Post by QPR Report on Apr 1, 2010 21:59:36 GMT
Times April 2, 2010
Revealed: the £150m cost of debts owed by Premier League clubs
Teams in frantic race to reduce borrowings
Oliver Kay Football Correspondet
The 20 Premier League clubs paid a combined total of almost £150 million in interest charges in the last financial year — the most striking illustration of the cost of the league’s £1.9 billion debt mountain.
Manchester United’s bill was by far the largest, with £41.9 million paid in interest even as their debt rose to £716.5 million, but Arsenal, Liverpool, Manchester City and Portsmouth also paid out significant sums in an attempt to scale down their borrowings. City spent £14.5 million on interest — along with £82.6 million on wages, just under 95 per cent of their total turnover — as Sheikh Mansour attempted to transform the club he inherited from the turbulent Thaksin Shinawatra regime.
An in-depth investigation in today’s Times reveals that the total amount of debt in the Premier League has come down from £3.1 billion to £1.92 billion — largely thanks to philanthropic gestures from the billionaire benefactors of Chelsea and Manchester City, who converted their personal loans to their clubs into equity, although Arsenal and Liverpool have each paid off more than £100 million of their debts since the summer of 2008.
Sepp Blatter, the Fifa president, declared this week that “something is wrong here with the Premier League” after Portsmouth went into administration, but there has been a palpable shift towards financial stability at some clubs. In addition to the debts paid off at Arsenal and Liverpool — under instruction from the Royal Bank of Scotland in the case of the latter — West Ham United reacted to previous excesses by reducing their wage bill as they sought to avoid the same fate as Portsmouth.
Wages remain by far the biggest expense among the 20 clubs — coming in at more than £1 billion even before Liverpool’s and Portsmouth’s figures are known — and several clubs’ staff costs far exceed the Uefa-recommended maximum of 70 per cent of turnover.
In addition to Manchester City, clubs such as Aston Villa, Blackburn Rovers, Sunderland, West Ham United and Wigan Athletic all spent at least 75 per cent of turnover on wages — as did Birmingham City, Burnley and Wolverhampton Wanderers in winning promotion from the Coca-Cola Championship.
Apart from Portsmouth, the club whose financial situation is causing greatest concern is Hull City, whose accounts contain a stark warning from their auditor, Deloitte, about the club’s future ability to operate as a going concern. Although Hull made a profit of just under £2 million in the financial year ending July 31 last year and have relatively small debts of £15.3 million, Deloitte states that, in the event of relegation from the Premier League, the club will face a shortfall of £21 million and that, even if they avoid relegation, a shortfall of £16 million is expected next season.
The “emphasis of matter” clause in Hull’s accounts has already triggered the attention of the Premier League, which introduced tighter financial regulations last September to avoid a repeat of the situation that was already unfolding at Portsmouth. Hull, like the other 19 clubs, were required to submit “future financial information” documents this week, laying out expected budgets for next season, and are likely to be subjected to close scrutiny, with the league having the power to impose a transfer embargo in an extreme case.
Richard Scudamore, the Premier League chief executive, believes that the new rules will go a long way towards ensuring no repeat of the Portsmouth situation, but even increased regulation, he admits, could be no guarantee if owners were guilty of such “rank bad management”.
www.timesonline.co.uk/tol/sport/football/premier_league/article7085215.ece
Revealed: the £150m cost of debts owed by Premier League clubs
Teams in frantic race to reduce borrowings
Oliver Kay Football Correspondet
The 20 Premier League clubs paid a combined total of almost £150 million in interest charges in the last financial year — the most striking illustration of the cost of the league’s £1.9 billion debt mountain.
Manchester United’s bill was by far the largest, with £41.9 million paid in interest even as their debt rose to £716.5 million, but Arsenal, Liverpool, Manchester City and Portsmouth also paid out significant sums in an attempt to scale down their borrowings. City spent £14.5 million on interest — along with £82.6 million on wages, just under 95 per cent of their total turnover — as Sheikh Mansour attempted to transform the club he inherited from the turbulent Thaksin Shinawatra regime.
An in-depth investigation in today’s Times reveals that the total amount of debt in the Premier League has come down from £3.1 billion to £1.92 billion — largely thanks to philanthropic gestures from the billionaire benefactors of Chelsea and Manchester City, who converted their personal loans to their clubs into equity, although Arsenal and Liverpool have each paid off more than £100 million of their debts since the summer of 2008.
Sepp Blatter, the Fifa president, declared this week that “something is wrong here with the Premier League” after Portsmouth went into administration, but there has been a palpable shift towards financial stability at some clubs. In addition to the debts paid off at Arsenal and Liverpool — under instruction from the Royal Bank of Scotland in the case of the latter — West Ham United reacted to previous excesses by reducing their wage bill as they sought to avoid the same fate as Portsmouth.
Wages remain by far the biggest expense among the 20 clubs — coming in at more than £1 billion even before Liverpool’s and Portsmouth’s figures are known — and several clubs’ staff costs far exceed the Uefa-recommended maximum of 70 per cent of turnover.
In addition to Manchester City, clubs such as Aston Villa, Blackburn Rovers, Sunderland, West Ham United and Wigan Athletic all spent at least 75 per cent of turnover on wages — as did Birmingham City, Burnley and Wolverhampton Wanderers in winning promotion from the Coca-Cola Championship.
Apart from Portsmouth, the club whose financial situation is causing greatest concern is Hull City, whose accounts contain a stark warning from their auditor, Deloitte, about the club’s future ability to operate as a going concern. Although Hull made a profit of just under £2 million in the financial year ending July 31 last year and have relatively small debts of £15.3 million, Deloitte states that, in the event of relegation from the Premier League, the club will face a shortfall of £21 million and that, even if they avoid relegation, a shortfall of £16 million is expected next season.
The “emphasis of matter” clause in Hull’s accounts has already triggered the attention of the Premier League, which introduced tighter financial regulations last September to avoid a repeat of the situation that was already unfolding at Portsmouth. Hull, like the other 19 clubs, were required to submit “future financial information” documents this week, laying out expected budgets for next season, and are likely to be subjected to close scrutiny, with the league having the power to impose a transfer embargo in an extreme case.
Richard Scudamore, the Premier League chief executive, believes that the new rules will go a long way towards ensuring no repeat of the Portsmouth situation, but even increased regulation, he admits, could be no guarantee if owners were guilty of such “rank bad management”.
www.timesonline.co.uk/tol/sport/football/premier_league/article7085215.ece