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Post by Macmoish on May 23, 2012 16:53:06 GMT
www.guardian.co.uk/football/2012/may/23/premier-league-losses-2010-11-profitsGuardian/David Conn
Premier League clubs lost £392m last year despite record £2.2bn income
• Only five Premier League clubs made a profit in 2010-11
• Manchester City's £197m loss the biggest in football historyThe Premier League's 20 clubs collectively made a loss of £392m last year, after spending all of their record £2.2bn income. Of the clubs which were in the Premier League in 2010‑11, the year of most clubs' latest published accounts, only five, 25%, made a profit, of £71m in total. Of the other clubs, 14 made losses, totalling £463.4m. Manchester City, in the third year since Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi's ruling family bought the club and began to pour in money to acquire a team capable of winning the Premier League, lost £197m, the greatest financial loss in the history of football. Chelsea lost the next highest amount, £68m, bankrolled by their owner, the Russian oligarch Roman Abramovich, who loaned £94m to the club during 2010‑11. Liverpool, documenting the first eight months of ownership by John Henry's Fenway Sports Group, lost £49m. Birmingham City, now in the Championship, have failed to file their accounts for 2010‑11, which were statutorily due on 31 December. The club's parent company, Birmingham International Holdings, registered on the Hong Kong stock exchange, has not yet published its own accounts, and Carson Yeung, who led the takeover of the club in 2009, is awaiting trial on money-laundering charges, which he denies. The clubs' combined turnover of £2.2bn is partly the result of the first year of the Premier League's 2010‑13 TV deals, in which a record £1.5bn was earned from overseas broadcasters. The financial figures portray a league of fierce sporting competition which relentlessly forces up players' wages. In total, £1.5bn was spent on wages by the 20 clubs in 2011 (including Birmingham's £38m wage bill in 2009‑10). That accounted for 69% of the clubs' total income, slightly up from the 68% of income the clubs spent in 2009‑10 on wages. The largest profit was recorded by Newcastle United, in their first season back in the Premier League since relegation in 2009. The accounts were published before last summer's transfer spending, swollen by the £35m sale to Liverpool of the striker Andy Carroll, which netted £33m profit. Manchester United, despite spending £50m in interest on the debts loaded on to the club by United's owners, the Glazer family, won the championship having spent less on wages, at £153m, than Chelsea and City, and still made a profit of £12m. Liverpool, by contrast, made an operating loss of £90m. Had they not recorded a profit of £43m for the sale of players, including £50m from Chelsea for Fernando Torres (the money spent on buying players, such as Carroll, is accounted for more gradually), Liverpool would have stated a much greater overall loss than the £49m final figure. Richard Scudamore, chief executive of the league which this season celebrated 20 years since it was formed by a breakaway of the old Football League First Division clubs, has rejected introducing a form of "financial fair play". Such rules, designed to make clubs break even rather than rack up losses, whether bankrolled by an owner or not, have been agreed by Uefa for its competitions and, more recently, by the Football League. In the Premier League, clubs playing in Uefa's Champions League or Europa League must comply with financial fair play over this year and next. Even the two which are lavishly backed, Chelsea and City, have stated they want to move towards breaking even. Lower down, most clubs make losses in the effort to stay up. The Wigan Athletic owner, Dave Whelan, who wrote off £48m in loans to the club last August, said that financial fair play "can only be a good thing … for football in general to ensure that debt is maintained at reasonable and sustainable levels".
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Post by grillr on May 23, 2012 18:22:32 GMT
Saw Bolton chairman Gartside on box last night carefully excplaining that Trotters aren't really £100mil in debt cos £90mil of it is a "soft loan" from some sugar daddy in the Isle of Man. S'pose it's a similar story at Man City, Chelsea, Fulham, Wigan and others too? I do find it bewildering that the more money clubs get in income (predominantly from Sky) the greater their debt?  |
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tom007
Dave Sexton
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Post by tom007 on May 23, 2012 22:21:42 GMT
it does not bode well for the lower league clubs if clubs at the top cannot stay in the black but unfortunately our clubs players are paid far,far too much and it is not sustainable.
happening in all businesses though not just football.
i am in the care industry and i am a manager for a small company and have in the past worked for the huge companies with 70,80-100 homes and they are owing millions to the banks they owe more than they are worth and i used to look at the accounts and think how the hell can this happen but it dopes all the time and no wonder our banks are always in the crap.
a large company went under last year owing loyds 132 million
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Post by RoryTheRanger on May 23, 2012 22:23:16 GMT
Saw a table of Prem debt today and Foolham have the second highest debt in the league LOL!!
