Wigan Athletic Chairman Dave Whelan has written to the chief executive of the English Premier League, Richard Scudamore, to suggest a cap on club borrowings. This followed news that the High Court had granted Portsmouth extra time to tackle their unpaid tax bill but the club are still in an extremely precarious situation. Whelan’s comments show that Portsmouth’s severe debt problems have sent shockwaves through the entire league.
In an interview with The Times, Whelan outlined his thoughts on the financial situation, as well as his solution to the debt problems that are taking over the Premiership. To manage the debt, he feels clubs should be limited to borrowing 25% of their turnover. This concept of debt management on a club by club basis would appear to be a fair solution.
UEFA’s general secretary, Gianni Infantino insists that the top clubs in Europe would actually be thrown out of the Champions League if they failed to manage their debt responsibly. Shortly, they will release results of a study into the running costs of Europe’s professional clubs, which are expected to show a fifth are running at a massive loss.
From 2012-13, clubs will have to break even if they want to play in the Champions League or Europa League. So, debt management at clubs like Chelsea and Manchester City, whose owners are essentially too wealthy to be concerned with such things, will need to be rethought as both rely on their owners fund new signings and pay wages.
The majority of the clubs in the Premier League would actually fail to meet the new criteria as their total debt is much higher than that which will be permitted to compete in Europe. Maybe they should consider a conventional debt management plan. Rather than over think it or pay over the odds for financial assistance, they should just get in touch with one of the specialist debt advisors that help individuals in the UK every day. www.harringtonbrooks.co.uk are one of longest standing financial institutions in the UK. So,