Can football escape its effects ?

By Howard Borrell

Of course it can't is my view and I suspect also the view of most football fans. For years I'd been semi-predicting a financial crisis simply because our economy had no substance and people borrowed with very little collateral because it was so tempting to borrow when crazy offers from financial institutions arrived almost daily.

 Just over a month ago the FA Chairman Lord Triesman wound up the Premier League by stating the blindingly obvious. Triesman estimates that top English clubs owe over £3bn. He explained "They're beginning to see the edge of the hurricane - the art is to get out of the path of it."

Unsurprisingly the Premier League chief executive Richard Scudamore, who clearly inhabits a different world, rejected Triesman's concerns, arguing clubs' debts were manageable. Ask West Ham with a bankrupt sponsor and a potential £30m to pay to the Blades.

A worldwide banking crisis has led to a collapse in shares, fears of a recession and increasing costs for clubs having to repay or maintain huge debts - with Liverpool, Chelsea, Arsenal and Manchester United accounting for a third of that £3bn debt according to Triesman.

However, Chelsea say their "unique ownership structure" means that monies owed are "internal and in the form of interest free loans from the owner that have no repayment time frame attached" - Yeah right ! Tell me if Chelsea will be worrying when not if their owner gets bored.

Triesman continued "What I know is we are in a very much more volatile position in which debt is not only a problem in terms of its volume, it's a problem because those who own the debt are themselves now often in serious problems. Your fate isn't in your own hands."

"I don't think anybody who is rational can look around this environment we are in and think they are immune."

"Football is obviously carrying a pretty large volume of debt. People will be making business judgements about whether it is sustainable or not, but it is carrying quite a large volume of debt."

"Those debts will either have to be paid or there will have to be a re-financing deal, and re-financing deals inevitably mean that you package up debt in smaller blocks as people try to minimise the risk."

Triesman even felt there was scope for a major English club suffering a melt down in the way that the financial institution Lehman Brothers went under.

A short while after Triesman's wise words The UEFA General Secretary David Taylor got in on the act. He believes "Clubs with such huge debts are putting their future in jeopardy and feels they have to bring their finances under control. There is concern about these numbers, particularly in an era of financial crisis. Just because I have a mortgage it doesn't mean I'm bankrupt. But the debt does have a requirement to be properly serviced. Clubs must work within all available means and they must not expose themselves to such an extent that the whole future of the club is jeopardised unless some white knight comes over the horizon with millions and millions of pounds.

"That is a very dangerous and risky financial strategy for any organization and as far as football is concerned we have to consider whether we should take further measures to regulate against that."

Taylor says making Uefa's licensing system more robust, and preventing some clubs from playing in Europe, could be one way of regulating their finances. It could reasonably be argued that the level of debt on these shores puts other foreign clubs, unwilling to saddle themselves with such debt, at a
major disadvantage.

Would the threat of such a sanction make the big boys listen - I'm not so sure. In Germany Bayern Munich is owned by 142,000 members and Real Madrid and Barcelona are similarly kept in check. Will the influx of foreign owners and the pursuit of profit (that all of a sudden looks harder to achieve) be the beginning of the end or should we carry on as before paying more than we can afford on wages and chasing the proverbial dream with no realistic way to finance the dream ?

At Chesterfield's level too the same questions need to be asked. Financial prudence may not be sexy but currently it seems a pretty good