Post by Macmoish on Nov 4, 2010 6:40:49 GMT
Guardian/Owen Gibson
Culture secretary wants Premier League to rule out leveraged buyouts
• Lessons on debt have not been learnt, says Jeremy Hunt
• Manchester United's debt "worries me a lot"
The government today urged the Premier League to introduce rules on leveraged buyouts, with the culture secretary, Jeremy Hunt, saying that Manchester United's debt "worries me a lot".
In his first intervention on the subject since the coalition came to power, Hunt said he is alarmed by spiralling debts and concerned that lessons learned during the financial crisis had not hit home with those who run some clubs. "The lessons the rest of the country have to learn about the over-dependence on debt seemed not to have been learned by some of the people who are running our Premiership football sides."
The issue of club ownership and football governance became a hot topic before the election, in the wake of fan protests at Manchester United at the £769m debt loaded on to the club by the owning Glazer family and at Liverpool, where the former owners Tom Hicks and George Gillett had funded loan interest payments from the club's cashflow.
Both Labour and the Conservatives proposed policies to increase fan representation and encourage supporters' trusts to take a stake in clubs, but there has been little detail since on how they might be taken forward.
Hunt welcomed recent steps made by the Premier League to tighten its fit and proper persons test and require more transparency and financial information, partly in response to tough questions asked by former culture secretary Andy Burnham, but said they should go further.
"My hope is they bring in rules that make sure we only have sensible amounts of leverage when people buy football clubs because we all know what happens when debt gets out of control," Hunt told the BBC. "The football authorities have taken some steps. There is a lot more transparency. They have strengthened the fit and proper person's test. They are moving in the right direction but it is obviously something that is a concern to a lot of people.
"The reason it is a concern is because clubs do not just have a responsibility to their owners, they have a responsibility to their fans as well. They are part of their local communities. They are different to other types of businesses and that is why this is a very important issue. The Premier League understands this and that it does not do them any good if a club goes under.
But Hunt claimed foreign owners, such as Roman Abramovich at Chelsea and Sheikh Mansour at Manchester City, had helped turn the Premier League into a great British export. And he said debt had a place when used responsibly, as at Arsenal where it had helped fund a new stadium and improved the club's long-term prospects.
"Let's not forget that foreign owners have brought huge amounts of money into the Premier League, which has meant a couple of things. It has made it the best Premier League in the world and secondly it has meant a huge amount of money has been invested in the UK in grass roots football."
His comments on the social responsibilities of clubs will be welcomed by supporters' bodies but they may be less cheered by Hunt's insistence that the matter is one for football authorities to deal with.
Some had wanted the government to put more pressure on the Premier League and the Football Association to overhaul governance arrangements and introduce new ownership rules and financial controls.
"I would hope as the person responsible for sport that they would learn the lessons of what has happened in the rest of the economy. Sports are in a much better position to regulate themselves than government," said Hunt.
"It is not just what has happened at Manchester United but also Liverpool and Portsmouth. The Premier League understands something has to be done."
Hunt admitted he was "dead jealous" Wayne Rooney had renegotiated a lucrative new contract at Manchester United. "Wayne Rooney brings a lot of pleasure to a lot of fans. He is one of the top footballers in the world," he said. "It is not for me to step in and try and control that in any way. But everyone though is shocked at the scale of these packages."
The Premier League said its new rules on ownership obliged prospective buyers to prove their plans for clubs were financially sustainable. "The Premier League has introduced a raft of new regulatory and governance measures over the past two years that encourage responsible and sustainable financial management. Future financial information and audited accounts are required on an annual basis as well as upon a change of ownership, where proof of funds and a business plan also have to be submitted to the League.
