The monetary status of the English Premier League is a growing concern in the soccer world. The last couple of years have displayed the fall of a sporting empire, from the struggle of clubs within the organization itself.
Before 2009, the EPL was situated at the top of all professional soccer leagues across the globe, signing the most talented athletes from each possible country. From 2004 to 2009, the top four English clubs, Arsenal, Manchester United, Liverpool and Chelsea, participated in all five United Europe Football Associations annual tournaments—a round robin of teams across Europe competing for the title of best European club. Now, its coming to an end.
One of their premier clubs, Manchester United, won the glorifying championship in 07-08 and made the finals last year, losing to Barcelona. But they succeeded because of their fan support and the talent occupied within their roster. They even topped the lists for most valuable sporting club in the world at a consistent US$1.8 billion. Besides the success of the Red Devils, it seems that Manchester United is the only team surviving while the word bankruptcy floated across many other clubs.
Club teams across England are now dropping in profit and in talent. Many are struggling to find buyers to stabilize them, and help both the clubs and the league grow once again.
Portsmouth have emerged from the depths of the unknown and are now noted in the media pipeline across the world for their exquisite amount of owners buying and selling the club through this years current campaign. The south-coast club welcomed their fourth owner of the season. Hong Kong businessman Balram Chainrai, 51, bought 90% of the clubs shares from Saudi investor Ali Al Faraj to help the club gain revenue and pay for its excess debts.
Before the buyout, Chainrai, an executive of Portpin, an investing firm, had already loaned out approximately $31 million to previous owners to help pay the league fees and salaries. Portpin have made substantial loans to Portsmouth to try and ensure the clubs future, Chainrai said. Portpin will continue to work for the best interests of the club.
It was reported in the United Kingdoms Guardian that Chainrai will stay with the club momentarily until the club is stabilized and ready for a rebid into the market, indicating a fifth owner before the end of the season.
Other teams are also feeling the same aftershocks of the falling market.
Liverpool is facing a similar road, except American owners Tom Hicks and George Gillett Jr. have taken successful roots by eliminating a few high-priced player contracts, such as Xabi Alonso, Alvaro Arbeloa, Andrea Dossena and Andriy Voronin.
In 2008, both Hicks and Gillett saw refinancing troubles of up to $545 million in debts. That does not include their previous excess of $705 million in 2007, which was paid off by Kop Football Holdings. They cant afford to build new Anfield and they looked for new investors to help Liverpool gain edge again.
Sameer Al Ansari, an Arab investor and Liverpool supporter, offered Hicks and Gillett $782 million to buyout the club and relinquish all their debts from salary payments to operating costs and loans. Ansari also offered to build the new $600 million stadium to increase sponsorships and matchday revenue. Liverpool is currently working their way back from the debts accumulated the past few years.
Arsenal FC, who was the financial model for a typical soccer team, also confronted their own financial woes. In 2007, they accumulated a debt of $615 million from player transfers and loss of matchday revenues. This year, they stayed in the top four of the EPL standings, trying to climb back up to their previous stature in the league.
Other clubs like Tottenham, Blackburn, Birmingham City, Aston Villa and West Ham United all suffered a major financial fall. In 2009, SBOBET, West Hams premier sponsor, helped West Ham United clear most of their debts in player salaries. Icelandic owner Bjorgolfur Guomundsson transferred his 70% shares to CB Holdings, Icelands bailed-out division in Straumur-Burdaras bank and 30% owned by another Icelandic bank. In January, David Gold and David Sullivan, former owners of Birmingham City, bought 50% the club for a measly $78 million.
Trouble persists within the league for many teams, with only a precious couple of clubs holding enough investment to keep player transfers working and operations running. But it is not only the clubs numbers that explain the EPLs fall as the top premiership.
According to Deloitte firms, 2008 was a big year for the EPL and was considered one of the markers for its fall in profit. There were record deals in transfer rates and player sales with more than $150 million spent from all English clubs in transfers and a chunk more spent on those players salaries.
This past January, only $46 million was spent on transfers, displaying that the EPLs weakness is acquiring talent from other leagues and is apparent from the leagues lowest amount spent in transfer history. Some teams have no room within the budget to attain valuable young talent such as Hull City; some teams can afford to spend only a couple of millions. Chelsea is in excess of $65 million and must recover before they can lure more young talent into the prestige club.
The only teams that have opportunities to spend money are Manchester United and Manchester City.
No transfers, no player acquisitions, no revenue and a cut in spotlight talent occupy the English teams. They transferred most of their goods to Spain.
The obvious are Cristano Ronaldo, Alonso, Arbeola, Pizarro and Elano, who have been bought out to other teams outside of England. Robinho is now loaned out to Santos for money and World Cup preparations, while Stefano Okaka transferred to AC Roma (Italy). The list goes on.
English fans support their according clubs, but when there isnt any more high-priced talent, some clubs face the deficit in matchday profits and club apparel. The EPL has monetary support from North American fans, but it is still not enough.
Is there a bigger concern for the league, with majority of their clubs stepping into the grim darkness of bankruptcy? Perhaps teams should exist for their fans, but sports is a business, and when the business doesnt have those specific necessities, like overall revenue and superb talent, teams cannot continue to grow. Fans can help ensure club survival by adding to the charity bowl, but we are faced with a struggling market and a changing era for professional soccer.