Thursday, October 7, 2010

Financial Times in Football

Looking at the newspapers this week, you'd think sport had been replaced by finance as the new section on the back of most newspapers. Suddenly your favourite sports writer has had his lack of financial knowledge tested, and has had to look up a few terms on websites he'd never normally go on. Either that or they've just replaced him with a writer from the finance section.

It's all about the culmination (?) of the saga that is the Liverpool ownership, which has come at a time when there's a gap in the domestic top flight fixtures, and just another boring England game to look forward to. Which is unfortunate for a club who has had more dirty laundry aired in recent times than mud wrestling rugby player who also has a young child, two dogs, and is a messy eater.

Re-financing, equity, franchises, nominal shares, loan debt and interest payments. Some of the terms you know and some you may be able to guess at, but what the whole thing seems to come down to is that Tom Hicks and George Gillett didn't actually have any money. They didn't buy the club with money they had. This is wrong and the fact it was allowed to happen is wrong. It's just unfortunate that a few clubs had to wither and die before the people who can do something about it, started to think that there was something wrong and maybe they should start looking into it.

It seems like some sort of revelation that Liverpool's new owners will actually buy the club with something resembling cash, pay off the debts with actual money, and then use any profits made to help improve the team! Under the current ownership, it has become evident that most of the profits made were going into ridiculously high interest payments on loans, rather than being put back into the club. It makes you wonder who actually accepted their business plan.

Bored by the finances already? It seems that as a fan of a top flight club these days, you need to be as well versed in your excess reserves, as you are in your.... well, it's likely Liverpool know all about excess reserves.

In times where Manchester United will make massive operating profits, but still make overall losses because of interest payments brought on by their own American owners, and where Manchester City might not be allowed to compete in European Competition (surely they'll be top 4 this season) because of new UEFA fair play rules, fans seem to be required to understand these things as it is a big part of their clubs futures. And after all, much of the profit their clubs make comes from their pockets. This is something that can't be solved by a diamond formation.

Still bored?

Suddenly the prospect of Kevin Davies being picked up front for England becomes more exciting.

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