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Post by Macmoish on May 23, 2012 22:50:46 GMT
Ifyou could find that and post it, would be interested
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Post by RoryTheRanger on May 23, 2012 22:55:35 GMT
My attempt at linking to it from my phone has failed epically so will do it tomorrow.
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Post by londonranger on May 24, 2012 2:03:06 GMT
The reason is that loans made to the club belong to the club. Easy for an owner to sell on selling debt. Isle of Man is a notorious offshore haven for companies who have a storefront there and used as a tax haven. Man U made money, not much. Romans loan to club is not a gift.
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Post by hotanalyst on May 24, 2012 3:19:26 GMT
The Daily Telegraph recently published a financial health review for several Premier League clubs, which makes for very interesting reading. I have attached the link. The problem with football clubs is their player wages to turnover ratio, which ranges from 50% to as high as 90%, with most clubs sitting at around 70% or higher. No other industry pays this much of its gross income to it's employees in salaries. It's no surprise that most clubs post constant losses as there are significant other operational costs to be met year-on-year and hardly any money left to pay them after paying salaries! In the US, sports franchises are run by their owners as businesses intended to make a profit. Not so in the Premier League. As a result, the debt just keeps mounting up as clubs constantly borrow to cover their black holes. Football clubs must be the worst managed businesses in the world. Weekly salaries of £150,000 are now becoming commonplace and the era of £200,000 + per week is upon us. Yet the gross income of the clubs is failing to keep up with the ridiculous wages being paid. It's madness...and bankruptcy is always the end result. The only other industry that pays a disproportionately high percentage of its annual turnover to its employees in salaries is investment banking, and yet, the ratio there is below 50%. Football needs to get its house in order but I don't see it happening any time soon. www.telegraph.co.uk/sport/football/competitions/premier-league/9255617/Revealed-the-financial-health-of-the-Premier-League-laid-bare.html |
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Post by Macmoish on May 24, 2012 6:49:46 GMT
Thank you
The amazing (positive) thing behind this is that Football in England is such a popular sport. Get the crowds and the TV audiences and so forth.
"All" that is needed to bring everything around is for players to be paid less...and for clubs to be "made" to keep within financial limits. Etc.
Personally, I would not mind that much if some of the world's top stars left and we were watching in the Premiership (or below) lesser players playing lesser players. If that meant all the clubs were surviving and not endangered.
That of course would also mean owners couldnt be making bags of money either.
Whether this is possible to bring about I have no idea. But in American sports - bastion of free enterprise - it's done with wage caps etc. Owners do make a lot of money, so there may need to be additional steps.
A lot informed-about-this minds than me about this could surely come up with something at least on paper. But of course the biggest owners and well payed players might not agree!
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Post by RoryTheRanger on May 24, 2012 11:11:07 GMT
Found it. Attachments:
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Post by Macmoish on May 24, 2012 11:27:50 GMT
Thanks very much.
But I'm not sure how fully accurate...Cos don't Chelsea owe Abramovich close to a billion...Ditto Man City to their owners? Maybe it's not counted...But they are loans not gifts, I think?
This was originally from The Telegraph?
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Post by RoryTheRanger on May 24, 2012 12:51:05 GMT
Thought Abramovich payed all their debt off last year?? Same with Man City and their owners.
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Post by londonranger on May 24, 2012 16:31:25 GMT
The debts belong to the club, both Chelsea and Man C. have significant debt, as we do. Look and see how much the owners
paid for these clubs. Its not much. Briatore and co. paid around 100 thou plus or minus change, then they took loans to payoff the debt.
