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.

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

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s