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Half of Premier League clubs are "insolvent"


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Half of Premier League clubs are "insolvent"

 

An online credit information provider has claimed that half of Premier League clubs are technically insolvent.

 

In a review of credit ratings for the top flight, Equifax declared that 10 clubs would struggle to repay their debts if they were asked.

 

“We have listed 10 clubs as insolvent because they would struggle if everyone came at once to ask them for the money they owe," explained Equifax's external affairs director Neil Munroe.

 

"That's unlikely, but the reality is that no firm is safe these days, as what happened to a number of key retailers at the end of the last year proved."

 

Indeed, Woolworths stores across the country have closed their doors this week, the latest in a series of big names to have been rocked by financial uncertainty. In November, the UK Government had to bail out the Royal Bank of Scotland, while US car giants Ford, Chrysler and GM are begging for help from president-elect Barack Obama.

 

"Like most of other sectors of the UK economy, it is likely to be a difficult year ahead for the nation’s favourite sport,” says Munroe. “Football has more investment from wealthy individuals, but if there’s a sudden crisis, those individuals may struggle and this would impact on the clubs. Not even Premiership football is safe from the recession if investors decide to withdraw funds."

 

The Premier League table bears only a passing resemblance to Equifax's results, in which the lower the score, the more likely a business is to default on payments. Whereas Hull have suprised everyone with their performances in the Premier League, their Equifax rating – 1 out of 100 – is firmly in the relegation zone. Aston Villa, Fulham and Wigan scored just two points.

 

Abramovich-bankrolled Chelsea scored just 10 points. Without the Russian’s investment, heavily indebted Chelsea would struggle – worrying, considering recent City chatter that he may be considering pulling out.

 

Meanwhile, although West Brom have struggled on the pitch, their a credit rating rating of 71 is bettered only by Manchester United and table-toppers Arsenal. The Gunners' boss Arsene Wenger refuses to spend big in the transfer market, preferring to buy young players with large resale potential.

 

“Every business is facing tough times and our latest analysis shows that the business of football isn’t immune," says Munroe. "A consumer-driven business, like retailers, the football clubs might struggle in the coming months. As households tighten their belts to cope with the rising cost of living, many fans could decide to watch the match at home, instead of splashing out on a season ticket. And, of course, if they’re not at the football ground there’s less chance of them spending on other club items.

 

“Even some of the most successful clubs need to take a look at how well they’re scoring off the pitch to make it through the recession, in particular keeping a close eye on cash flow management and ensuring that they don’t fall foul of bad debt themselves. Arsenal prove that good money management goes a long way in times like these.”

 

The Equifax Table

 

98 Arsenal

93 Man United

71 West Brom

65 Tottenham

43 Blackburn

40 Manchester City

37 Sunderland

37 West Ham

26 Liverpool

--------- CLUBS BELOW THIS LINE TECHNICALLY INSOLVENT

18 Everton

17 Stoke City

10 Chelsea

7 Middlesbrough

5 Newcastle

5 Bolton

2 Aston Villa

2 Wigan

2 Fulham

1 Hull

0 Portsmouth*

* No accounts filed for Portsmouth at Companies House

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I can imagine Four Four Two is wrong.

 

We can't go from being one of the highest earning clubs in Europe to being insolvent in a couple of years - not enough has changed.

 

The attendances are still good, our net transfer spend is practically £0 and I can't imagine the short lived merchandise boycott has had too much effect.

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“We have listed 10 clubs as insolvent because they would struggle if everyone came at once to ask them for the money they owe," explained Equifax's external affairs director Neil Munroe.

 

"That's unlikely, but the reality is that no firm is safe these days, as what happened to a number of key retailers at the end of the last year proved."

 

 

Jesus wept. I wonder if Neil Monroe could magic up the cash if for some reason his mortgages, car loans, credit cards etc were all called in.

 

Without any evidence or research into covenants (which are commercially sensitive anyway) this research means absolutely nothing- it classes an overdraft as debt the same a 30-year bond. Yet an overdraft could be demanded tomorrow while the bond would only be payable in 30 years time.

 

All they've done is gone on Companies House, got out of date accounts and subtracted one part of the balance sheet from another. A monkey could do that in an hour. It's so much more complex that some pissy index score.

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That table has to be bollocks.

 

Manure and liverpool have huge amounts of debt.

 

Havnt liverpool just renegotiated their debt replayments as they couldnt afford them?

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How accurate can this article be if Liverpool are deferring their 350m load by another six months?

 

Although it makes you wonder just what the fuck is going on behind the doors at SJP if they claim we are that in debt and the cockney cunts keep telling us they paid off the debt.