The debt always stays home. How this was arrived at is a very interesting but not too complex to understand. The FA sees it as the way to go. It attracts enormously wealthy owners who can get even more wealthy by continuously borrowing
and then when the business starts to turn, they can find a buyer who will take a risk, since there isnt much.
Big salaries create bigger players, richer ones. Messi makes the most money of any sport figure in any activity.
There is big money to be made in buying and selling debt, through hedge funds. Sometimes gambles go sour, or the buyer
turns out to be risky business and the team, like Portsmouth and others go south.
That is why Fernandez wants a bigger stadium. To make more money, attract better players and to build clubs value.
He forgot one thing, where are the fans who will fill this stadium. this is part of the risk. If they dont, he will be looking
for a buyer and get out with a profit. If they do his team value will be much higher, so will salaries.
However, even this venture, I am sure is already hedged with either quality or toxic funds. thats where offhore assets
come into play.
USA if intersted. All teams can only have so much debt before league takes over. Owner owns debt.
Baseball does not have a salary cap but some revenue sharing. Football, roundball, hockey do have caps.
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ingham
Dave Sexton
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Post by ingham on May 24, 2012 17:37:00 GMT
From the owners' point of view, risk is the guiding principle, I'd say.
Loans protect an investor not only from his own mistakes, but from his own less than honourable intentions.
The downside from the Clubs' point of view is that the person who makes the loans is the person who represents the Club.
So the Club can't protect itself from his greed, incompetence, lack of know-how.
How many smaller Clubs have been taken over with big promises and then, surprise, surprise, they lose the Ground.
How many 'investors' would we see at Clubs like QPR if the cost of each clueless player - or the losses incurred even by the better ones - were down to him.
Would they sign nonentities at sky-high wages, just on the basis that they could tell us they were 'making funds available' and that this represented their 'ambition'.
We wouldn't see the money, and we wouldn't see their ambition, either.
That is what is disturbing. They must know that what they're doing will never work. And the curious thing is that the authorities never call their bluff, by insisting that they must cover all losses themselves, for example.
They used to do so. Clubs were not defined as 'businesses'. in what line of business does every institution lose money all the time, with exceptions so rare that they aren't worth mentioning? They were defined as sporting institutions. To succeed, they needed talent, sizeable attendances - which went with the talent, every Club didn't get a full house all the time, no matter how big it was (Man Utd excepted haha) - and luck. If there were many other Clubs with talent, the prizes were shared round.
But, of course, the authorities are lining their own pockets from all the cash sloshing around the game, and the phoney hype nowadays could never be sustained if Clubs actually owned up to their own limitations, the sheer unlikelihood that any of them will anything much, and the probability that almost all of them will win nothing.
At the moment, the game seems to be built on the idea that there is always someone wealthier who will buy you out, no matter how useless you are, and how insignificant in terms of success that your Club has been.
Is there a limit? And what happens if it is reached. There is already, of course, in a big way, with only the biggest Clubs getting a look in in the success stakes, and the biggest winning the title four times as often as its nearest competitors, and those two 3 times as successful as the only other 2 to succeed.
Will we actually see investors writing off their losses (losing their own money effectively)? Will they be obliged to? Or will the shadow of moves and mergers return to provide them with a profit at the expense of the Clubs' existence.
TV might object, but I doubt that the investors would.
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Post by saphilip on May 24, 2012 19:51:50 GMT
You don't have to go to the US - the irony is that theGlazers would not be allowed to do in the USA what tyhey have done to Utd - just hop over to Germany to see how to get things right - especially ownership and debt.
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ingham
Dave Sexton
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Post by ingham on May 24, 2012 22:21:16 GMT
They didn't write off the loans as far as I know, Rory, they converted them to shares (equity) at City and Chelsea. As they'll seek to recover the money by selling the shares, I don't see any difference myself, not a significant one.
If a buyer has to pay £50 million in shares and no debt, or £10 million for the shares and £40 million to buy the debt - debt is an asset to an investor as it is to a bank, but it is a liability to the Club - the cost to a buyer is the same.
If they'd wanted to lift the burden from the Club, they would have written it off.
