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HoneyNUFC

Clubs Risking Financial Ruin Chasing Premier League Riches

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HoneyNUFC    1,012
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English football clubs are risking ruin in a bid to reach the Premier League's riches, according to a new report by financial analysts.

The analysis found that 18 of 19 clubs who were promoted to the top tier between the 2008/09 and 2015/16 seasons made a loss during their promotion season.

And playing in the Premier League was no insurance against future financial difficulties, according to analysts Vysyble, as just one in four were making a profit after four years while the majority were dumped back out of the league having over-spent in order to compete with England's biggest clubs.

The findings concur with a diagnosis made in Deloitte's annual review of football finance which reported that in the 2015/16 season Championship clubs spent more on wages than they generated for the third time in four seasons.

"Clubs that financially overexert themselves to survive in the Premier League usually struggle to survive in the longer-term and incur significant damage to balance sheets as they suffer economic exhaustion," said the Vysyble report's co-author Roger Bell.

"This then renders any parachute payment ineffective and usually brings with it a prolonged tenure in the Championship or below. Therefore, staying in the Premier League is not a 'wealth creation' scheme, or a solution to a club's financial woes.

"English Football League clubs who spend beyond their means are, in fact, risking their futures by chasing a dream that is just that - a dream, and one that is actually more likely to end up as a financial nightmare."

The Football League introduced financial fair play rules in 2012, limiting how much a club can loss can lose each season without punishment, while TV money and Premier League parachute payments have increased.

"Reports of this nature inflame the position and confuse the reality of the situation for supporters," said an EFL spokesperson in response to the report.

http://www.cityam.com/273598/english-football-clubs-heading-financial-nightmare-pursuit?utm_source=dlvr.it&utm_medium=dvTwitter

 

Will we see some severe collapse of big spenders soon?

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Mel81x    56

I think the writing was really on the wall with all the money clubs will get as part of the TV deal as well. Didn't seem like it was going to create anything for clubs that came into that money with no proper long-term management of finances. We'd all like to think its nice that clubs can compete fairly but in all honesty if there were never going to be a tangible ROI from the spending this was always going to be the case.

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SirBalon    653

The thing is the saturation...  It's capitalism in its purest essence because everyone thinks they're in the same boat and everyone thinks they can acquire what the really rich have.  The next 5 years are going to be very interesting.

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Mel81x    56
6 minutes ago, SirBalon said:

The thing is the saturation...  It's capitalism in its purest essence because everyone thinks they're in the same boat and everyone thinks they can acquire what the really rich have.  The next 5 years are going to be very interesting.

Think its only going to get worse because you can't stop all the people involved in this little money-circle from doing what they do. Things only get more expensive as time goes on and maybe this little bubble is going to burst sooner than we think but you're right the next few years are going to be very interesting to watch for how clubs survive when they punch above their financial means.

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SirBalon    653
21 minutes ago, Mel81x said:

Think its only going to get worse because you can't stop all the people involved in this little money-circle from doing what they do. Things only get more expensive as time goes on and maybe this little bubble is going to burst sooner than we think but you're right the next few years are going to be very interesting to watch for how clubs survive when they punch above their financial means.

That’s true mate... The more people that have money to spend, the more expensive the targets become because the system get saturated and those with real money outpower the situation.

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Stan    868

This has been going on for ages. Surprised clubs like Forest and Derby haven't suffered for it given how much they've spent and not got promoted. 

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Dan    226

It does make you wonder why clubs don't look at what's happened at places like Burnley, Huddersfield etc.. and thought to themselves that there might be a bit more to it than just throwing absurd money at it year upon year.

When we went up it was when we'd actually cut back our spending.

Derby, Forest and Sheff Weds are the main offenders I reckon.

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HoneyNUFC    1,012

The most likely reason no one has gone tits up is because the creditors are not mainstream lenders but are actually shareholders and owners. If it was a mainstream lender they simply wouldn't be able to go into large debt trying to get promoted.

The risk is not a debt time bomb, whether it is sustainable or not depends on the wealth of investors and their intent. If they lose their riches outside of football or they decide it's not worth it anymore they could turn the tap off and write off their investment. That wont be the common theme but it will happen somewhere, Sunderland for example.

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RandoEFC    368

It's another sad nail in the coffin of football now that there's such a disgusting amount of money in reaching the Premier League that the prospect for fans of teams like Brighton and Huddersfield visiting Old Trafford, Anfield etc. is a complete after thought now.

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Aaroncpfc    307

All you have to do is look at us to realise that from a financial perspective it's not all it's cracked up to be. You just pay a lot more to agents, players, transfer fees etc. Getting promoted was meant to be our way of sorting out the stadium, continuing our academy's performance etc but if anything it's got progressively worse.

It's hit a point where relegation wouldn't bother me. I'll miss playing and beating the top six but I'm not going to miss the attitude of some of the players and the direction this club wants to gear itself too.

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HoneyNUFC    1,012

Middlesbrough willingly let themselves get relegated thinking the money they've made would give them a bigger punch next time they came up. What if they don't come up... 11th after 11 games!

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