Premier League clubs earn and owe most

Sports - Football - Premier League - Money Matters

Talk about never judge a book by its cover:

A couple of weeks back, I read a BBC article which labelled the Premier League as "one of the richest sporting series in the world" with its main earnings coming from the sale of TV rights.

In the UK alone these are worth £1.8 billion over three years; overseas tv deals, internet and mobile phone rights add another £1bn. These deals were negotiated in January 2009 - at the hight of the recession.

The League's total assets add up to £3.8bn and constitute 48% of total club wealth across Europe.

However, another BBC article about a study on football club finances, headlined with the Premier League clubs owing more money than all the other European top clubs put together, with a total of 3.8bn euros (£3.4bn).

In other words, the Premier League clubs are top earners and debtors.

The European Club Footballing Landscape study looked at the 2007-08 accounts of all 732 clubs licensed by UEFA.

The total debt of 18 Premier League clubs is about four times that of the next most indebted top-flight league, Spain's La Lige with 978m euros in debt (and assets of 2.5bn euros).

The report says most of the Premier League's debt is linked to the takeover of Manchester United and Liverpool and does not include Portsmouth or West Ham into their research as they were not granted UEFA licences that year because of their financial problems.

And it has not looked any better for them since.

Over the last couple of weeks we have been able to follow more and more of the other side to the glorious game, the downside:

Portsmouth have become the first Premier League team to enter administration with about £70m debt and are most likely facing relegation after they will have points deducted for their financial plight.

But they are not the first, not the only and will not be the last in a sticky financial situation, that is for sure:

UEFA Cup and Champions League semi-finalists in 2000 and 2001 respectively, Leeds United were forced into a mass sale of players when they came into financial difficulties but could not avoid relegation from the Premier League in 2004. Administration followed three years later and a further relegation, from the Championship into League One.

Crystal Palace dropped out of the top-flight in 2005 and went into administration last January with debts of £30m.

Coventry City had nearly the same destiny three years ago but rejected the big spending approach and went back to its roots instead as a community club.

Manchester United have more than £700m debt by the Glazer family. Liverpool are indebted by more than £200m and are looking for new investors.

Their major profits from TV and sponsorship revenue have been covering them so far, but I would rather not dare to predict for how much longer they can survive that way without incurring further debts and similar financial problems, if maybe not as fatal.

Meanwhile, on the only positive financial note this week, Arsenal have announced a profit boost of £35.2m which has drastically reduced their debts (from £332.8m to £203.6m).

They raised £96.6m by selling 261 new apartments at Highbury Square, their former ground, and have also been rejecting the big spending approach other Premier League clubs like Chelsea and Manchester City have been getting used to.

Analysts say other clubs should follow their and Coventry City's example.

I feel, rules and regulations should be introduced to draw a line under this multi-million misery and avoid any similar demise to Leeds United's, Portsmouth's, et al.

UEFA president Michel Platini has been pushing for a system where clubs should no longer be allowed to compete in the Champions and Europa leagues when they spend more than they can afford.

I think this is long overdue looking at what has happened over the last few years, but it has also its own risks which could escalate the matter even further.

The clubs need to make profit, which would be more difficult with less competitions, less matches, less tickets to sell, less TV and sponsorship deals, etc. etc. etc. It is a vicious circle which I think we are only getting a first taste of where it can all lead to.

During the last transfer window, Premier League teams have spent only £30m, £100m less than a year ago.

So, does this indicate that the Premier League teams have finally learnt for the better? Or will they continue to walk, dance and prance on very thin, cash-strapped ice?