Some commentators make it look good on the basis that the investors are taking some sort of risk, but as they control the Clubs in question, the risk is the Clubs', not theirs, because they can manipulate the finances as they please.
I think the shareholders here, at QPR, have done something of the sort, but on a smaller scale (inevitably).
Investors are also hoping UEFA will accept the pretence that the Clubs in question effectively have no debt, so they won't fall foul of the new UEFA rulings about losses. Not sure UEFA are quite that easily fooled, but on the other hand ...
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Post by hotanalyst on May 25, 2012 0:35:05 GMT
I'm not a great fan of collusion but it sometimes has its benefits. If the Premier League, club owners and boards acted in unison to bring player salaries down to a realistic level and contain wage inflation, then this would be a quantum leap forward towards the self-sustainability of clubs as it would free up significant cash flow to pay the other annual operating costs and start to reduce debt (and therefore debt servicing). It would be a great start towards ensuring the financial health of the industry. Players don't need to earn £150-200k a week. Or even £100k. This is just plain greed on their part, milking the system for every penny they can. And it is crippling the clubs. It needs to be nipped in the bud by the football authorities and club owners. As does the role and fees paid to agents, which are truly eye-watering in many cases. Quite frankly, most of these players would be kicking a ball around in a park for nothing most evenings and weekends if they were not professional footballers. The fact that they get paid huge sums of money for doing something that firstly they love, and secondly they would do for nothing, puts them in a very privileged position. Players need to re-think their behaviour and attitude towards their employers. And contribute more towards the financial sustainability of their clubs by collectively accepting some sort of salary cap or formula, be it a % of club turnover or fixed £ amounts. Fat chance of that happening though, huh?
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ingham
Dave Sexton
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Post by ingham on May 25, 2012 17:04:20 GMT
Yes, difficult to regulate after the players won various freedoms of contract and movement since the 196s (when it was all wage-capped and buttoned up tight by the authorities and the Clubs), and when everyone is making money hand over fist - except the Clubs.
Maybe it won't change until some external factor changes, and then there might be change. If the TV audience began to lose interest, for example, or supporters became indifferent to the hype from investors.
Trouble is, change of that kind might well be catastrophic, and the domino collapse might happen with lightning speed. The Clubs couldn't pay their way, players would begin to leave, quality would diminish, causing TV audiences to switch off, earnings to fall, prospects would be slim, many supporters would vote with their feet as investors pushed up ticket prices to claw back losses (driving more supporters away) even as they tried to offload the Clubs with no takers and flogging off assets like the stadiums.
The playing 'assets' would be worthless, with no-one able to pay the sky-high wages and therefore nobody able to raise money from player sales.
And no domestic players of quality to replace them, after 20 years of raiding the world for superior quality to the dross we usually produce.
Luckily, the world economy is in great shape, especially Europe, and particularly Britain.
Otherwise we might have problems.
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Post by RoryTheRanger on May 25, 2012 17:15:26 GMT
Not going to lie, I don't understand most of this but it still makes for interesting reading.
How come you two know so much about all this??
