Football finances
Some decent stuff in the Independent today:
and
We’re number 5 in their debt table. It’s interesting how others have avoided debt. Check b+w_geezer’s series on Fulham Finances, incidentally, linked to in the sidebar.
5. Fulham
Owner: Mohamed al-Fayed
Debt: c£180m
Wholly reliant for survival on Fayed, who would sell if he could recoup losses.
I seem to recall that MAF was going to start paying back some of the money he is owed from this year?
I can’t remember whether it was mentioned in an article, at a forum or by B+w geezer but I think that he was going to start taking £10-15 million a year out of the club to syart paying the debt down.
Quite how this works when the club is loss making I don’t know. It may of course be some tax efficient way of managing the asset but it will be interesting to see whether the debt to MAF starts to go down in future or whether it is just being switched from one investment vehicle to another.
Looking at the list of clubs and their debts I don’t think there are many that have anything to worry about. With the possible exception of Liverpool, those debts look manageable. Arsenal’s figure doesn’t seem to factor in the sale revenues from 650 flats at Highbury that will come on stream in the next year and will surely knock that debt down substantially.
It is also intriguing, on a debt versus asset basis, to look at how the values of clubs are increasing. I read somewhere yesterday that West ham is now worth about 3 times the £85 million that the Icelandic consortium paid for it – which would place a value of about £250 million on it. Thta is a massive appreciation in value in just a couple of years.
That would be the aspect I would be most interested to see reported on next – what are the individual market values of each Prem club and how do they compare with turonver and profitability. I guess I would probably need to buy a copy of the annual Deloittes report for this but it would be interesting to see how accountants appraise football clubs when they apply the same measures as they do to other companies.
One substantial unknown in all this, as Richard Scudamore I think pointed out this week, is what is the upward potential of overseas TV rights? These are, relative to the UK rights deal, still relatively small beer but are growing quite a bit each time they are renewed. I guess these potentially have the scope to outstrip the value of the UK deal which could mean the current financial set up of The Prem could potentially keep growing quite agressively over the coming years.
There may not be an end to the gravy train in sight for quite some time and the current levels of club debt may be dwarfed by future revenues.
Will the FA and UEFA stop dealing with all institutions that are in debt? That would wipe out a significant portion of their sponsors, as well as probably 2/3rds of the banking institutions in Europe.
I must admit that when I saw this on Sky Sports News last night, I had a good laugh. UEFA Barring Fulham from European football in 2008 would be like barring Nixon from running for office in 2008. It’s just not likely to happen anyway.