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

Toon gaffer lets us know he knows nothing

For someone who vowed never to speak to the mainstream media, Joe Kinnear has done an awful lot of talking to the mainstream media. The rotund Newcastle boss has told us which Disney character he feels most closely represent a certain referee, he has belittled relegation rivals Tottenham and has a strong propensity to let us know he has no idea what is going on at any given point:

“I said [my contract renegotiation] would be after the Chelsea game,” said Kinnear, “but the goalposts have moved since then. Every time it gets nearer to being sold a problem pops up, the credit crunch and whatever else.

“They keep saying we are that much away,” he added, gesturing a tiny gap between fingers, “but we have not seen any finances coming up. That is all they tell me. Until something concrete comes up it is not sold and I will keep going on a month-by-month basis.”

At a time when Mike Ashley is watching shares in Sports Direct fall off the face of the earth and

Two buyers lined up for top flight’s worst performing club

No one needs to remind Spurs that their season-opening form is their worst in over half a century (although it’s quite funny to do so), but their strength on the pitch is far exceeded by their strength in the financial market: the club are said to be close to selling up to one of two buyers, who are interested taking over the profitable and successful business chairman Daniel Levy has created.

The club constantly deny a sale is on the cards, but today’s Guardian says a billionaire from the Far East could take the reins by the end of the week if a reasonable price is agreed and ’super-agent’ Pini Zahavi can broker a deal.

BBC columnist Mihir Bose reports that Levy and the board believe an acceptable price would be around £400m, and that a British consortium is also in the running.

Joe Lewis, owner of 82 per cent of the club, lost around £400m when Bear Stearns went down the pan, and may be looking to recoup the loss by selling. He shouldn’t find the task as difficult as the one Mike Ashley faces,

Shinawatra’s best friend didn’t get the memo

Just a few days ago, City executive chairman Garry Cook was boasting about how Manchester City will be more popular than Coca-Cola around the world, thanks to the ten year plan of a disgraced former Thai Prime Minister. He also assured us that the Citizens were financially stable and uninterested in attracting additional investors:

“I was in Beijing last week,” began Cook, “sitting with [Thaksin Shinawatra] and the second richest man in China and other guys. They all want to be part of Manchester City. I’ve had representatives of companies from Dubai, Saudi Arabia, Kuwait on. Some of those representatives have actually phoned the supporters’ club because they couldn’t find the club number. So I get the supporters’ club secretary saying to me, ‘So the club is for sale, then, because I’ve got Anwar on the phone from Saudi Arabia?’ This club is not for sale.”

The man who wants a break-away league of 10-14 clubs obviously wasn’t kept in the loop on this one…

[Quote: The Guardian]

And the biggest transfer deal of the day is…

Things start looking good for Manchester City on the pitch, but there’s a right old kerfuffle going on behind the scenes at eastlands. According to Sky Sports, Thaksin Shinawatra agreed a deal last night to sell the club to the Abu Dhabi United Group for Development.

Dr Sulaiman Al Fahim, the chief executive of Hydra Properties, will represent the new owners on the board:

“We will release details later, but this is a great event for both the club and Abu Dhabi. Our goal is very simple - to make Manchester City the biggest club in the Premier League, and to begin with, to finish in the top four this season.”

So, just months after Shinawatra sacked Sven Goran Eriksson for failing to meet his ridiculous expectations, along comes a new owner with even tougher targets. Is this good news for Manchester City? Will Garry Cook continue to defend his favourite disgraced Thai? Let us know with a comment below.

Chelsea chief exec tells other clubs to get their houses in order

In what may be a vague attempt at entering into some Fergie-style PR mind games, Peter Kenyon today told clubs such as Tottenham, Newcastle, Everton and Aston Villa to get their act together:

“It should be more about them getting their houses in order rather than us coming down to their level.”

According to the most recent financial data available (from the 2006/07 season), Cheslea had a debt of £738m, their operating expenses had increased by £35m on the previous year, and they were only being stabilised by an interest-free loan of £538m from a kindly Russian gentleman. At their current rate of inflating wages, it would be ambitious for the club to break even in the next five years.

Of course, Roman Abramovich is no fool, and being able to support such a huge debt is testament to Chelsea’s long-term financial strength, but it seems a little rich for Kenyon to tell other clubs to get their houses in order when theirs relies solely on a man who would think nothing of writing off a £700m loss…

One in Seven fans won’t be renewing their season tickets

We’re all a bit hard pressed these days - each time we turn the ignition keys we face spending the equivalent of the GDP of a small African nation, and a loaf of bread now costs the same as a two bed semi in Bradford. While the Premier League’s finest are rubbing our noses in it by spending like it’s going out of fashion, it appears that the clubs themselves are about to become the latest victims of the nationwide belt tightening. According to Scott Mowbray of Virgin Money, nearly one in seven fans are refusing to renew their season tickets this year.

The worst affected club are West Ham, as 25 per cent of their faithful will now spend Saturday afternoons standing around in Jane Norman at Lakeside while the missus tries on dresses she won’t buy. This defection may be due to the fact that certain factions of Hammers fans are dissatisfied with Curbs and his boring brand of football, or it could be that the average ticket price is around £780

Annual Deloitte report reveals fiscal health of the Prem

Yesterday, the number crunchers at Deloitte released their annual report regarding the games’ finances in the 2006/07 season. The reams of data tell us that Premier League wages have now topped the £1billion mark, with each Premiership side dishing out an average of £48.5m to their staff (with Watford’s £17.7m at the bottom of the scale, and Chelsea’s staggering £132m at the top).

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While revenues have never been higher (The Premier League brought in €2273million in 2006/07, almost twice as much as the closest financial competitor, The Bundesliga), many clubs are spending far more than they are generating. Of all the teams in the top two flights, Derby’s situation was most troubling, as their wages/turnover ratio stood at 125 per cent. That means for every £100million that came into the club (and that’s just turnover, not profit), they were spending £125million on keeping the team in place. Of course, this figure is skewed by the performance-related bonuses given to Rams players for winning promotion, but it represents part of a trend that Deloitte partner Dan Jones believes will ‘lead to a continuing flow of insolvency cases’.

The financial housekeeping in Derbyshire leads a lot to be desired, but bank mangers in north London are considerably less aggravated. The famed wage structure at Arsenal puts them in a healthy third place in the league of wages/ turnover ratios (with 50 per cent), but based on this criteria, Spurs’ 42 per makes their structure the most economically sustainable in the top two flights.