OK I am still feeling controversial and still in a very bad mood about the way that Barcelona are conducting the on off transfer of our Captain. Greedy, and miserly are the words that spring to mind. Barcelona think that Fabs current market value is £29 million and Arsenal would settle for nearer £60 million which is what I want to hear, if as I fear the deal will be done. Sweeteners are being mooted such as Yaya Toure, but Barca don’t want him anyway, so let’s say £10 million for the player. That still leaves Barcelona some £20 million short of any realistic deal. My guess is that Barcelona will not budge thinking that Arsenal still need the money. This will almost certainly be resolved by the two clubs accepting that Fabs be allowed to play one more season in North London prior to returning to his spiritual home.
Well finally with the release of the 2010 Football finance report by Deloitte some very big hens are coming home to roost. Arsene Wenger can feel that his far sighted efforts are at last going to be rewarded. He is buoyed by the belief that the team is not very far away from returning to consistency given that he is going to make the necessary purchases. The Spanish economic crisis is growing and soon as part of austerity measures, the reversal of tax breaks to high earning footballers will make the Bernabeu much less appealing in future. Spanish banks will be forced to reign in financing the stratospheric loans which enable the two giants to try and row against the rising economic tide of debt. The report makes clear that the party is over for most European leagues and currently only Germany’s Bundesliga can take any praise. The report’s editor Dan Jones has said
“I think that is probably in the long run a good thing for football clubs, as it is about stability, and financial sustainability,”
Clubs will be forced to explain how a debt will be financed as a pre-requisite for Champions League entry in due course, and the falling operating profit of the Premier league to £79 million should send shudders down the spines of League Chairmen. When Revenues are approaching £2 billion, one has to ask who ate all the pies? The reply? It was the players silly… The wages being paid are simply unsustainable and soon some very high profile players will be forced to take pay cuts like it or not. Even the writing off of debts into equity by the likes of Sheik Mansoor and Roman Abromovich will become de rigeur under the Fair play plan agreed with clubs for entry into the Champions League. Given the rewards from the broadcasting rights and the attraction of the best players, no self respecting businessman can hope to recoup their investments if they are not in the Competition.
Key points from the Report
The Premier League Clubs are spending 67% of their income on wages and over the last three years the salaries have increased by 55% The wage to turnover ratio had risen from 58% to 63% Indicating that costs were not being controlled .
Chelsea spent £167m, followed by Man Utd at £123m and Liverpool an astonishing £107m with Arsenal coming in fourth with £104m being spent on wages at the Club.
Premier League Clubs Debts had risen to £3.3billions up 0.1billion with four Clubs being responsible for £1.9billions (Man Utd 0.8bn, Chelsea 0.6bn, Liverpool 0.3bn and Arsenal 0.2bn)
Only 10 out of the 20 league members had made an operating profit in 2008/9.
Premier League Revenues rose to £1.92 billions with operating profits halved
Wage costs for the league were £1.3billions
I am not happy that sovereign countries in Europe will be thrown into economic turmoil because of the credit crunch, but if it persuades the banks to stop lending money to Clubs that cannot control their costs, then so be it. It also means that the days of the mega takeover are numbered too. Manchester United’s owners The Glazers have revealed that the debts are actually £400 million more than previously stated. That hidden extra equals our debts in total!!! This position is not only unsustainable, but there is a nasty streak inside me that wants Manchester United to go bust, Sorry, they have had it too good for too long and even the “Red Knights” the future saviours may find that having to explain how to finance one and a quarter billion pounds of debt to UEFA is all too challenging no matter how wealthy they are. The Arsenal takeover will be a risky business too, as having acquired the Club, the costs of financing the incurred debts will be equally unattractive.
The last wall that I wish to see demolished are the people responsible for this obscene financial situation, namely the broadcasters. If the worldwide economic crisis means that there will be fewer countries willing to pay top dollar for Premiership rights, then the price paid by BSkyB will fall. Remember they have shareholders too, and their market share is under attack by the likes of Virgin Media and the new Freeview HD service combined with more aggressive tactics on Sporting broadcasting rights negotiation from commercial terrestrial channels. Not even the advent of 3D TV will enable Sky to continue increasing its profits, and when the plateau arrives, the only way from there will be downwards I welcome this football financial Armageddon! For in three seasons time the football finance landscape will be barely recognisable compared with what it is today. By then Arsenal Football Club will be basking in the afterglow of its financial prudence, and will have a team winning trophy after trophy. How sweet will that be?
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