A new Business blog from John Birchall
It seems that not a day goes by without one of the leading football clubs being in deep financial troubles. Till now none of them have been a Premier club but now Portsmouth FC are in considerable difficulties and may become the first ‘big’ club to go into administration and have 10 points deducted from their current total. In the case of Portsmouth this would put them on just six points and would undoubtedly condemn them to relegation to the notably less lucrative Championship.
The club owes £7.5m to HMRC (Her Majesty’s Revenue and Customs) and faces a winding-up order. Their manager, Avram Grant, has made an impassioned plea for their survival stating that ‘Football is not one plus one is two, it is a passionate game’ and "It is not a clear business where there are no feelings - there are feelings of fans, players and my own. There are problems, but football is more than this. This club needs to stay alive. That is more important than football. It is 112 years old.’
In the same court, after Portsmouth, will be League One club Southend United and Championship side Cardiff City, also both face winding-up petitions.
Just how has a supposed ‘cash cow’ industry got into such financial problems? One reason worth asking students to research is that of just one player at West Ham. He is Kieran Dwyer and it is reported that his total contract cost to the club close to £30 million and yet he played just a few games and scored a very few goals.
On Tuesday of this week Crystal Palace of the Championship, with debts of £50 million, were put up for sale in The Financial Times and a reported 20 interested parties registered in the first 24 hours after the advert was published.
Are they all mad or do they know something about football that the ordinary ‘person in the street’ does not?