Four interrelated stories concerning the financial state of English football suggest that English professional football may be heading the same way as the British banking sector. Are we talking millions? No, we are talking billions. David Conn of the Guardian estimates the English Premier League has accumulated over ‘3 billion worth of debts. Chelsea, Manchester United are in the worst shape but Liverpool are on the ropes as well. Every single club is carrying debt and with the wages bill set to escalate even further the debt can only get worse. The irony is that Man United and Liverpool are making a profit but are ending up as loss making concerns because of the interest they must pay on their debt. ( The Guardian, 3/06/09 )

The second story focuses directly on Liverpool Football Club. The figures in the Guardian article tell the grim picture. Two years after US speculators’ Hicks and Gillett took over Liverpool the club has ‘313 million of debt. Interest on that debt amounted to ‘36.5 million. The crunch figures are the ’25 million operating profit has turned into a ‘42.5 million loss after the payment of the interest on the debt and other accounting provisions. So dangerous is the situation that the auditors spoke of ‘material uncertainty’ about Liverpool’s ability even to continue in business’. The warning lights should be flashing when we learn that the holding company carrying the loan is based in the low tax US state of Delaware via the Cayman Islands. As for the proposed new stadium, that seems permanently on hold given that the money was to come from another ‘400 million loan. The bigger the loan the bigger the interest payments. You don’t need to be an international finance guru to work that one out.
( The Guardian 2/06/09 )

The third story involves West Ham United. Once again the state of the global banking system is making itself felt. As Ken Dyer in the London Evening Standard stated, ‘The departure of Icelandic businessman and old fashioned philanthropist, Bjorgolfur Gudmundsson, ended the West Ham dream of being able to compete financially with the fat cats of English football.’ Gudmunsson soon became aware of West Ham’s poor financial situation and demanded a more self sufficient regime. This was made more imperative when his bank, Landsbanki were one of the first casualties of the global banking collapse. That was the end of that dream. The new owners, CB Holding who are primarily owned by Straumur Investment Bank insist on continuing the policy of self financing all future signings. Zola will have to sell a player in order to buy a new one. Dyer believes, ‘This model is likely to become the norm in the coming years as financial realities hit home even in the cash rich Premier League.’
( Evening Standard 8/06/09 )

The forth story, which underpins the first three, tells the bleak but inevitable details of the imminent collapse of Setanta and the possible loss of ‘100 million in TV revenue English football. Daily Mail correspondent, Charles Sale explains, ‘The shock waves from Setanta’s switch-off will reverberate throughout the professional game from the FA, who now face a ‘100 million black hole in their budget, to the Premier League and down to the Blue Square Premier, all of whom will have serious problems finding buyers at a competitive price for their lost TV contracts.’ Of course the bulk of TV revenues still come from the highly lucrative Sky deal but even Murdock’s empire is not.

What are we to make of these four stories? Do they represent the beginning of a long tern trend or is that reading too much into their importance. What is significant is that at the very same time as English football is feeling the reverberations of the global economic crisis, Real Madrid have set a new record of weekly wages: ‘200,000 per week for Kaka. If Chelsea, Liverpool, Man United want to compete they will need to offer similar rates. The bubble just gets bigger!