Is soccer ready to debt-onate?
In these troubled times where interest rates and stock fluctuations are discussed in the court of public opinion with as much scrutiny as the box scores, it was only a matter of time before the credit crunch and soccer were debated on the same agenda.
The Leaders in Football summit at Stamford Bridge this week featured an intriguing showdown between Lord Triesman, chairman of the Football Association, and English Premier League chief executive Richard Scudamore.
Triesman argued for tighter regulations and more in-depth checks upon foreign owners, insisting that the global financial difficulties left teams in greater danger of hardship if a buyer's credentials were not properly examined. He also claimed that English clubs carry total debts in excess of $5 billion dollars, a third of which comes from the Big Four of Manchester United, Chelsea, Liverpool and Arsenal.
Yet while it is those big names that will catch the eye of the public, the real danger does not lie at the top of the English game. Instead, it is the smaller clubs in lower leagues that could be in peril, as consumer spending cuts back and that £300 season ticket doesn't seem like such good value any more.
Forget about there being major headaches at the likes of United. Sure, the Glazer family borrowed heavily in order to purchase the club, but those debts are secured by future earnings that are unlikely to drop.
Television rights deals worth billions and stretching on for several years are in place – precisely why Premier League ownership was such an attractive position for these savvy businessmen in the first place.
Furthermore, the real cost of borrowing fell around the world on Tuesday, with many central banks slashing interest rates. More cuts are expected to follow.
While foreign ownership is not to the taste of many in England, for some clubs it is the best way out of financial difficulty. As long as the buyers satisfy the necessary criteria of integrity and solvency, the pros outweigh the cons.
THOUGHT OF THE DAY
"The FA themselves know about all these things because they are one of the most indebted organizations in the world."
Premier League chief executive Richard Scudamore.
