Football Programmes Centre

foxes1 · Joined: 30 Nov 2008 Posts: 1223 Location: Leicester

So with Gold/Sullivan taking over at West Ham, they have announced that they have debts of 110 million pounds if you believe reports, can someone explain how debts at football clubs is gauged.

Reason I ask is, it was stated on the radio last night (and this is not a dig at Man Utd) that they are the richest club in world football but have a debt of 510 million pounds, how can this be. I am assuming that the assets of Man utd are more than any other club, so this effectively cancels out the debt.

ForestMick · Joined: 24 Nov 2008 Posts: 1645 Location: Nottingham

I would guess that rich clubs are like rich people - the more money they have, the more things they want, so the more debt they get into. Banks tend to lend money to people that need it the least, so I guess football clubs are the same.
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Tynie Topics · Joined: 26 Nov 2009 Posts: 3572

Glazers buy Man Utd for £600m and "mortgage" that debt against the club, a bit like you buying a house really.
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crowdedhouse · Joined: 21 Nov 2008 Posts: 262 Location: Sunderland

If you think Pompey are having a hard time at the moment, spare a thought for Chester City.

425 supporters turned up for their home league game against Salisbury City tonight in what could be their final game ever, a record low crowd for Chester, and a High Court winding-up hearing on Friday.

If Chester survive to the end of the season it will be a miracle !!!

stodin · Joined: 14 Dec 2008 Posts: 293 Location: Nottingham

crowdedhouse wrote:

If you think Pompey are having a hard time at the moment, spare a thought for Chester City.

425 supporters turned up for their home league game against Salisbury City tonight in what could be their final game ever, a record low crowd for Chester, and a High Court winding-up hearing on Friday.

If Chester survive to the end of the season it will be a miracle !!!

http://www.footballprogrammecentre.co.uk/forum/viewtopic.php?t=2369

I have been banging on about non league clubs living outside of their means for ages on here. Yes, its bad for the fans but if you run a buisness by spending more than you earn something is bound to go wrong and the owners must face the consequences. Spend too much chasing sucess and you get what you deserve. Halifax, Newcastle Blue star, Kings Lynn, Scarborough etc etc etc have learned this lesson.

Like I said I do feel sorry for the fans but I also feel sorry for the creditors of these clubs who often get back only 10-15% of what they are owed resulting in financial problems for local business. Lets also not forget that they owe £1million in unpaid tax, that is money stolen directly from my pocket!!

The recent cold weather is also having an impact on the non league clubs due to a lack of income from postponed games. Chester wont be the last one to fold (if they do)

Geddon · Joined: 20 Nov 2008 Posts: 1044 Location: Bristol

I think if a few Premier League clubs were to go into admin then it might wake a few of the rest of them up and we'll start to see a return to something approaching normality.

Otherwise I wouldn't be against a licensing system like they have in Germany, where clubs have to prove that their finances and stadium etc. are in good enough order for the league they want to play in. No licence = relegation. That may make it difficult for the top clubs to keep competing and winning the Champions League but it'll certainly make things fairer for those clubs who don't spend money they don't have in order to succeed.

Senior82 · Joined: 25 Nov 2008 Posts: 982 Location: Near Sheffield

It's only a matter of time before Portsmouth go into admin. They are totally screwed.

pompeypete · Forum Moderator Joined: 17 Sep 2009 Posts: 1094

Senior82 wrote:

It's only a matter of time before Portsmouth go into admin. They are totally screwed.

Correct.........now Sol Campbell sueing pompey for £1.7 million.

Still I think there are a lot of premiership clubs looking over their shoulders.
Once Pompey go, it could start the domino effect.

What the effect of 'Administration' is I'm not sure, relegation with -9 points , what happens to the creditors ? perhaps the forum can let me know.
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stodin · Joined: 14 Dec 2008 Posts: 293 Location: Nottingham

pompeypete wrote:

Senior82 wrote:

It's only a matter of time before Portsmouth go into admin. They are totally screwed.

Correct.........now Sol Campbell sueing pompey for £1.7 million.

Still I think there are a lot of premiership clubs looking over their shoulders.
Once Pompey go, it could start the domino effect.

What the effect of 'Administration' is I'm not sure, relegation with -9 points , what happens to the creditors ? perhaps the forum can let me know.

Clubs dont get automatically relegated for going into administration but they do get a 10 point deduction (9 points in the premier league). They have to enter into a company voluntary arrangement CVA to pay their creditors, 75% of their creditors have to agree to this CVA. Football creditors have priority over HMRC regarding getting their money back meaning local business and us as tax payers probably get 15p in the pound back whereas football creditors should get 100% of their debt paid off.

Its complicated

stodin · Joined: 14 Dec 2008 Posts: 293 Location: Nottingham

Just to put this into a Portsmouth context. If they do go into administration it could mean that Sol Campbell gets his £1.7million while HMRC only get £1.5million of the £10million that is owed.

Its a disgrace!

foxes1 · Joined: 30 Nov 2008 Posts: 1223 Location: Leicester

Leicester went into admin in 2002, and got off lightly in paying their debts off (and as a taxpayer it is wrong), but its like STODIN stays football related debts are at the front of the queue.
http://news.bbc.co.uk/1/hi/uk/7741859.stm

Problem is all major creditors have to agree to re-structure the debts owed by clubs and if one creditor doesn't agree, then the only option is administration.

pompeypete · Forum Moderator Joined: 17 Sep 2009 Posts: 1094

stodin wrote:

Just to put this into a Portsmouth context. If they do go into administration it could mean that Sol Campbell gets his £1.7million while HMRC only get £1.5million of the £10million that is owed.

Its a disgrace!

Thanks for the info, I can only agree. Thats worst than us bailing out the banks, at least banks might pay us back............eventually after paying those bonuses.
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Senior82 · Joined: 25 Nov 2008 Posts: 982 Location: Near Sheffield

I believe it is written into HMRC's constitution that they don't accept a lower %age through a CVA, if another creditor is getting a higher %age.

So as football debts have to be paid in full, then HMRC do not accept anything less than 100%. This then leads to teams not exiting administration properly, and they end up with the additional points hit (see Leeds, Rotherham, Luton and Bournemouth)

stodin · Joined: 14 Dec 2008 Posts: 293 Location: Nottingham

Senior82 wrote:

I believe it is written into HMRC's constitution that they don't accept a lower %age through a CVA, if another creditor is getting a higher %age.

So as football debts have to be paid in full, then HMRC do not accept anything less than 100%. This then leads to teams not exiting administration properly, and they end up with the additional points hit (see Leeds, Rotherham, Luton and Bournemouth)

This is true, while HMRC lost their priority status they can still stop a club exiting administration properly, especially if they are the largest creditor as they can refuse to accept the CVA.