Football clubs with debts set to face banishment

The current banking catastrophe seems to have had some sort of impact on everyone, and now, not even football is immune to the knock-on effects of the crisis. This week, Uefa announced that football clubs with heavy debts could face exclusion from European competitions.

Whilst attending the ‘Leaders in Football’ conference at Chelsea’s home ground, Stamford Bridge, the general secretary of the organisation, David Taylor, spoke of the need for clubs to face up to their debts and take responsibility for their finances, particularly in the current climate of poor “financial stability”.

If clubs fail to do this, they could face what he ominously calls the “ultimate sanction”. Taylor tempered this worrying comment by stating that clubs would definitely be informed and given a chance to change their ways prior to the instigation of such a sanction (“there would be forms of communication, even warnings or reprimands”) but these comments will do little to ease the fears of fans of some of England’s biggest football clubs.

In order for a club to compete in European competitions, they must be provided with a licence, which is issued by the governing body of European football. Officials could now deny clubs this licence if they feel that their finances are spiralling out of control.

Taylor evidently believes that this latest move from Uefa is in the best interests of the respective club, since a poor financial state could place their future in jeopardy. Uefa has tried hard in recent months to introduce a zero-tolerance approach to financial uncertainty in football and Taylor spoke of a “working group” set up by the organisation to address the issues at hand.

There is no doubt that something needs to be done about debt in the world of football, especially when one considers the official statistics. The chairman of the Football Association, Lord Triesman, has taken an active role in addressing the problems of debt in the sport.

He has spoken in public about the option of enforcing a salary cap on Premier League clubs, in order to enable them to bring their spiralling debts under control: “a sensible form of restraint would make sense and it is not inconceivable”.

The frustrating thing is that this policy could never work across Europe, due to differing tax rates. Furthermore, Triesman recently estimated the total amount of debt among English clubs. Shockingly, his estimate came to approximately three billion pounds.

Worryingly for fans of the Premier League’s top four clubs, Chelsea, Manchester United, Arsenal, and Liverpool are thought to account for approximately one third of that hefty sum.

Chelsea have already attempted to defend themselves against accusations of excessive debt, stating that their one-of-a-kind “ownership structure” keeps owed money “internal […] in the form of interest free loans from the owner”.

Bruce Buck, chairman of the club, also spoke of his belief that debt is a “business tool”. However, Chelsea’s overwhelming dependence upon the wealth of owner, Roman Abramovich, has been viewed by many as an extremely risky position to be in.

Written by Charlotte Cook