financial morass that is the EPL, is tough. In this article I am trying to pull together some of the latest facts, figures, and then conclusions. I am hopeful that if there are factual errors these can be pointed out and I will produce an update a bit later.
Much of the info came from a newspaper report I was forwarded – and my apologies I can’t find the note saying who sent it to me or where it came from – but anyway, I’ve added some research of my own, and my own thoughts too.
———————————-
Chelsea – 6th in the rich list
- Turnover: £190.0m
- Operating profit: –£11.4m
- Net debt: £511.6m
- Interest payment: £0.7m
- Get a licence for the Champs League under new regs: No chance unless the rules are manipulated in their favour. So yes, no trouble.
- What the figures don’t tell you… The debt has now become an investment in the club (ie shares). But the problem is what happens to this year’s debt. Does the owner create more shares for himself to make the club debt free again?
- The crisis comes when Europe has had enough and says that the turning of debt into shares does not exempt the club from meeting Europe’s financial demands.
Manchester United – third in the rich list
- Turnover: £278.5m
- Operating profit: £91.3m – including the sale of Ronaldo
- Net debt: £716.6m
- Interest payment: £68.5m
- Get a licence for the Champs League under new regs: No chance.
- What the figures don’t tell you… Manchester IOU’’s finances are so complex, being wound up in an stream of companies that seem to own bits of each other, that no one can be quite sure of what’s what. The payment in kind loan interest was £26m taking that debt to £202m in the year, and the Bond money goes to pay off £70m of that and the bank loans. The owners are milking the club for millions which they are taking out for themselves.
- The crisis comes in 2013 with part one of the bond repayment and 2017 when the rest of is due, along with the PIK loan. The only solution under this ownership or any other is to take on even greater loans.
Arsenal – 5th in the rich list
- Turnover: £312.3m
- Operating profit: £58.8m
- Net debt: £297.0m over 20 years
- Interest payment: £16.6m
- Get a licence for the Champs League under new regs: Without any problem.
- What the figures don’t tell you. The club is paying down the Ems borrowing each year, so the debt is going. The Highbury Square borrowing is down to 25% of its opening level. The team is still incredibly young, and the youth policy is now providing new blood every year. So finally the continual production line is there.
- The crisis comes if the club go four years without being in the Champs League and the average attendance drops by 10,000.
Liverpool – 7th in the rich list
- Turnover: £164.2m
- Operating profit: £24.9m
- Net debt: £261.7m
- Interest payment: £36.5m
- Get a licence for the Champs League under new regs: Not a cat in hell’s chance
- What the figures don’t tell you… This is financial madness on a global scale. The ground if full, there has been Champs League every year, and there is still no way to pay the interest due out of the profit. The club is totally doomed. There is darkness, nothing, darkness.
- The crisis comes in 2010 because the banks want another hefty repayment. Even if they can find another bank insane enough to give them a loan, that just puts it back to 2011.
Manchester City – 19th in the rich list
- Turnover: £87.0m
- Operating profit: –£34.2m
- Net debt: £194.4m
- Interest payment: £14.4m
- Champions League: Presumably they are paying someone to get the rules changed.
- What the figures don’t tell you. Well, you know it anyway. £117m just spent on players, and they are still not sure of a top four place. The whole debt has now risen to £305m and is now called “equity” to play the UEFA game
- The crisis comes if there is an uprising in the Emirates, or if the crowds of other teams are so abusive about Arab owners of football clubs the the Sheikhs go back to camel racing. Since Arsenal has a contract for the sponsorship of the Ems we wouldn’t be affected.
Tottenham Hotspur – 15th in the rich list
- Turnover: £113.0m
- Operating profit: £18.4m
- Net debt: £45.9m
- Interest payment: £8.0m
- Champions League? Yes, if Europe continues to take off shore funding reports on trust.
- What the figures don’t tell you, is very much because the funding comes from a gent in the Virgin Isles where there is no disclosure of business dealings. The Very Tiny Totts pay 7.29 per cent on £30m of its borrowings, but doesn’t have to repay until 2024.
- The crisis comes if they can’t raise the cash for the 56,000-seat stadium and five star leisure complex in that most desirable part of town. Would you lend £250m to a club £45m in debt already? That means that there is no means of growth. Will the Virgin Island owners keep forking out the money?
Fulham
- Turnover: £53.7m
- Operating profit: –£2.1m
- Net debt: £164.0m
- Interest payment: £1.0m
- Get a licence for the Champs League under new regs: If Chelsea find a loophole by converting loan into stock, so can Fulham
- What the figures don’t tell you.. Fulham FC owe Mr Harrods owner £159m. However, unsecured, interest-free and with no repayment timetable. £4.5m bank is owed to NatWest, at 7.11% interest.
- The crisis comes in ????? If Mr Al Fahed gets bored, dies, runs out of cash, gets deported, gets arrested…
Aston Villa
- Turnover: £75.6m
- Operating profit: –£13.1m
- Net debt: £72.3m
- Interest payment: £5.7m
- Get a licence for the Champs League under new regs: No because the owner is paid interest on his loans, so can’t do a Chelsea.
- What the figures don’t tell you… Hold Your Head has a £13m bank loan secured against the ground and a £10m overdraft and owes the owner £49.5m. These loans are repayable in full in December 2016. Hold Your Head pay £4.1m in interest a year to the owner, plus £1.37m to the bank.
- The crisis comes in 2016 when the owner’s bank loan is repayable because the debt is already just on the size of the turnover. They could get more in the ground, they could get in the Champs League, but without, there is nowhere to go.
Birmingham City
- Turnover: £49.8m
- Operating profit: £13.7m
- Net debt: £12.0m
- Interest payment: £0.26m
- Champions League? Not with these finances and hidden owners.
