Untold Arsenal: Arsenal News » Why the Prem League is about to go bust

There is a feeling in football that things really aren’t that bad.  In this article I will try to convince you that they are not just disastrously bad – they are actually far worse than that.  Football in England is about to explode.

I’ll start with something that we all know about: Portsmouth FC.  We all know of their financial mess.  But consider also the people who have been in charge of the club this season…

• Sacha Gaydamak son of a convicted arms trafficker, himself charged with money laundering.  Known to be totally anti-gay, and very much wanting to publicise his view that gays should be shot.

• Sulaiman al-Fahim.  No one ever knew who backed him or where any of his money (if there was any) came from.  He always said he was a good mate of Thaksin Shinawatra, late of Manchester City and Piers Morgan.

• Ali al-Faraj.   The classic multi-billionaire who couldn’t raise a farthing, the owner of an EPL club who had “no interest in football”.   In fact he was so bored with football he handed over control to…

• Daniel Azougy who was convicted of fraud.  He was a solicitor who was banned from practising for deliberately handing fake documents in to the courts.   And then we had…

• Balram Chainrai – who was previously linked with the Gaydamak empire (see above) and Levi Kushnir, who seemed to have spent so much time sending companies into receivership that I think he ran his businesses from the court robing room.  This guy loaned money to Ali al Faraj which gave him links to two of the four above, but what he also had was a charge on everything in the club, which means that if the club goes bust he can get the lot and have Portsmouth thrown out of the league for not paying football debts.

In case you think that Portsmouth are a one off, consider Cardiff run by Peter Ridsdale who ran Leeds and created the “live the dream” phrase for football.  He denied there was any tax owing at Cardiff, and said he would challenge any demand from the Revenue, and then asked the fans for money for some new players, before saying oops sorry he was wrong there was a tax case, then paid the fans’ money over to the tax man, and the tax man said, “nothing like enough, sunshine” and they are awaiting their next hearing.  The Revenue want them wound up.

Palace have been in administration for a while now, and well, its Crystal Palace, not really a big team.  And Southend, well small time.  Except that smaller clubs have been going in and out of administration for years now, but the number is growing and growing.   But hang on, Portsmouth, Cardiff and Southend – that was one week in the courts.

So I pose the questions: why are the clubs going bust when they have all this TV money, and where does it all end?

First answer, clubs are spending so much on salaries now that they cannot make ends meet even if they get to the money spinning cup final – as both Portsmouth and Cardiff did a year and a half ago.

While Arsenal invested the profits from player sales, TV and the rest on the greatest world-wide scouting network in the world, on training facilities to die for, and ultimately the redevelopment of the ground, most clubs did none of this.   They blew every single penny they didn’t have on salaries.  In short, Arsenal’s expenditure gives us something that lasts more than a year or two.  Most clubs’ money goes out of the door before they have even got it.

But many people, on hearing of the ludicrous situation that Man U and Liverpool are in say, “How could this be allowed?”   It seems unbelievable as does the fact that a club that gets £40 million odd from TV etc, can turn that into a loss.

The fact is, no one has broken any FA, EPL or UEFA rules.  They have disintegrated within the rules.  Ali al-Faraj, Balram Chainrai, the Glazers, Hicks and the rest of them have made it plain that they are motivated by making money for themselves, and the EPL can’t do anything about it.

Which brings me to the second part of the explanation – the people.  I’ve mentioned the crew at Portsmouth, and we know the people at Man U and Liverpool and the way they act.  Is this how football is?

In fact this is how it is through most of football.   Remember my notes about Derby recently – how three men went in, raped the club, and now are (fortunately) in jail?

Did football learn anything?   Of course not.   Portsmouth were allowed to bring in Daniel Azougy, a convicted fraudster.  Notts County’s owners were always unknown and are now seen even by dear of sweet Sven to be a bunch of crooks with contacts in North Korea who got the simplistic Trust that ran the club to hand over all their shares for nothing.   And we still don’t know who owns Leeds or Birmingham City (and it is not the front man Cheung – he’s just, well, the front man).   We have clubs who are financially based in the Virgin Islands, and clubs owned by tax exiles.  We have clubs owned by men who lend the clubs money and then demand interest at way above market rates.

So, it is the habit of spending all the money on salaries, and it is the fact that the industry is in the hands of people who, to put it mildly, don’t have many scruples.

Now you might think I am exaggerating, and that it could not have got this bad without someone noticing.  I am now going to prove that it could – by comparing football in England to the banking industry in the US.