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Liverpool should be more or less at the top of the danger list as their bridging loans following the US takeover will not be rolled-over for much longer. Without reasonable evidence that a refinance was on the way, the auditors would not sign off their accounts on a going concern basis.

 

Man Utd at football club level may be OK, but Red Football Ltd (parent co) has a rather nasty 'toggle' which is accruing at an alarming rate. That will in turn put pressure on the club to increase dividends to flow up the company structure.

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How accurate can this article be if Liverpool are deferring their 350m load by another six months?

 

Although it makes you wonder just what the fuck is going on behind the doors at SJP if they claim we are that in debt and the cockney cunts keep telling us they paid off the debt.

 

There's no way the club has officially paid off the 'debt'. What will have happened is Ashley puts cash into SJHL, they lend that on to NUFC on a secured basis so that in the basis of NUFC going into administration Ashley would be at the front of the queue to recover what was left. If he simply paid it off he would be just an equity investor and would be left with bugger all.

 

Even Comrade A has a 'loan' in his favovur for everything he has put into Chelsea.

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http://en.wikipedia.org/wiki/Malcolm_Glaze...nchester_United

 

In July 2006 the club announced a refinancing package. The debt taken on by the Glazers to finance the club was split between the club and the family, approximately £256 million is secured against Manchester United's assets.[9] The total amount will be £660 million, on which interest payments will be £62 million a year. The club stated, "The value of Manchester United has increased in the last year, which is why lenders want to invest in the club... 'This move represents good housekeeping and it ensures that Sir Alex Ferguson will be provided with sufficient funds to compete in the transfer market." The Manchester United Supporters Trust responded, "'The amount of money needed to be repaid overall is huge... 'The interest payment is one thing but what about the actual £660million? It is difficult to see how these sums can be reached without significant increases in ticket prices, which, as we always suspected, means the fans will effectively be paying for someone to borrow money to own their club."[10][11] Under the terms of Glazer's financing, in the event that Glazer is unable to repay bondholders, majority control of Manchester United will pass to three New York hedge funds in August 2010. The three hedge funds are Citadel, Och-Ziff Capital Management Group and Perry Capital.[citation needed]

 

Thats £62Million just in interest payments per year. Does anyone know if the actual debt is still there?

 

Have manure made an operating profit of more than £62M in any year since the debt was restructered?

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How accurate can this article be if Liverpool are deferring their 350m load by another six months?

 

Although it makes you wonder just what the fuck is going on behind the doors at SJP if they claim we are that in debt and the cockney cunts keep telling us they paid off the debt.

 

There's no way the club has officially paid off the 'debt'. What will have happened is Ashley puts cash into SJHL, they lend that on to NUFC on a secured basis so that in the basis of NUFC going into administration Ashley would be at the front of the queue to recover what was left. If he simply paid it off he would be just an equity investor and would be left with bugger all.

 

Even Comrade A has a 'loan' in his favovur for everything he has put into Chelsea.

 

 

 

work in finance matt?

 

interesting stuff.

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How accurate can this article be if Liverpool are deferring their 350m load by another six months?

 

Although it makes you wonder just what the fuck is going on behind the doors at SJP if they claim we are that in debt and the cockney cunts keep telling us they paid off the debt.

 

There's no way the club has officially paid off the 'debt'. What will have happened is Ashley puts cash into SJHL, they lend that on to NUFC on a secured basis so that in the basis of NUFC going into administration Ashley would be at the front of the queue to recover what was left. If he simply paid it off he would be just an equity investor and would be left with bugger all.

 

Even Comrade A has a 'loan' in his favovur for everything he has put into Chelsea.

 

Fuck me, nice one Matt obviously only those that work in finance understand that, without you we'd be lost! :(

Of course the cunt is "loaning" money to the club.

Still it makes you wonder why the fuck they keep releasing PR statements that the club is debt free, is that spelt out better for you?

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So what would your take on the financial situation at united be? or is there not enough accounts details to comment?

 

As we're a private company we have to wait for the accounts to be filed, which means any information we do get will be out of date anyway. The first set of accounts for SJHL will give a good indication of how things were initially set up, but that's about it. As the lads at Anglo Irish Bank showed, you can move a few quid here and there on 30 Dec, file accounts for 31st Dec, then shift it all back on 1st Jan and no-one will even be any the wiser.

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Fuck me, nice one Matt obviously only those that work in finance understand that, without you we'd be lost! :(

Of course the cunt is "loaning" money to the club.

Still it makes you wonder why the fuck they keep releasing PR statements that the club is debt free, is that spelt out better for you?

 

Fuck you very much.

