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|
|West Ham United||56%|
|West Bromwich Albion||3%|
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.