The collapse of the western economies started in the US with the collapse of a company called Long Term Capital Management, (officially LTCM but widely known as Short Term Crazy Banking).

This firm had available cash of $500m.  Unfortunately LTCM had leveraged itself  so much it owed $1.25 trillion.  ($1,250,000,000,000)

The president of the Federal Reserve Bank of New York, called in all the big  US banks to organise a rescue.   LTCM were too big to go down.   But the head of Bear Stearns – one of the biggest banks of all, said his bank was not in the business of helping out two-bit firms known by a set of letters.

The other bankers were outraged, and vowed revenge.  They bailed out the crazy bankers, and then waited.   A short while later Bear Stearns ran into difficulty and went cap in hand to the other banks.  They could have been bailed out, but the other banks were so mad about LTCM they utterly refused.   Bear Stearns was bought out for about 10% of its value.   The collapse of the economies of the West had begun.

The point of my piece is that organisations are not built on logic but on people and personalities, and in football in England we have a load of totally unstable personalities running the show, many of whom are nutters.   Some are like the leaders of Bear Stearns who think they can play God.  Some will never forget an insult.  Some are just idiots.  Some are crooks.  None of them do what is right for the game – they act on impulse, emotion, greed and hatred.

For goodness sake, even the England manager has been done for tax fraud in Italy, with another series of cases pending, and we have got another load of people (all innocent until proven otherwise) waiting for their trials.  The word “Arry” springs to mind.

Figures up to 2008 showed that the EPL clubs then owed £3.1bn.   That is in addition to the money that League and the FA owe quite separately.   And this with a £2.7bn TV deal.

The most successful club of that period – Man U, who won League and Champs League, lost £44.8m that year.  Arsenal is the only club to take on debt as a long term clear investment – the stadium and the redevelopment of the old ground.

And what did the EPL say at this time about all the debt around football?   “The debt levels are manageable.”

So let’s take a middle of the road club and see.

In 2009 Everton reported a record turnover of £80m and a £6.7m loss.   That loss was not because they made some one-off investment.  It is in fact the loss they make each year, year after year after year (except when they sold Rooney).  And they are not exceptional.   Villa, Bolton… look anywhere you like, and the clubs are making losses year after year.  They are simply propped up by people putting money in.

Unsustainable continuing losses are the norm.   Welcome to Short Term Crazy Football: financial suicide meets crooks and nutters.  Football is about to implode.

UNTOLD RUMOURS

It has emerged that Arsenal FC made a huge error when taking on their new ground at the Emirates.  Under ancient rights, people living around the ground had grazing rights for their sheep on the Highbury ground.  In order to avoid this happening, each year Arsenal paid the residents a fee in lieu of the right being exercised.  However since moving to the Ems the fee has been “forgotten” and now angry residents are threatening to buy a flock of sheep and let them loose on the Ems pitch.

Fabregas is going to Barcelona to meet up with his friends in a couple of weeks.  He will then return to London.   The Mirror (which is now at the very heart of the attempt to knock Arsenal) will say, “Fabregas on secret trip to Barca” and use it as proof of the forthcoming transfer.  (You heard it here first).

Lady Nina Bracewell Smith has given all her shares in Arsenal to her dog Hobgoblin.  “I have had enough of football,” said her ladyship from her luxury yacht off the coast of Somalia.  “Out here on the ocean, miles from anywhere, with just one ship sailing towards us and the men on board dressed like pirates…  oh shit…”

Fabio Capello has offered Arry Redknapp tax advice and guidance.  Arry is due up in court to defend himself over allegations that he has been doing me (as a UK taxpayer) out of tax that he should have paid.  Capello considers himself something of an expert on the matter after he managed to get away with only a £3000 fine for giving false information to the Italian tax police while he was manager of Roma.

Capello could have faced a three-month jail term but struck a deal with the police and testified against his agent, who was jailed for 20 months.   We don’t know yet who Capello suggests that Arry could stitch up in this way, but the name Bentley springs to mind.

Commenting on this state of affairs an FA spokes person said,  “What’s tax?”

AND IN CASE YOU MISSED IT….

Why did Arsenal move to Highbury and not somewhere else?

Making the Arsenal. The story of how the modern Arsenal was made.  A must for every Arsenal fan with a sense of humour.

From Man U to Mansfield – how football is falling apart and what three guys have done to stop it.  Read here.

Coming up next… Billy the Dog McGraw in Porto.

Thank you for reading

Tony Attwood (who pays all his tax on time every time – I’d be bloody stupid not to writing articles like this).  2010