The Sweeper: Portsmouth’s Crisis Reveals Depth of Premier League’s Borrowing Risk
For a league swimming in money, it’s of obvious alarm that a club cannot pay its players’ wages, as recently and famously as happened to little old Portsmouth FC. Yet the most interesting news to come out of the whole mess is in just how many areas Portsmouth owe money, and how far ahead clubs like Pompey are willing to gamble their future — and most alarmingly, how apparently normal this is for the Premier League.
Soccernet today has a very detailed article on Portsmouth’s attempts to securitise their TV revenues for years into the future in order to raise £60 million now, borrowing against future revenues to pay past debts: they currently owe millions on transfer fees, agents fees, to banks and to the taxman (and even allegedly to the police for matchday duties). As Harry Harris explains, their solution to borrow more on future revenue follows a common practice in the league:
Ten years ago, clubs like Newcastle and Leeds United led the way in securitising their guaranteed season ticket sales to buy players, ease debt and build new stands. Some clubs followed suit and so, having tied up season ticket sales for years to come, the clubs are now seeking to sell advanced TV revenues, knowing that a new three-year cycle of Premier League rights both domestically and overseas, amounting to £3 billion collectively, is guaranteed.
The risk of this move is fairly obvious (how are Newcastle and Leeds doing, then?), in a year of global financial meltdown. In the past decade, supposed guaranteed revenue amounting to hundreds of millions of pounds suddenly vanished from the English game with the collapses of ITV Digital at the start of the decade and Setanta most recently. TV revenue is also slashed in half for three of the twenty clubs who are relegated in their first year out of the Premier League, and further thereafter.
An escalating cycle of borrowing more and more on the belief revenues will always keep increasing is an ever riskier business, and the glittering stadium pictured that Portsmouth had planned to build just a year ago is now an awful long way from reality. And perhaps most alarming is how commonplace Portsmouth’s practices apparently are in the Premier League.
Worldwide News (actually, today, it’s mainly American lower league news)
- The expected latest twist in America’s lower league crisis occurred with the USL filing lawsuits against three breakaway teams who have joined the NASL, the Rochester Rhinos, Crystal Palace Baltimore and the Tampa Bay Rowdies. This is potentially the first of many lawsuits, according to Inside Minnesota Soccer; I hope the legal department at US Soccer is hiring some extra hands to help sort this out.
- Meanwhile, one of the leaders of the NASL movement, St Louis owner Jeff Cooper, yesterday announced the details of his new team to (hopefully) play in the NASL: AC St Louis (fine name), logo (not bad, if dull), website (uh, this is 2009…) and coach (Claude Anelka?!). Overall, good to see the history of a true soccer city played-up in the announcement, and they do have a soccer stadium and some ambition youth development wise. Now let’s hope they have a league to play in.
- Crap, there’s more USL/NASL news. The excellent Puerto Rico soccer blog blog Pasion Naranja! has been thoroughly examining all sides for the island’s teams in the last day or two, including the silence of the USL’s Puerto Rico Islanders, the prospect of Ponce River Plate playing in the NASL and the possibility of unlikely USL expansion.
- The US World Cup bid ramps up and plays on the relationship with ESPN with a Sportscenter “news” video explaining its merits; I have to say I’m with Fake Sigi in giving this a thumbs-down. MLS is ignored aside from a frankly bizarre fake cut to a Galaxy-Fire game, and the only stadium mentioned is Dallas Cowboys’ stadium, gridiron lines in clear view (I’m aware of its size, luxury box glory and likely high chance of hosting the final, but if you’re going to feature an NFL stadium, surely the MLS Cup Final that was hosted in Seattle would have made more sense).
- Play the Game has an update on the rescheduling of the next Viva World Cup for “nations” who are not part of Fifa, as the fifth iteration of the tournament is moved to Iraqi Kurdistan in 2012.
- The bizarre Leeds-Kettering FA Cup second replay last night, which ended up won by Leeds 5-1 after extra time, got weirder as Kettering apparently fired assistant manager John Deehan for his substitutions immediately after the game. Player-manager Lee Harper, who was on the pitch, is threatening to quit in solidarity with Deehan.
The Sweeper appears every weekday, and once at the weekend. For more rambling and links throughout the day every day, follow your editor Tom Dunmore @pitchinvasion on Twitter.