"The secretary of state is right when he says that debt is an important function of the economy as long as it is proportionate and sustainable; our regulatory framework is designed to ensure this is the case for our member clubs. If this ceases to be so we are able to intervene.Clearly there are always challenges on the horizon and we have always demonstrated an appetite to meet them in an appropriate and proportionate manner."
www.guardian.co.uk/football/2010/nov/03/jeremy-hunt-premier-league-debt-rules
Culture secretary wants Premier League to rule out leveraged buyouts
• Lessons on debt have not been learnt, says Jeremy Hunt
• Manchester United's debt "worries me a lot"
The government today urged the Premier League to introduce rules on leveraged buyouts, with the culture secretary, Jeremy Hunt, saying that Manchester United's debt "worries me a lot".
In his first intervention on the subject since the coalition came to power, Hunt said he is alarmed by spiralling debts and concerned that lessons learned during the financial crisis had not hit home with those who run some clubs. "The lessons the rest of the country have to learn about the over-dependence on debt seemed not to have been learned by some of the people who are running our Premiership football sides."
The issue of club ownership and football governance became a hot topic before the election, in the wake of fan protests at Manchester United at the £769m debt loaded on to the club by the owning Glazer family and at Liverpool, where the former owners Tom Hicks and George Gillett had funded loan interest payments from the club's cashflow.
Both Labour and the Conservatives proposed policies to increase fan representation and encourage supporters' trusts to take a stake in clubs, but there has been little detail since on how they might be taken forward.
Hunt welcomed recent steps made by the Premier League to tighten its fit and proper persons test and require more transparency and financial information, partly in response to tough questions asked by former culture secretary Andy Burnham, but said they should go further.
"My hope is they bring in rules that make sure we only have sensible amounts of leverage when people buy football clubs because we all know what happens when debt gets out of control," Hunt told the BBC. "The football authorities have taken some steps. There is a lot more transparency. They have strengthened the fit and proper person's test. They are moving in the right direction but it is obviously something that is a concern to a lot of people.
"The reason it is a concern is because clubs do not just have a responsibility to their owners, they have a responsibility to their fans as well. They are part of their local communities. They are different to other types of businesses and that is why this is a very important issue. The Premier League understands this and that it does not do them any good if a club goes under.
But Hunt claimed foreign owners, such as Roman Abramovich at Chelsea and Sheikh Mansour at Manchester City, had helped turn the Premier League into a great British export. And he said debt had a place when used responsibly, as at Arsenal where it had helped fund a new stadium and improved the club's long-term prospects.
"Let's not forget that foreign owners have brought huge amounts of money into the Premier League, which has meant a couple of things. It has made it the best Premier League in the world and secondly it has meant a huge amount of money has been invested in the UK in grass roots football."
His comments on the social responsibilities of clubs will be welcomed by supporters' bodies but they may be less cheered by Hunt's insistence that the matter is one for football authorities to deal with.
Some had wanted the government to put more pressure on the Premier League and the Football Association to overhaul governance arrangements and introduce new ownership rules and financial controls.
"I would hope as the person responsible for sport that they would learn the lessons of what has happened in the rest of the economy. Sports are in a much better position to regulate themselves than government," said Hunt.
"It is not just what has happened at Manchester United but also Liverpool and Portsmouth. The Premier League understands something has to be done."
Hunt admitted he was "dead jealous" Wayne Rooney had renegotiated a lucrative new contract at Manchester United. "Wayne Rooney brings a lot of pleasure to a lot of fans. He is one of the top footballers in the world," he said. "It is not for me to step in and try and control that in any way. But everyone though is shocked at the scale of these packages."
The Premier League said its new rules on ownership obliged prospective buyers to prove their plans for clubs were financially sustainable. "The Premier League has introduced a raft of new regulatory and governance measures over the past two years that encourage responsible and sustainable financial management. Future financial information and audited accounts are required on an annual basis as well as upon a change of ownership, where proof of funds and a business plan also have to be submitted to the League.
"The secretary of state is right when he says that debt is an important function of the economy as long as it is proportionate and sustainable; our regulatory framework is designed to ensure this is the case for our member clubs. If this ceases to be so we are able to intervene.Clearly there are always challenges on the horizon and we have always demonstrated an appetite to meet them in an appropriate and proportionate manner."
www.guardian.co.uk/football/2010/nov/03/jeremy-hunt-premier-league-debt-rules