[black187]

News emerged that Chelsea and Manchester United are in big big depts.
Is it really good having a sugar daddy for a short run if you are then fvcked up on the long run?

 

[Deo]

Bad, very bad.

 

[The Green One]

To be fair, Chelsea were approaching financial ruin with an Englishman in charge, and plenty of clubs have been bankrupted by an English chairman.

 

[Crackedpleasures]

There is no simple yes or no answer to this question. If an owner is good or bad doesn't rely on his nationality, religion, ethnic background, ... You got good foreign investors and bad ones, it just depends on the situation and the person. I would not mind a foreign owner as long as he has some connection with the club and doesn't just pick a random club to invest in for a short while and then leave. If the person has good intentions with the club, then his nationality is the least I'd care about.

By the way, foreign or not, depending on 1 rich investor is bad, very bad. Because the moment he's had enough of it the club is usually worse off than before. You cannot depend on 1 person's money, that is recipe for disaster and the number of examples are countless. Gretna seems to be the latest club to prove this fact. The only way to survive long-term in this situation is if the rich owner took your club this far that it has become commercially attractive so that a new owner is ready to invest in the club once the rich sugar uncle leaves. But I'd not want to take the risk, I'd rather play division 3 for years than being taken to the premier division while depending on 1 single person to cover all costs.

 

[Onree]

I wouldn't want Alisher Usmanov and the rest of Fat and Orange involved in Arsenal because of what sort of people they are - criminals, essentially - and not because of where they come from.

Chelsea's figures are utterly ludicrous, though. Arsenal are still turning a significant profit without a billionaire owner and with a sizeable stadium repayment to go with it.

 

[Dmitriy]

I'd rathr have a foreign owner than 9-10 foreign players in my first 11.

 

[Nero]

18 months to repay a debt of nearly 600m pounds??

Well Chelsea fans better hope Abrahamovich doesn't lose interest in the club.

 

[Crackedpleasures]

With all respect but if you have such an amount of customers (aka fans) buying merchandise, high ticket prices, a lot of incomes from TV deals, big sponsorship deals, ... and you still manage to have such debts, then you don't deserve anything other than bankruptcy. What ridiculous amounts do you have to spend on salaries and players to manage to fully use the huge incomes those clubs have, let alone making debts ?!

 

[G. Facchetti]

18 months to repay a debt of nearly 600m pounds??

Well Chelsea fans better hope Abrahamovich doesn't lose interest in the club.

How does it matter? You can roll the debt over, albeit at a higher cost until some funds finally do arrive.

But you won't get to that point. When Roman tries to sell he'll have to absorb the debt or discount the price by that amount....so either way, the new owner would be perfectly unaccountable for the debts. The debt doesn't belong to the club, it belongs really to the current owner.

 

[Rob]

Yeah, not sure how it all works at that kind of level, but I'm pretty confident that's tax related somehow.

 

[Tim]

Debt financing is not necessarily a bad thing and can actually be very beneficial when used correctly. As long as the debt is not so high that the income cannot cover the interest payments and that it does not scare away potential investors, it is typically not cause for alarm. At least not in the business world, as business debt is quite different from personal debt, the latter rarely having the potential to increase your income or provide some other type of financial return.

In the case of Chelsea, the debt is irrelevant, as it represents the money that Abramovich loaned to the club. These are zero interest loans that the club should repay Abramovich at some point in time, but unless a set a strict payment schedule with high individual payments, are really no financial burden at all.

 

[G. Facchetti]

Debt financing is not necessarily a bad thing and can actually be very beneficial when used correctly. As long as the debt is not so high that the income cannot cover the interest payments and that it does not scare away potential investors, it is typically not cause for alarm. At least not in the business world, as business debt is quite different from personal debt, the latter rarely having the potential to increase your income or provide some other type of financial return.

Companies that want to grow always leverage out as much as fiscally responsible. That is correct.

 

[ekim]

90% of foregin owners are bad. But so are many non-foreign. Owners should be elected.

