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Credit crunch hits Premier League

Economic growth, Financial Events, Leverage
By Paul Hodges on 22-Oct-2008
Ronaldo.jpg

When Manchester United play Newcastle on 4 March next year, the US government will also be playing the UK government. United’s main sponsor is AIG, now owned by the USA, whilst Newcastle’s sponsor, Northern Rock, is also nationalised. West Ham, of course, were sponsored by an Icelandic bank, now bust.

The President of the UK’s Football Association warned recently that the $5bn debts of the main Premier League clubs were ‘high risk’. The clubs, just like many banks in recent months, immediately denied this. But the fact remains that the blog’s team, Manchester United, have debts of $1.2bn; Chelsea owe $1bn: Arsenal owe $700m and Liverpool owe $600m. And only Arsenal made a profit last season ($60m), whilst MUFC lost $100m, Chelsea $125m, and Liverpool $35m.

These losses were in spite of the clubs’ receipts from the current $4.6bn Sky TV deal. And the blog does wonder whether the clubs will be able to renew this on similar terms next season? Equally, will UK football fans continue to pay $100/match for the cheapest seats as the UK recession bites? Is this the real reason for Cristiano Ronaldo’s unusually thoughtful face, as he turns out at Old Trafford each match?