Growing Premier League Debts

Discussion in 'Personal Articles' started by outlaw_member, Jan 7, 2010.

  1. outlaw_member

    outlaw_member New Member

    As the recession brought the worldwide economy to a near grinding halt, the Premier League seemed to be resilient to the hardship faced by most other financial quarters. On the surface of things, English clubs were spending more then ever and a newly negotiated TV deal had ensured that revenues were at an all time high. Rich benefactors from around the globe had arrived on the English shores with aspirations of making a profit, as clubs were sold like hot cakes after being promised the grandeur of trophies and Champions League football. Following the blue print set by the current Chelsea owner Roman Abramovic, 10 Premier League outfits were subsequently bought by investors over the course of the noughties decade, all with the common objective of financing their clubs to the sweet muzzy feeling of success. The plan was sound in theory but just how feasible was it?

    The first English club be taken over in the new wave of private investment was Chelsea FC who parked their tanks on the lawns of many European clubs, whilst proceeding to fire banknotes at just about anything that moved. Consequently, Abramovic amassed a disposal of some of the finest players in the world to help execute his aggressive strategy. With the controversial and flamboyant Jose Mourinho at the helm, together they won two back-to-back Premier League titles and consolidated a Champions League spot. The Russian had auspiciously accomplished just about everything he had hoped for, but at what cost? A £340 million debt owed to himself was recently written off and turned into equity, as he acquiesced a gargantuan loss from his footballing entity. So, if the most successful philanthropist in Premier League history was unable to make a profit after seven years of significant success, then what chance was there for his fellow businessmen at making a tangible return on their investments?

    Another club whose nouveau riche status was intended to propel them to the zenith of football was Man City, who throughout their history had lived in the shadow of their superior city rivals, Man Utd. The arrival of an Abu Dhabi Investment Group soon filled the rhapsodic fans with hope as their commitment and ambitions were seemingly intertwined with those who supported the club. On the very first day after completing the takeover, the group broke the British transfer record by shelling out £32.5 million on the Brazilian superstar, Robinho. Less then a year later, the club posted an annual loss of £92.6 million which excluded an outlay of near £70 million that had been placed on several other new signings. Like many other over ambitious entrepreneurs, they had overextended the clubs natural resources in an attempt to create the infrastructure and status other clubs had spent the best part of their existence trying to develop. A method which had all too often been proven to be disastrous in the long run, as spiraling debts and unsustainable expenses eventually caught up on the careless men that were in charge.

    The potential repercussions were perfectly illustrated on the Italian peninsula after similar imprudent management imploded several of their clubs. Quite easily the leading European league between the late 80’s and early 00’s, the Serie A encompassed many great players for large fees at high wages. From Ruud Gullit to Gaizka Mendieta, Italian clubs on the whole expended like there was no tomorrow and the most prominent cheque-book was owned by the Roman club, SS Lazio. Whom under the guidance of Sergio Cragnotti broke several transfer records in the pursuit of the sport's greatest stars. As the money started to dry up and Cragnotti’s position became untenable after a scandal involving an unrelated company, he soon left Lazio with hefty debts which had been accumulated from their extravagant expenditure. Eventually, they were forced to sell all of their major assets as the 2000 Scudetto winners regressed down the Italian hierarchy. The fortunes of their rivals Fiorentina was no different as their mounting debts effectively saw them become bankrupt and ultimately ceasing them to exist, until they were fortunately re-established back into the fourth tier of Italian football under a new owner.

    Such is the dangers of spending beyond your means and the recent conduct of certain clubs who have whittled down their expenses has at least suggested that the risks have been conceived. Despite, the potential consequences that lie in wake, many fans celebrate and even hope for the possibility of getting their very own sugar daddy in order for a short term fix. Yet, it’s the fans who will be left picking up the broken pieces once the owners decide to withdraw. There is no shortcut to success and like a number of major clubs, it takes hard work and the constant development of the infrastructure to reach the standards that these owners have promised to achieve with a quick cash injection.

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