Wednesday 8 October ~
The Daily Express described it as “the hurricane force of the global credit crunch raging mercilessly through the game”. As the Icelandic government forced West Ham's owner, Bjorgolfur Gudmundsson, to resign his chairman position at the country’s second largest bank Landsbanki, there were worries for the health of the east London club. But on a far larger scale, as the national economy of Iceland seems on the verge of collapse – no little thanks to its financial institutions overextending their credit capacity – some were yesterday warning that English Premier League clubs could find themselves in a similar position.
Yesterday’s “Leaders in Football” conference on the state of the game, held, appropriately, at Stamford Bridge, saw FA chairman Lord Triesman and Premier League chief executive Richard Scudamore establish contradictory and firmly entrenched positions. Lord Triesman expressed concerns about the “fit and proper persons test” and suggested a future salary cap, but his predominant theme was the “tangible dangers” of an estimated £3 billion debt in football: “Not only is debt at high-risk levels, we are also in a period when transparency lies in an unmarked grave. There is little point in thinking this now affects everyone except football. I predict, especially in today's financial climate, it cannot go on.”
Richard Scudamore, seemingly rattled, reacted to the FA chairman’s presentation in the afternoon and produced a number of non-sequitur soundbites. He stated: “The 92 clubs of today are very similar to the 92 of yesteryear,” before contradicting himself by lapsing into very un-yesteryear marketing language: “They are very sustainable brands.” In response to Lord Triesman’s concerns about transparency, Scudamore went for simple denial: “Part of our success is our openness. That is the bedrock of our success. We cannot be doing it all wrong.” Regarding debt he opted again for straightforward opposition, with a dose of jingoism thrown in for good measure, all backed up with a hugely oversimplified example: “We have to be careful we don't adopt Michel Platini's and the French view of debt, which is that it is bad. Debt is inevitable. You say debt is not healthy but debt, of course, to a degree is healthy. If we are not careful we’ll end up where no one is allowed a holiday in France who has a mortgage in England.”
As much as times of economic difficulty are bound to affect football, comparisons between the financial world and the finances of football can only go so far. Even when compared to other big-money industries football is comparatively unregulated and uninvestigated – professional clubs can get away with this level of debt, so they do. It is also too late for this to change. Once a club is in debt, particularly at current levels of spending, it is very difficult to ever get out of it. A club’s debt is not wiped clean by a new owner, just restructured and borrowed from someone else. Yet as Lord Triesman also said: “There is one certain fact about debt, it has to be repaid or refinanced.” The only real way to reduce debt would be to cut wages and transfer fees, putting yearly profit into debt repayment rather than the desperate (and expensive) endeavour towards those valuable European places. There is of course little desire for this in the Premier League. The vicious circle is unlikely to be broken by political will – such as, perish the thought, a government enquiry into the financing of football – and so the top clubs are instead looking to simply make yet more money to get them through difficult times and service huge existing debts.
The clubs have an ever willing ally in Scudamore who used yesterday’s conference to once again push the Game 39 idea. This is due to be discussed again in February, and is a perfect example of a big-club and Premier League money-spinner. No one really yet knows how long the upcoming recession will last or how far it will go. Despite Lord Triesman's best efforts, it seems the only way that football can break out of the debt spiral will be through drastic events such as bankruptcies. Richard Scudamore may take more notice then.