 

[G. Facchetti]

I reallly really like the Spanish concept of socios or many owners. I believe that is the best thing b/c it takes into account shareholders, and also is not completely financial in nature where the club is compromised for financial gain. All of the shareholders or socios love the club, and want it to succeed. And I want CEO's and President's to be elected through them. They have a nice model.

 

[The Green One]

Would these "unsuitable foreign owners" become suitable all of a sudden at a club of their country of origin?

 

[Crackedpleasures]

Debt financing is not necessarily a bad thing and can actually be very beneficial when used correctly. As long as the debt is not so high that the income cannot cover the interest payments and that it does not scare away potential investors, it is typically not cause for alarm. At least not in the business world, as business debt is quite different from personal debt, the latter rarely having the potential to increase your income or provide some other type of financial return.

In the case of Chelsea, the debt is irrelevant, as it represents the money that Abramovich loaned to the club. These are zero interest loans that the club should repay Abramovich at some point in time, but unless a set a strict payment schedule with high individual payments, are really no financial burden at all.

In the end it's a matter of time though before things get out of control and football destroys itself. There are limits how far you can go with salaries and transfer fees, the current trend is simply crazy and it doesn't seem to stop anytime soon... Sooner or later the salaries are that high that even the biggest TV and sponsorship and marketing deals cannot cover it anymore, but by the time we realise that it'll be too late. Salary caps like in the US should be introduced better today than tomorrow (it would not only make football more competitive when rich clubs cannot just offer the most insane salaries to top players, but it'll save football from self-destruction on long-term basis)

 

[Andy Christ]

Chelsea don't need to worry, Abra is loaded and he won't let the club to go down, it would damage his reputation too.

But most people don't seem to realize how fragile is ManU's situation. Glazer doesn't have billions on his account like Abramovich. despite of ManU's current success they are on the edge of a financial abyss since Glazer took over.

 

[Tim]

In the end it's a matter of time though before things get out of control and football destroys itself. There are limits how far you can go with salaries and transfer fees, the current trend is simply crazy and it doesn't seem to stop anytime soon... Sooner or later the salaries are that high that even the biggest TV and sponsorship and marketing deals cannot cover it anymore, but by the time we realise that it'll be too late. Salary caps like in the US should be introduced better today than tomorrow (it would not only make football more competitive when rich clubs cannot just offer the most insane salaries to top players, but it'll save football from self-destruction on long-term basis)

I think the ones that will suffer most long term are the smaller clubs that will have problems competing for market share and that may make unwise financial decisions in an effort to get ahead, although we have seen that not even some of the larger clubs are immune. At the same time, any professional team is a business and is not owed an existence by anyone.

On the other hand, there is no easy way to curb the amount of money involved in football. Yes, American leagues typically have a salary cap, but it is difficult to implement such system in football. For one, these are closed leagues with the clubs being league franchises and the salary caps are calculated based on a percentage of league revenue.

How is this going to work in football? You would need to have separate salary caps for the top tiers in each country. After all, smaller clubs in lower divisions are not above spending beyond their means. You would need to have separate salary caps for each individual countries. Again, clubs spending beyond their means is not exclusive to England or Europe.

Who sets these salary caps and enforces them? Who determines what is a far cap in relation to other divisions and leagues?

Then there is the issue of transfer money. Players in American leagues are typically not purchased and sold but are traded for other players and draft picks. However, in football, players are purchased and sold for money, and you would need separate transfer caps for this, because transfer spending and wage spending are two different things.

 

[ac_milan_foreva]

bad!! very very bad

Anyway back to the good news
Did you say they were in debt?? Got any good source for that? What figures are we talking about and how will that effect them?

 

[Rob]

I don't think Man U are in any real danger, they're paying for themselves as long as they're successful. TV money from the premiership is going up every year (non English TV contracts are worth a lot these days too) and the brand still has insane value, so if they did get in trouble, someone could easily step in.