The Money Pit

The Guardian’s David Conn has just conducted his annual analysis of Premier League football clubs’ accounts.  The period covers the 2010-11 season and the full data can be found on the newspaper’s website.  The usual financial data is presented, including: turnover; net debt; wage/turnover ratio and, as is now customary in the age of leveraged takeovers; interest payable.

With the European debt crisis dominating headlines around the world, the oft-cited figures for concern are, along with fluctuating bond yields, countries’ net public debt-to-GDP ratios.  The Guardian article doesn’t provide a net debt-to-turnover ratio for the Premier League clubs but, as this is extremely simple to do, I crunched the numbers with the following ranking as a result:

Team Debt-to-turnover ratio, 2010-11
Fulham 247%
Bolton Wanderers 162%
Newcastle United 146%
Aston Villa 124%
Sunderland 97%
Manchester United 93%
West Ham United 56%
Everton 55%
Blackburn Rovers 45%
Chelsea 41%
Wigan Athletic 41%
Arsenal 38%
Liverpool 35%
Tottenham Hotspur 35%
Birmingham City 29%
Manchester City 28%
Blackpool 8%
West Bromwich Albion 3%
Wolverhampton Wanderers N/A
Stoke City N/A
Source: The Guardian

Wolves and Stoke have zero debt in their published accounts and are thus the bottom-feeders of this particular version of the league.  Without over-analysing this one set of data it would appear that newly-relegated Bolton are in desperate need of harsh austerity.  Their debt-to-turnover ratio is the near equivalent of Greece’s net public debt-to-GDP figure: 162 per cent to 163.5 per cent, respectively.   In addition, their wages-to-turnover ratio stood at an unsustainable 82 per cent in 2010-11.  By way of a comparable example, West Ham, with only a 56 per cent debt-to-turnover ratio in their relegation season, have been visibly pruning away at their budget since.  Newcastle and Villa have also been desperately trying to make a profit on the transfer market and reduce their wage bills, with very different results on the pitch.  Fulham, with an eye-watering 247 per cent ratio, will presumably place their hope on owner/Chairman Mohammed Al Fayed underwriting/paying-off their £190m debt.

With Uefa’s Financial Fair Play regulations on the horizon – the 2011–12 season is the first which counts towards the 2014–15 assessment of whether clubs have exceeded the total maximum allowed losses of €45 million (£39.5m) over those three years – clubs will be encouraged to balance their books or face sanctions ranging up to exclusion from European competitions.  I have no financial background but I believe David Conn when he suggests (elsewhere) that many Premier League clubs are belatedly waking up to the money pit they’ve dug for themselves.

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One thought on “The Money Pit

  1. Good work as always, this blog is more proof to me that you should make a move to sports writing! I know I’ve said it before but I’m gonna keep banging on until you do!

    Man hugs x

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