As demonstrated by Portsmouth and most recently Rangers, money and its management are essential to football these days.
With the annual release of economic profits and losses by the Barclays Premier League teams, fan and pundits alike discuss how safe their team is. Yet it seems looking at such figures are not true indicators of your club’s well being.
A new study in the Telegraph attempts to break the trend. Instead of looking at profit and loss figures, it ranks clubs on the total cash they possess having paid their debts and interest rates on the debts, or their solvency. In short it gives a more accurate measure as to how much money clubs have whilst they deal with their debt. Arsenal is a good example to look at here.
Having opened the Emirates Stadium in 2006, they were loaded with debts through the construction of their new home. Many would gasp at the £300m debts they recorded. Yet with careful management, increased revenue from tickets and the Highbury area-housing complex they have severely reduced this debt to a manageable sum.
What this provides the general fan is an explanation as to why people invest in football clubs. Many, including myself, just saw them as playthings for the rich who have made enough money. Yet this report shows that clubs can still record profits and bring money in for themselves and their owners.
|West Ham United||2.914|
|West Bromwich Albion||-2.944|
The table provides a unique analysis on which clubs are economically stable, something that may be important for UEFA to use in future years as they look to implement more heavy financial fair play rules.
In addition, the table also gives a unique perspective on the importance of television deals and Champions League football are to teams. Chelsea, Tottenham and Manchester United are all near the top of the table thanks to their recent Champions League qualifications. Another scary element is the wealth of some Premier League owners.
Although it is well documented that Sheikh Mansour is extremely wealthy, the extent to which is highlighted when we see the transfers fees City pay combined with their lack of cash inflow. In this regard, the Blue half of Manchester is certainly punching above their financial weight.
In conclusion, the Telegraph report just goes to show the influence of money in the Premier League these days. It allows us to illustrate simply the destruction of Portsmouth and the struggles of clubs such as Blackburn (and perhaps even their relegation).
For the common Joe, this analysis helps us understand how important financial management is in our league these days and why plans such as UEFA financial fair play make sense. All in all it shows us an important thing – football can now longer be considered ‘just a game.’
Click here to comment on this articleor
Give us feedback on your Football Transfer Tavern experience