Credit-Crunch: the two words on everybody’s lips. Although it has surprised me of late that seemingly nobody in football is talking about it. It seems to have slipped through the football fan’s net of conversation topics. People seem to think that these two simple words will not affect our beautiful game. They are wrong. At the start of October, Football Association chairman Lord Triesman claimed that domestic football is £3billion in debt – warning that a top club could go bust in the current economic crisis.
This is entirely plausible. Leeds United are a shining example of what can go wrong when a club takes a financial gamble, and although they survived, they are currently fighting to get out of League One. The worrying thing is that the situation at Leeds United happened at a time when borrowing in football was at nowhere near the level it is today. With more clubs buying players or paying wages based on television rights and sponsorship deals, and with more people using vast loans to buy clubs that then need re-financing, the Premier League needs to take a long hard look at itself.
The impact that the credit crunch has had so far is obvious. With so much of club owners’ cash tied up in affected business, winning or losing off the pitch is becoming as important as on it. Take recent revelations at West Ham: their owners have been hit hard by the global Credit Crunch as Iceland’s second-biggest bank, Landsbanki, fell into receivership. West Ham chairman Bjorgolfur Gudmundsson is a major shareholder in both West Ham and Landsbanki, and though West Ham officials insist the Hammers will not be affected, it is hard to believe.
Chelsea and Man City are lucky – they both have ‘sugar daddies’ at their helm, and any debt they have is currently not a problem. Manchester United and Liverpool however, face an uncertain future, with £660m & £350m of debt respectively, giving them annual interest payments of £42 & £30m. On the face of it, these clubs may not seem like they have a problem; but United’s pre-tax profits were only marginally higher than their interest payments last year - the scale of this problem goes far beyond what we can see.
Even in Europe, major clubs are having difficulties - AS Roma are reportedly heading for financial ruin unless they can start paying back some of the massive debt owned to the Unicredit Bank.
On the surface, the Credit Crunch seems like it means so little to those in football, as the sport carries on regardless. But it could mean so very much. It could mean Newcastle fans not seeing their club sold; it could mean the Premier League losing Barclays as a sponsor; it could mean clubs not reaching performance targets due to a lack of signings; it could mean the FA (£400m in debt) may have to sell off stakes in Wembley.
It could even mean that we can say goodbye to watching Brilliant Brazilians in Bolton and Flamboyant Frenchmen in Fulham because of a much discussed salary cap.
Still, at least the national side will profit…
This is entirely plausible. Leeds United are a shining example of what can go wrong when a club takes a financial gamble, and although they survived, they are currently fighting to get out of League One. The worrying thing is that the situation at Leeds United happened at a time when borrowing in football was at nowhere near the level it is today. With more clubs buying players or paying wages based on television rights and sponsorship deals, and with more people using vast loans to buy clubs that then need re-financing, the Premier League needs to take a long hard look at itself.
The impact that the credit crunch has had so far is obvious. With so much of club owners’ cash tied up in affected business, winning or losing off the pitch is becoming as important as on it. Take recent revelations at West Ham: their owners have been hit hard by the global Credit Crunch as Iceland’s second-biggest bank, Landsbanki, fell into receivership. West Ham chairman Bjorgolfur Gudmundsson is a major shareholder in both West Ham and Landsbanki, and though West Ham officials insist the Hammers will not be affected, it is hard to believe.
Chelsea and Man City are lucky – they both have ‘sugar daddies’ at their helm, and any debt they have is currently not a problem. Manchester United and Liverpool however, face an uncertain future, with £660m & £350m of debt respectively, giving them annual interest payments of £42 & £30m. On the face of it, these clubs may not seem like they have a problem; but United’s pre-tax profits were only marginally higher than their interest payments last year - the scale of this problem goes far beyond what we can see.
Even in Europe, major clubs are having difficulties - AS Roma are reportedly heading for financial ruin unless they can start paying back some of the massive debt owned to the Unicredit Bank.
On the surface, the Credit Crunch seems like it means so little to those in football, as the sport carries on regardless. But it could mean so very much. It could mean Newcastle fans not seeing their club sold; it could mean the Premier League losing Barclays as a sponsor; it could mean clubs not reaching performance targets due to a lack of signings; it could mean the FA (£400m in debt) may have to sell off stakes in Wembley.
It could even mean that we can say goodbye to watching Brilliant Brazilians in Bolton and Flamboyant Frenchmen in Fulham because of a much discussed salary cap.
Still, at least the national side will profit…
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