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Post by Macmoish on May 25, 2012 17:21:27 GMT
Forgot to post Guardian/David Conn Premier League club accounts: how in debt are they? The Premier League's 20 clubs collectively made a loss of £361m last year – sort the saints from the sinners here Manchester United won the Premier League in 2010-11, and also finished top of the money-making table with a turnover of £331m, more than £100m more than any other English club. Photograph: John Peters/Man Utd via Getty Images The Premier League's 20 clubs made a record income of £2.3bn in 2010-11, yet still made a collective loss of £361m. David Conn explains the maths here. Eight of the 20 clubs made a profit while Manchester City, whose lavish funding by Sheikh Mansour bin Zayed al-Nahyan has just won them the league title, reported the greatest financial loss in the history of football: £197m.  Football turnover Photograph: Graphic Manchester City were also the only Premier League club whose wage bill (£174m) exceeded their turnover (£153m). The smallest wage bill in the 2010-11 season was perhaps unsurprisingly to be found at Blackpool (£25m), but West Bromwich managed to avoid relegation with the second smallest spend on wages, of £37m. [The second chart can be seen best by clicking www.guardian.co.uk/football/2012/may/23/premier-league-accounts-profit-debt |
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Post by hotanalyst on May 26, 2012 1:54:54 GMT
Ingham - agree with what you say. The Premier League and clubs do not appear motivated to tackle the issues of excessive player wages and agent fees, despite the deteriorating financial health of most clubs. They appear to be rabbits caught in the headlights. I guess their overarching fear is that any action to curb salaries would drive the best players overseas to leagues where salary caps did not exist and result in a deterioration in quality within the domestic game. Which means any action on player salaries would have to be collectively enforced by all of the major leagues and maybe policed by FIFA if it were to have the desired effect. But if the Eurozone governments cannot agree on collective action to tackle the region's sovereign debt crisis, then what chance is there of it's football bodies agreeing a policy on player wages and actually enforcing it? None, I would say. So the catalyst for change has to come externally, either from a dramatic fall in TV revenue and/or supporter backlash against high ticket prices. The first may occur if the recession continues to bite, advertising revenue falls sharply (cyclical) and networks suffer a fall in subscribers but the latter is unlikely to occur. And off course, this scenario brings its own separate set of problems.
Rory - in answer to your question, I am a hedge fund analyst in the City by profession (albeit unemployed for the last six months due to the difficult economic environment) and therefore have a keen interest in the finances of football. I enjoy looking at the P+L and balance sheets of clubs, their revenue sources, cost base, debt financing costs and debt accumulation etc. Call me boring - many do - but the self-sustainability debate interests me!
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Post by Macmoish on May 28, 2012 6:36:24 GMT
This from last year: How much was brought in from TV To view the Broadcast Payments to Premier League Clubs for 2010/11 and 2009/10, click here. www.premierleague.com/staticFiles/fe/72/0,,12306~160510,00.pdf www.premierleague.com/page/Headlines/0,,12306~2366164,00.html And what Deloitte said... Deloitte Reading and Swansea City only 90 minutes from a £90 million ‘winner takes all’ promotion prize 24 May 2011 The Football League Championship Play-off Final on Monday 30 May will again offer the biggest financial prize in world football, worth around £90 million to the winners. Whilst Reading hope to return to the top flight after a three year absence, Swansea City are bidding to become the first Welsh Premier League club. If successful, Swansea City would become the 45th different side to play in the Premier League since its inaugural 1992/93 season. Paul Rawnsley, Director of the Sports Business Group at Deloitte, commented: “ The winners at Wembley on 30 May can expect a revenue increase of more than £40m in 2011/12, mainly due to Premier League broadcast income, but also from higher gate receipts and commercial income. In addition, even if a club is relegated after one season in the Premier League, it is entitled to parachute payments over the following four seasons of up to £48m.”Rawnsley added: “In financial terms, the Championship Play-off Final offers the winning club the most substantial prize in world football. Promotion offers an unparalleled, and potentially one off, opportunity to strengthen the foundations of a club for years to come through sound investment in long term infrastructure, in addition to the expected player acquisitions in the short term.” Alex Byars, Senior Consultant in the Sports Business Group at Deloitte, said: “The newly promoted clubs are often the bookies’ favourites to be relegated, but over the past decade more than half (17 out of 30) of those clubs have successfully retained their Premier League status in that crucial first season, so history shows it can be done.”Byars added: “Whilst many newly promoted clubs have managed to maintain some momentum from a successful Championship campaign, survival in the Premier League often ultimately hinges on strategic investment on and off the pitch. Inevitably, the short term priority is usually investment in the playing squad; but clubs need to also have one eye on the medium to long term, by building in protection against the risk of relegation, through the use of variable pay clauses in players’ contracts."[/u] .... www.deloitte.com/view/en_GB/uk/industries/sportsbusinessgroup/sports/football/fce0c412b4d10310VgnVCM2000001b56f00aRCRD.htmRead more: qprreport.proboards.com/index.cgi?board=general&action=display&thread=22843#ixzz1w8y52kxDRead more: qprreport.proboards.com/index.cgi?board=general&action=display&thread=22843#ixzz1w8xY5EVU |
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