Liverpool face money trouble – is the Premier League bubble about to burst?
Could a Big Four side really go down the pan?
As the Tesco Value teabags and “one square of loo roll per visit rule” at Spoiler towers demonstrates, the nation remains in the grip of a financial apocalypse.
Throughout the crunchy credit crisis, the Premier League has tried its best to remain impervious to global economics, by continuing to spend big, charge extortionate amounts for tickets and encourage potentially destabilising foreign investment. This week, however, cracks are starting to show in the supposedly invulnerable entity, whose members seem to believe they can buck the trend of a recession.
On Tuesday, The Guardian revealed that the Premier League is cumulatively £3.1bn in debt. Just over £2bn of those outstanding bank overdrafts, loans and other borrowings are attributable to the Big Four alone.
We have also learned that wages have spiralled to over £1bn for the first time, suggesting one too many clubs are operating with an unstable business model. Such a unevenly balanced ratio of wages to turnover could become a club’s undoing, particularly in light of the fact that ‘guaranteed’ income from ailing broadcaster Setanta may be about to dry up.
Perhaps the most telling sign of the fool’s paradise that is the Premiership, however, is the news that reached us this morning concerning Liverpool’s financial crisis.
In a set of accounts that were a week overdue for filing at Companies’ House, we have learned that Billy Bob Gillett and Hank Hicks’s Holding company, Kop Football Ltd, lost £42.6m in the year ending July 2008. Of this, £36.5m is an interest payment of the £350m the American business borrowed from Wachovia and the Royal Bank of Scotland to refinance the club. In essence, this isn’t a healthy debt.
At the time when Liverpool were hemmaroaghing money [they may still be, but we'll have to wait for next year's accounts], we suggested they would have to sell big stars like Fernando Torres to make ends meet. Such a suggestion was laughed off at the time, but the concern being shown by Liverpool’s accountants KPMG this week suggests the Big Four do not hold as much impunity as they would like.
So, is the bleak situation at Anfield a telling sign of things to come in a league that has grown too accustomed to spending beyond its means? Or are we all worrying about nothing, as there will always be someone willing to bail a top flight club out? Let us know your thoughts below…