In these days of money shortages - except for the extra stuff that the Bank of England is printing - are we approaching the day when the English Football Premier league will go belly up? Certainly it is becoming increasingly apparent that the finances are in a mess. Portsmouth looks likely to be the first club to collapse. They have not paid their players for 3 months - although I expect that the poor dears will be able to get by for a few weeks without having to go down to the National Assistance Board. Portsmouth are being threatened by HMR&C, who want their money now - to help Gordon and Allister bail out the banks. Now, I have little sympathy for the football clubs who live in a cloud-cuckoo land that makes no sense unless they have an Arab sheik or a Russian billionaire to pay the bills. Manchester United is probably the most successful sports club anywhere in the world with an estimated value of £1½ billion but its ability to make money has been much compromised by the American businessmen who now ..... well ......sort of own them. It is difficult to be sure. To buy the club in the first place 4 years ago the Glazers had to borrow lots of money. They then refinanced the debt using Manchester United as the collateral. The total debts are staggering and increasing. Some of the money is owed to hedge funds and carries a staggering and accumulating interest at 14.25%. In order to repay this and increase their takings from the club they are attempting to raise £500 million via a bond with a probable interest rate of 9%. Next year the club will have to pay out well over £100 million in interest on the bond, other interest payments, service charges to the Glacers, dividends, etc. Last year the club only made a profit because they sold Christiano Ronaldo for £80 million. How they can make a profit in the future and pay off their debts is a bit of a mystery. Sir Alex Ferguson has no money for new players and fans are paying double for their season tickets. The whole scenario is one which confirms that football now is a matter of money and accountants and less and less about footballers.
Liverpool is in a similar position, owned by rich - but not super-rich - Americans and is spending all its profits paying the interest on the borrowings.
In the lower layers of the Premier League the numbers are smaller but clubs are still up to their eyes in debts because they pay their players too much. Bolton Wanderers - struggling in the relegation zone - uses 80% of their revenues to pay their players. And its is true of almost every club in the league. Only Arsenal has a viable balance sheet.
Reality will only set in when a few clubs have gone bankrupt. Fans seem less and less willing to pay ridiculous sums to buy tickets - particularly if they think that they are being ripped off or that they are paying their hard earned cash to foreign owners bleeding them dry.
Who will be next to go after Portsmouth? Hull? Bolton? Wigan? A little time will tell.
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