Post by QPR Report on Jan 26, 2010 7:28:45 GMT
The Guardian
Gordon Brown wades into football debt debate declaring 'it's too high'• Clubs must look at their responsibilities to supporters, says PM
• Government intervention ruled out – 'it's a matter for the clubs'
Owen Gibson guardian.co.uk, Monday 25 January 2010
Gordon Brown spoke about debt at Premier League clubs during his monthly press conference at 10 Downing Street. Photograph: Pool/Reuters
The prime minister, Gordon Brown, today warned that debt levels at some football clubs were "too high", telling them to "look very seriously at their responsibilities to supporters" in the wake of weekend protests at Old Trafford and Fratton Park.
Although he insisted it was not for the government to intervene, saying "the clubs themselves … have got to deal with this issue", it is understood that the sports minister, Gerry Sutcliffe, will discuss the matter when he meets with football authorities within the next three weeks.
The Glazer family's successful refinancing of £504m of the £716.5m in debt they loaded onto Manchester United in order to buy the club and the hundreds of millions they will pay in interest and fees as a result, together with the financial crisis at Portsmouth and severely stretched balance sheets elsewhere, has reignited the debate about the levels of debt in English football and whether they are sustainable.
"There is an issue here for football supporters, that over the last few years a number of football clubs have become highly leveraged and therefore they have far higher levels of debt than the income they are able to generate from the footballing activities and the television activities," said Brown at his monthly Downing St press conference.
"Of course, in many cases there are very simple ways that they can deal with these problems. In other cases, football clubs don't have the income that is necessary to deal with the leverage that they have.
"But this is an issue and it's an issue football clubs are facing and it's a worry to supporters and I think the management of football clubs have got to look very seriously at their responsibilities to their supporters, that they have high levels of income from the supporters but the debt levels have been at a leverage level that is too high."
In addition to the controversy surrounding the high profile leveraged buy-outs of Manchester United and Liverpool, many other clubs including West Ham and Portsmouth have gambled by mortgaging future season ticket and television revenues to boost their short-term cashflow.
In 2008, the FA chairman, Lord Triesman, caused a deep rift with the Premier League when he warned of the "debt mountains" in English football and the former culture secretary Andy Burnham set football authorities seven questions about the game's future.
Last September Sutcliffe called on the FA to do more to regulate the game and in a letter that also went to the Football League and the Premier League said he was "concerned at the amount of debt that is being used to finance takeovers".
"The trend of clubs being financed in this way is a concern for many and I believe it is important you continue to look at ways in which club takeovers are financed and whether this is in the best interests of the club in question, and indeed in the wider interests of the game," he said.
Sutcliffe will meet with the FA, the Premier League and the Football League during February in order to discuss the matters raised in his eight-page response to their submissions.
Uefa plans to introduce new regulations in 2012 that would prevent clubs that fail to break even over a three year period from entering European competition.
www.guardian.co.uk/football/2010/jan/25/premier-league-debt-gordon-brown
Gordon Brown wades into football debt debate declaring 'it's too high'• Clubs must look at their responsibilities to supporters, says PM
• Government intervention ruled out – 'it's a matter for the clubs'
Owen Gibson guardian.co.uk, Monday 25 January 2010
Gordon Brown spoke about debt at Premier League clubs during his monthly press conference at 10 Downing Street. Photograph: Pool/Reuters
The prime minister, Gordon Brown, today warned that debt levels at some football clubs were "too high", telling them to "look very seriously at their responsibilities to supporters" in the wake of weekend protests at Old Trafford and Fratton Park.
Although he insisted it was not for the government to intervene, saying "the clubs themselves … have got to deal with this issue", it is understood that the sports minister, Gerry Sutcliffe, will discuss the matter when he meets with football authorities within the next three weeks.
The Glazer family's successful refinancing of £504m of the £716.5m in debt they loaded onto Manchester United in order to buy the club and the hundreds of millions they will pay in interest and fees as a result, together with the financial crisis at Portsmouth and severely stretched balance sheets elsewhere, has reignited the debate about the levels of debt in English football and whether they are sustainable.
"There is an issue here for football supporters, that over the last few years a number of football clubs have become highly leveraged and therefore they have far higher levels of debt than the income they are able to generate from the footballing activities and the television activities," said Brown at his monthly Downing St press conference.
"Of course, in many cases there are very simple ways that they can deal with these problems. In other cases, football clubs don't have the income that is necessary to deal with the leverage that they have.
"But this is an issue and it's an issue football clubs are facing and it's a worry to supporters and I think the management of football clubs have got to look very seriously at their responsibilities to their supporters, that they have high levels of income from the supporters but the debt levels have been at a leverage level that is too high."
In addition to the controversy surrounding the high profile leveraged buy-outs of Manchester United and Liverpool, many other clubs including West Ham and Portsmouth have gambled by mortgaging future season ticket and television revenues to boost their short-term cashflow.
In 2008, the FA chairman, Lord Triesman, caused a deep rift with the Premier League when he warned of the "debt mountains" in English football and the former culture secretary Andy Burnham set football authorities seven questions about the game's future.
Last September Sutcliffe called on the FA to do more to regulate the game and in a letter that also went to the Football League and the Premier League said he was "concerned at the amount of debt that is being used to finance takeovers".
"The trend of clubs being financed in this way is a concern for many and I believe it is important you continue to look at ways in which club takeovers are financed and whether this is in the best interests of the club in question, and indeed in the wider interests of the game," he said.
Sutcliffe will meet with the FA, the Premier League and the Football League during February in order to discuss the matters raised in his eight-page response to their submissions.
Uefa plans to introduce new regulations in 2012 that would prevent clubs that fail to break even over a three year period from entering European competition.
www.guardian.co.uk/football/2010/jan/25/premier-league-debt-gordon-brown