 

It could well be that Ashley never expect the money back. In his head he could have written it off, so when they say the debt it paid off, it would be true in that sense, but should he sell up, the club hit the wall or Ashley suddenly need the cash then maybe that situation would change. So really, 'debt free' is subjective- from Ashley's view we are and it is from that viewpoint that the PR garb has been generated.

 

On your earlier comment, they have paid off 'the debt'. The cockney cunts you refer to say this because they paid off the major stadium loan as they were required to as part of the buyout. Sorry for answering your fucking obvious question.

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Fuck me, nice one Matt obviously only those that work in finance understand that, without you we'd be lost! :(

Of course the cunt is "loaning" money to the club.

Still it makes you wonder why the fuck they keep releasing PR statements that the club is debt free, is that spelt out better for you?

 

Fuck you very much.

 

It could well be that Ashley never expect the money back. In his head he could have written it off, so when they say the debt it paid off, it would be true in that sense, but should he sell up, the club hit the wall or Ashley suddenly need the cash then maybe that situation would change. So really, 'debt free' is subjective- from Ashley's view we are and it is from that viewpoint that the PR garb has been generated.

 

On your earlier comment, they have paid off 'the debt'. The cockney cunts you refer to say this because they paid off the major stadium loan as they were required to as part of the buyout. Sorry for answering your fucking obvious question.

 

But it wasn't a question Matt, that's the thing - it was a statement about the lies and propaganda used by the incumbent and you used it to show us how "switched" on you are to the financial ways of the world.

And let's be honest here they may have paid off what was required for the stadium loan but you can bet your financial arse it was just refinanced back to Mike Ashley bonds and loans incorporated.

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But it wasn't a question Matt, that's the thing - it was a statement about the lies and propaganda used by the incumbent and you used it to show us how "switched" on you are to the financial ways of the world.

 

Sorry for misreading your post, but there's no excuse to have a go at me and make me look like a big-headed prick when all I was trying to do was shed light on something.

 

In future I will remember that you are the fucking oracle and keep well clear.

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  • 3 months later...
The first chunk of the major debt on Manchester United needs to be repaid by June 2013.

 

Although the results posted by Red Football on Thursday confirmed record turnover and record profits, it was impossible to look at the figures without being drawn to the eye-watering £649.4million, the overall debt figure for United and its associated companies.

 

The bulk of this is the £510.69million taken out against the football club itself. And for the first time, it has been confirmed exactly when the money is due to be paid back.

 

Four major loans have been taken out, all dating back to the last refinancing deal on August 16, 2006, which must be paid back within seven and 10 years.

 

So, starting from June 2013, substantial sums, way beyond the £45.5million currently coming out of United's profits to make interest repayments, must be found by the Glazer family.

 

Further refinancing cannot be ruled out, although in the current financial climate, it is difficult to see any lender willing to take on such an undertaking.

 

The Glazers have never given any indication as to how they intend to pay the loans back. However, neither have they shown any sign of being too concerned about the debt mountain itself.

 

Indeed, as a stand-alone business, United can be delighted at their present performance.

 

Accounts to June 2008 reveal turnover at the Premier League and European Cup winners has risen an incredible 22% to £256.2million, underpinning a 7.5% increase in profits to £80.4million.

 

And, while wage costs have risen substantially following the arrivals of Owen Hargreaves, Carlos Tevez, Anderson and Nani, plus improved contracts for the likes of Cristiano Ronaldo, they are still well under 50% of turnover which is widely viewed in financial circles as the barometer for a well-run football club.

 

Whether, in the current financial climate, they can continue to squeeze even more from the United brand is open to doubt.

 

Attendance figures, while still extremely healthy, are showing signs of dipping slightly, suggesting further controversial increases in ticket prices might have more of a negative effect than has previously been the case.

 

Income from media streams, which show up a mammoth 30% rise to £90.7million, might offer more scope for improvement given the domestic Premier League TV deal has gone up 5%, with the overseas contracts likely to exceed that figure.

 

However, balanced against that is a rare surplus of £21million on transfers, generated by the sales of Gabriel Heinze, Giuseppe Rossi and Gerard Pique among others, plus an uncertain commercial market.

 

United are already touting for new shirt sponsors after AIG confirmed they will not be extending an overall £18million annual deal when it expires next year.

 

Indeed, given the company is now effectively in the hands of the US government, some politicians believe the entire contract should be ripped up.

 

Another financial institution, Prudential, is the latest to confirm they are in talks with Red Devils officials, joining a group that also includes Saudi Telecom and Indian corporate giant Sahara.

 

However, the deal United are eventually able to strike will offer a good indication of whether Old Trafford can continue to ride out the global recession.

 

http://www.football365.com/story/0,17033,8...5168997,00.html

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