As the credit crunch sweeps across the globe, Languagecaster takes a look at how the economic problems may affect some of the clubs in the premier league. We also:
- Review the news in the Good, the Bad and the Ugly
- Introduce a football expression in English for Football
- And continue the predictions battle in the predictions competition
- Football glossary (a huge collection of football vocabulary, technical terms, cliches and football phrases)
- Worksheets and transcripts
- Vocabulary lists
The current downturn in the global economy has been well-documented but how will the so-called ‘credit crunch’ affect English football? Right now, the Premier League is the biggest earner in the game, thanks to huge TV deals and worldwide marketing rights that reached £1.5bn at the end of the 20067 season, that’s some £700m more than the German Bundesliga that was in second place. But with revenues reaching record levels, debts are also increasing dramatically, with the FA’s President Lord Triesman claiming this week that debts of nearly £3bn are ‘toxic’ and may lead to dramatic consequences for the sport.
Back in May of this year UEFA President Michel Platini warned English clubs that their debts were unworkable and even argued for the banning of teams that found themselves severely in the red. But banning a team may be the least of Premier League clubs’ worries as there are serious concerns that one of their members may soon fold and go out of business.
Many of these debts are built up by a combination of huge salaries for the best players, the building of new stadia – to increase revenue streams – or by new owners who refinance and borrow so they can buy a club. But with the credit crunch now affecting ‘ordinary’ people, fewer fans will pay exorbitant prices for tickets, shirts, TV channels or other club merchandise, while the fear that owners may simply walk away from clubs as they are not able to afford them is also increasing. This is the case at West Ham in the Premier League, who after being taken over by an Icelandic consortium two years ago, are now facing financial trouble as the Icelandic economy is in meltdown. Furthermore, their sponsors have gone bankrupt and they face a £30m compensation claim from another football club. Difficult times for West Ham.
But most of the debt that the FA President mentioned has been incurred by the top four clubs in the Premier League as they seek to expand and stay at that top table. Between them, Chelsea, Manchester United, Liverpool and Arsenal account for more than £1bn worth of debt, which seems not only remarkable considering their revenues but also highly dangerous.
Accounting firm Deloitte, which specialises in football finances, suggest that Liverpool’s debt is £350m with an annual interest payment of £30m. In addition, their American owners have been unable to find the financing for a new stadium (reported to be £350m) which has done little for the confidence of fans and other investors. Their great rivals Manchester United find themselves in a similar position with debts of £660m that needs £42m of interest payments to be made a year. Now, Manchester United’s pre-tax profits up until January 2007 were £43m so the European and Premier League champions are still not any closer to paying off their main debt.
Arsenal are in a slightly better off position, though no less in the red, £307m in the red to be exact but they do have their interest fixed at £18m a year, which is manageable. As for Chelsea, well, despite what their managing director says, their debts are simply written off by multi-billionaire Roman Abramovic. Much like the new owners at Manchester City, these chairmen have bought football clubs for their own pet project and not to make money but just as easily as they have been bought so they can be sold.
Now, if the Premier League needs any further warning it should take a look at its Italian counterpart. Much as the English version does now, in the 1980s and early 90s, Serie A was the centre of world football possessing the richest teams, attracting the highest-paid players, and earning more money than any other European league. Now, Italian players leave to play in England, attendances have fallen dramatically and Italian football languishes in fourth place behind Spain in football revenue. Could that ever happen to the Premier League?