Insolvency and Football

[C-man]

Found this in the Observer yesterday. Had a little look online but couldn't find any more on the subject other than a year old article on the Premiership 2008/9.

(Clubs graded A to F – with D an average financial health score, or I for insolvent)

Score out of a 100 Insolvency rating:

Plymouth 85 A

West Brom 83 A-

Derby 61 C+

Reading 54 C-

S****horpe 52 C-

Watford 42 D

Barnsley 39 I

Sheff Utd 30 E+

Ipswich 26 I

QPR 16 F+

Nottingham Forest 13 I

Newcastle 11 I

Bristol City 10 I

Leicester 9 I

Preston 8 F

Doncaster 8 I

Cardiff 4 I

Peterborough 4 I

Sheff Wed 2 I

Swansea 2 I

Crystal Palace 2 I

Coventry 2 I

Middlesbrough 0 I

Blackpool 0 I

Not really sure how Plymouth top the list or how Watford are almost 5 times as financially healthy as us but it does show how fucked we are if MM packs up.

If anyone's interested these were the scores for the Premiership last year:

98 Arsenal

93 Man United

71 West Brom

65 Tottenham

43 Blackburn

40 Manchester City

37 Sunderland

37 West Ham

26 Liverpool

18 Everton

17 Stoke City

10 Chelsea

7 Middlesbrough

5 Newcastle

5 Bolton

2 Aston Villa

2 Wigan

2 Fulham

1 Hull

0 Portsmouth*

* Unsurprisingly there was no data available for Pompey so they get 0 and rated insolvent by default.

Interesting to see how Newcastle and West Brom's rating improved since their relegation but Middlesbrough's worsened. There's probably a time lag and they'll all be chronic next season.

[davieG]

I guess it depends on how you define insolvency as I thought Man U had astronomical debts, ok they may 'currently' have the ability to repay them in time but if you're in debt it's hardly a testimony to good fiscal management especially when you consider the size of their income compared to almost every other club.

Of course I could be talking bollocks as I'm no expert on this but fiscal people have strange ways of defining good financial management - witness the recent banking catastrophe.

[davieG]

Today's BBC

Manchester United has said it plans to raise £500m through a bond issue in order to refinance its debts.

The announcement came as the club announced pre-tax profits of £48.2m for the year to 30 June 2009, compared with a loss of £21.4m a year ago.

The profit includes the £80m fee the club received from Real Madrid for Cristiano Ronaldo last summer.

US businessman Malcolm Glazer bought the club for £790m in 2005, borrowing heavily to do so.

Group turnover rose to £278.5m from £256.2m the previous year, the club's holding company Red Football Ltd said.

There has been much speculation in recent weeks that United was considering a bond issue to address its debts.

PREMIER LEAGUE CLUBS 2008/09

Man Utd: £48.2m profit

Man City: £92.6m loss

Chelsea: £44.4m loss

Although no total debt figure was disclosed in the results announcement, it has previously been reported as £699m.

The Old Trafford club paid £41.9m in interest on a £509.5m loan.

Without the sale of Ronaldo, United would have reported a loss of £31.8m, despite winning the English Premier League for the third year in a row, as well as the Carling Cup and the Club World Cup last season.

The team also finished runners up in the Uefa Champions League.

"What the Glazers are trying to do is to give the club a bit more financial security," said Roy Kaitcer, client director for Brewin Dolphin stockbrokers in Manchester.

Financial analysts expect the bonds to be priced at the end of next week.

The club was knocked out in the third round of the FA Cup this month, a defeat that could have cost Manchester United more than £2m should the club have gone on a run all the way to the final.

Last week, United's big-spending neighbours Manchester City reported an annual loss of £92.6m after splashing out on top-class players since new owner Sheikh Mansour bought the club in September 2008.

Current Premier League leaders Chelsea made a loss of £44.4m last year but said it was now "virtually debt-free".