A recent study suggests that almost half of English football clubs have a significant level of debt. While this is not a major issue, it is worth mentioning. The study findings corroborate the findings of Dantas et al. (2017). According to the researchers, football clubs often struggle to meet their financial requirements without the aid of third parties. These third parties can range from loans to government benefits. The high level of debt at many clubs could put off prospective buyers, who may need the money to pay salaries and buy new players.
The amount of football club debt has been rising at a rapid pace, with the biggest examples being Liverpool and Chelsea. Several teams in the European Super League have suffered from the high cost of their players, while the debt of the rest has been accruing since the start of the season. The most common cause of such a situation is poor management of the club. Despite their best efforts to run the club smoothly, many clubs are in a state of financial crisis.
The number of balance sheets containing uncovered liabilities has increased over the last two years, although the number of clubs in this situation has remained almost the same. During the research, four clubs had negative equity values in all three years. Only the clubs from Minas Gerais, Internacional, and Sao Paulo had positive equity values. Overall, seventy per cent of 20 teams had a deficit on one of their balance sheets.
Currently, the biggest football club in the world is Manchester United. However, the club has a PS525 million debt and it has no plans to settle this amount. This debt is the result of poor management of the club, which is not the fault of the owners. The majority of football clubs have the ability to pay off their debt, but some of the biggest clubs in Europe are struggling to manage their finances. This means that UEFA should step in and get rid of these clubs from the European competition.
The debts of Premier League clubs are increasing. Arsenal has a massive debt. The club has a debt of PS4 billion. Its owner, Kroenke, is unable to foreclose on the club. A large portion of the remaining debts, however, are the responsibility of the club’s shareholders. As a result, these clubs have no way of negotiating with the creditors and will continue to remain in the league.
In 2007, Newcastle United had a debt of PS70 million and was making interest payments of around PS6m a year to Barclays. Mike Ashley bought the club from Sir John Hall in 2008 and was required to pay a PS57 million stadium mortgage to Barclays until he paid off the debts. In 2011, the debt of the club rose by 4%. In comparison, the combined debts of the top 20 Brazilian football teams are now valued at around PS97billion.
While the biggest football clubs are protected by insurance, smaller clubs can face severe financial problems if they fail to play their league. A recent study showed that the debts of some smaller clubs have tripled in the last five years, as the value of foreign currencies has risen significantly. In this context, the financial situation of small business owners has changed dramatically. It is no longer possible for a small business owner to shoulder multiple debts. Rather, they are no longer responsible for paying large amounts of interest.
The results show that many of the top football clubs are in a precarious financial situation. Their owners have generously given them the money to fund their clubs’ operations, but after a season, they are left with little or no money to spend. The most expensive football clubs are those with debts of PS478m and PS878m, while the most financially successful ones are underpinned by their financial strength. A high-quality team can also be financed by a high-quality loan.
Most clubs in the world have high debts. In the UK, a third of English clubs have debts that exceed their total revenues. Those in the Premier League, however, are even more extreme. The average football club in the United States has a debt of around $1 billion. It is the highest-profile football club in the United States. This is a significant issue for many clubs. The costs of a club’s operations are growing and can be unsustainable.