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Simon English: Is football finance bubble about to go pop after all?

Simon English
Thursday 16 August 2012 22:26 BST
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Outlook Cassandras have been warning for years that football was a bubble zone. Like house prices, internet shares and tulips, it would soon go pop. The thing people forget about the original Cassandra is that although she was insane, she was also always right, in the end.

Might we be at the point when the others are proved correct about football? Lawyers and agents say that banks are now behaving towards football clubs in the same way as they are behaving towards the rest of us.

They don't want to lend for anything that isn't an extremely good risk, and £30m on an asset as fallible as a footballer doesn't look like one of those. They break down regularly. Sometimes they get homesick. And sometimes they can't shoot straight, for inexplicable reasons.

Until recently banks have been kinder to clubs than to other businesses. They are an important part of the community and no bank wants the publicity that comes from shutting down institutions many thousands love.

Lately a rather more pragmatic, more austere approach has taken grip. Losing money on football now looks like yet another PR disaster for lenders that have more than enough troubles of their own.

Public mood being what it is, giving struggling clubs money so that they can shove footballers' salaries ever higher looks like a bad move.

Although the latest TV rights deal involving Sky and BT will deliver £3bn to the Premier League over three years from 2013-14, an increase of £14m a year for each club, don't assume it will be spent, at least not before it arrives.

Graham Shear, the head of sport at law firm Berwin Leighton Paisner, notes that Premier League clubs have so far spent only £240m in the transfer window compared with last summer's £480m. "We are currently seeing more moves, but, with a few notable exceptions, for much less money than previously, despite the prospect of the new Sky deal. Many loan deals are being agreed rather than permanent transfers," he says.

"Clubs' ability to pay the big fees is being reduced partly as a result of reduced bank finance which would normally be available to the larger clubs.

"Although Premier League clubs will next year start to receive additional income from the new Sky TV deal, the banks are currently sensitive about the reputational issues of lending to the football industry," he adds.

Add to this the eurozone crisis that makes clubs in Portugal and Spain reluctant to truly splash out and a clampdown by the Revenue on all sorts of whizzy football accounting schemes and you've the recipe for a crunch.

Such trifles, you are about to say, don't affect Chelsea owner Roman Abramovich. Perhaps not, but even he doesn't spend more than he needs to, and if the market for players is falling, so is what he has to pay for new toys.

I asked Jon Smith of First Artist, the go-to football agent in these situations, what he thinks. He says: "There is not a great deal of money around, you can see that. Clubs have handcuffs on. They are being conservative."

When Real Madrid bid £100m for Wayne Rooney tomorrow, you will say that all of this is tosh.

But one big deal does not a summer transfer session make.

And if football is joining the real world, surely that's good news all round.

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