- What the figures don’t tell you, apart from the fact that we still don’t know who owns the club, is that we don’t know much about the debt either.
- The crisis comes if the real owner (not Mr Cheung) turns out to be rather nasty.
Sunderland
- Turnover: £63.5m
- Operating profit: –£2.4m
- Net debt: £48.8m
- Interest payment: £0.7m
- Get a licence for the Champs League. No
- What the figures don’t tell you. They owe £35m to their parent company – no interest, no fixed repayment date. Plus a £13.6 overdraft.
- The crisis comes any time now. The club was sold to an American this year, and he is speaking with forked tongue. The summer could be very bumpy indeed.
Bolton Wanderers
- Turnover: £52.3m
- Operating profit: –£5.3m
- Net debt: £58.4m
- Interest payment: £3.9m
- Get a licence for the Champs League. No, but then…
- What the figures don’t tell you. It’s a disaster. The club owes Edwin Davies £55.9m on which they pay 10% interest and have to repay a sizeable chunk on demand.
- The crisis comes, either with relegation or because the owner has had enough. This is the Villa and Man U model – owner takes money out. Compare with Fulham where this does not happen. Close the doors, walk away, its over.
Hull City
- Turnover: £11.2m
- Operating profit: –£9.2m
- Net debt: £17.1m
- Interest payment: £0.4m
- Get entry into the Champs League. Not a chance.
- What the figures don’t tell you. It’s all over. The accountants said that if the Spitty go down they need £23m to avoid Portsmouthification. If they stay up they need £16m. Whist drive anyone?
- The crisis is here, it is real, it is terminal. There is no future.
Wigan Athletic
- Turnover: £46.3m
- Operating profit: –£17.0m
- Net debt: £54.0m
- Interest payment: £1.5m
- Champions League? No.
- What the figures don’t tell you is that Dave Whelan is owed £39m. It is interest free (how Aston Hold Your Head would like that) with no fixed repayment date (ditto). They owe Barclays of £18.7m, repayable on demand. Oooops.
- The crisis comes if the honourable Mr Whelan has had enough, or if the dishonourable Barclays has had enough.
Stoke City
- Turnover: £11.2m
- Operating profit: –£7.8m
- Net debt: £2.3m
- Interest payment: £0.5m
- Champions League: Do we really want all of Europe’s top players out with broken legs?
- What the figures don’t tell you. They claim they are debt free but actually owe a fortune to Peter Coates, who owns bet365 (remember that if you gamble and didn’t like the assault on Ramsey.) It looks like he doesn’t take any interest on the loan.
- The crisis comes when Bet365 goes bust because football is disgusted with the Stokian tactics.
Everton
- Turnover: £79.7m
- Operating profit: £6.3m
- Net debt: £37.9m
- Interest payment: £4.1m
- Champions League: No
- What the figures don’t tell you. They lose money every year except when they can sell a Rooney. They have borrowed £27m against future ticket sales at an insane 7.79% When that has gone, then what? They were dependent on the new stadium, but now can’t find the ground, can’t find the money, and next year’s income is already spent.
- The crisis is here, and there is no way out. Close the door as you go.
Burnley
- Turnover: £11.2m
- Operating profit: –£8.9m
- Net debt: £11.9m
- Interest payment: £2.7m
- Champions League? Well it doesn’t really matter does it?
- What the figures don’t tell you. Seven directors have lent £6.67m to the club and can have it back at any time. The debt is bigger than the annual turnover. A basket case.
- The crisis might be postponable. If they have clauses in the contracts that say that everyone goes to half pay upon relegation this could be the solution. They make a profit this year, and pay off a bit of the debt. Otherwise they tumble to the Weetabix Northern League.
West Ham United
- Turnover: £71.6m
- Operating profit: –£32.8m
- Net debt: £114.9m
- Interest payment: £3.0m
- Get a licence for the Champs League under new regs: quite irrelevant, although they didn’t for this season.
- What the figures don’t tell you… If you owe more than your turnover you should be put in a crate and shipped off to Titan. West Porno owe money to five banks, and if they turn you down for the next round (as they have) you are really in the muck.
- The crisis comes in August 2011 because the “club” is already in breech of its loans which is why the five banks want out. If £35 doesn’t show up, that’s the end. The porno merchants would get some real estate.
Portsmouth
- Turnover: £70.5m
- Profit: –£17.0m
- Net debt: £57.7m
- Interest payment: £6.6m
- Champions League: Hey ho
- What the figures don’t tell you: Administration, and the Revenue smell a rat. And that’s not Harry Redknapp, or the other two ex-Portsmouth men who are due in the dock this month. What we all want to know is, where did the money go?
- The crisis has been, and its downhill all the way. Southern League?
Wolverhampton Wanderers
- Turnover: £18.2m
- Operating profit: –£1.6m
- Net debt: £13.0m
- Interest payment: £0m
- Champions League. No
- What the figures don’t tell you… Steve Morgan must be the envy of Aston Villa since he is owed £13m but doesn’t charge any interest.
- The crisis comes if Steve Morgan goes. He is not totally Wolverhampton since he tried to buy Liverpool, but was turned away at the door.
Blackburn Rovers
- Turnover: £50.9m
- Operating profit: –£6.8m
- Net debt: £20.3m
- Interest payment: £0.8m
- Champions League? Not in 10 billion years.
- What the figures don’t tell you is that they are on the very edge. The inventors of rotational fouling have a £20m bank debt, and the estate of Jack Walker doesn’t seem to be paying up any more.
- The crisis is very real and it hits in May 2012 when the £20m loan is repayable.
——————————–
Other Untold financial stories
———————————————-
The sound of a billion fans saying “Ooops” as football destroys itself is copyright © Untold Arsenal 2010.