The English Premier League, home to some of soccer’s biggest superstars and most storied clubs, is facing tough economic times. Overspending on salaries and transfer fees, along with a laissez-faire approach to governance—teams are often bought and sold by questionable characters, including Thailand’s disgraced former prime minister Thaksin Shinawatra, who once owned the Manchester City franchise—has left many clubs buried under mountains of debt.
Last June it was reported that the 20 Premier League clubs owed a combined $5.2 billion. Two of the league’s most successful teams, Manchester United and Chelsea F.C., led the way with debts of roughly $1.2 billion each. Manchester United’s owners have since launched a plan to borrow $837 million to help refinance its existing debt load. Liverpool, another of the league’s famed clubs, has accumulated $400 million worth of debt since 2007. The 18-time Premier League champion was told earlier this month that it must cut existing debt by $167 million before bankers would consider refinancing the club’s existing loans.
And it’s not just the top clubs that are in trouble. Portsmouth, the worst team in the league, is buried under $101 million of debt; its players are not being paid on time, and last week the club shut down its website for a few hours because it couldn’t pay its service provider.
UEFA, the controlling body of European soccer, is promoting a “financial fair play” initiative whereby clubs would only spend what they earn in revenues, or face banishment from continent-wide tournaments. The idea comes after UEFA analyzed 650 European clubs and found that about 50 per cent of them were losing money each year, with 20 per cent reporting significant losses.