Premiership Football Finances in the Red

AUTHOR
FrontRow Legal
PUBLISHED
April 20, 2010
TAGS

Manchester United's Anderson and the da Silva twins might be forgiven for thinking that they have become firm fan favorites at Old Trafford this season – the stands have been regularly dominated with the green and gold colours of their native Brazil.

Green and Gold are in fact the original colours of Newton Heath FC, the club that became Manchester United in 1902, resurrected by the fans in protest against the club's American owners.

Under the Glazer regime, Manchester United have amassed debts in excess of £716 million - considerably more than the entire cumulative sum owed by all 36 clubs in the top two tiers of football in Germany.

Accounts for the 2008/2009 season revealed that but for the sale of Cristiano Ronaldo for £81 million, interest payments on the club's debt would have meant a net loss of around £40 million despite huge success on the field – winning the Premier League title and reaching the UEFA Champions League final.

A report by UEFA in February into the state of football’s finances revealed that Manchester United’s debt is not atypical in English football. Premier League clubs are £3.4billion in debt – more than the rest of their European counterparts put together.

2010 is the year that football suffers a reality check. The demise of Portsmouth may pinch clubs out of the dream worlds they have been operating in. Portsmouth are doomed to relegation damned by a 9 point deduction after they were forced into administration in February with debts of £70 million – only £3 million more than Manchester United paid in interest payments last year.

Hull City and West Ham are fighting to avoid a similar fate. Both clubs have financial problems and are currently imprisoned in and around the relegation zone. Relegation would be potentially crippling.

Manchester United are surviving. Income in all areas has risen under the Glazers including an increase in ticket prices by an average of 48%. The club have recently refinanced its debt with a £500 million bond issue.

The Red Knights are a mixture of City bankers, lawyers and lifelong Manchester United fans supported by The Manchester United Supporters Trust fighting usurp the Glazers.

They are seeking a move away from the growing trend of a football club being little more than a tamagotchi for the super wealthy and share UEFA's vision of clubs "controlled and run by their supporters according to democratic principles."

Such a model is advocated by European giants Barcelona and Real Madrid and provides greater financial stability.

UEFA's Financial Fair Play initiative comes into force for the 2013-2014 season. It dictates that clubs must break even and only spend the money they generate – or risk exclusion from European competition.

It is difficult to see how Manchester United will continue to compete at the highest level under these restrictions.

Greater importance may start to be placed on the League Cup and FA Cup competitions – a cup game against Norwich could be interesting!

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