Pride comes before a fall. In October 2008 the chairman of the Football Association, David Triesman, issued a warning about the level of debt being carried by Premier League football clubs. His concerns were dismissed by the barons of the league who were still pumped up with confidence after securing a series of record-breaking television rights deals.
But with yesterday's acrimonious descent of Portsmouth Football Club into administration (crippled by debts of £60m) Mr Triesman's alarm looks prescient. As the analysis of the finances of all 20 Premier League clubs in today's Independent sports supplement reveals, Portsmouth are far from being the only top-flight club to have run its affairs in a reckless fashion in recent years.
All that stands between many clubs and insolvency are "sugar daddy" owners prepared to subsidise their losses. Others, such as Manchester United and Liverpool, have been acquired by foreign investors in leveraged buyout deals which have left them struggling to service the interest payments on large debts.
The Premier League has, in several respects, been a tremendous success since its formation in 1992. It has delivered vastly increased television revenues, full stadiums and some of the most exciting football in Europe. But what it has not delivered is financial stability for clubs. Most have spent way beyond their means. Weak regulation has allowed individuals of dubious character and uncertain wealth to take control of clubs and participate in the boom. And now we are witnessing the bust.
The Premier League claims it is introducing sufficient new safeguards to prevent any other club from going the way of Portsmouth. Yet it still says owners should be permitted to subsidise clubs that spend more than they earn. The same old blind complacency persists.
Football clubs are not pure businesses to be bought or sold to the highest bidder, but community assets that merit a measure of special protection from the rapacious, greedy or incompetent. If the Premier League resists reform in this direction and fails to compel clubs to put their financial houses in order, the Government should be prepared to step in and do the job directly.
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