WE’VE SEEN it before with bail-outs during the 2008-09 financial crisis, but the latest move by the Premier League, seeking a £ 1 billion fund to help their cash flow, smacks of the rich seeking to make their life easier by holding out their bowl and pleading, “can I have some more”.
The UK government’s economy-saving measures in 2008 were actually essential, and didn’t save jobs by any means, but when an industry founded on financial excesses and no small amount of greed looks for a leg-up, it does leave a bitter taste in the mouth.
The Premier League spent £ 1.1 billion in the last summer transfer window, hardly the behaviour of a crisis-torn competition. Admittedly, clubs are rarely asked to pay every penny of their transfer fees in one tranche, but as a demonstration of their hubris and over-confidence, it doesn’t look like good public relations – particularly when the rear-end has almost fallen out of other sectors of society.
Advocates of the Premier League’s approach may point to a downward trend that has seen transfer fees fall to their lowest level since 2015, but it’s undeniable that top level football has lived beyond its means and has little margin for error.
One of the problems for the Premier is that conventional financiers are generally shy of lending money to football clubs, mostly because of risk management concerns as well as reputational issues – nobody wants to call time on a club if they cannot pay their debts.
But those that will provide facilities try and leverage the huge appeal of the Premier and offer assistance at uncompetitive rates. For example, one family office lent money at 9% to a Premier club, in an era of historically low rates. Clubs have been using factoring of broadcasting and transfer revenues to raise capital, but they’ve reached a point where the cost has become prohibitive.
The Premier League wage bill amounted to £ 1.6 billion in the 2019-20 season, with the average wage £ 3.2 billion. The average for Manchester City was £ 7 million. That’s small beer compared to what Manchester United are currently paying Cristiano Ronaldo, and it is the arrival of CR7 that really makes the Premier League’s hope of help almost obscene.
United did not need Ronaldo, indeed their biggest problem was midfield, but the circus element of signing the Portuguese icon was too much to resist. Now, every United performance is scrutinised even more than it was before and their manager at times looks like a dead man walking. Moreover, the CR7 deal is already being picked apart as serious over-indulgence that underlines the sheer hedonism of the Premier League. United have paid £ 20 million and £ 20 million per year for a 36 year-old, undoubtedly bending a few people out of shape in the process.
But what does the Ronaldo deal tell us about the Premier, and their subsequent hard luck story around their financing woes? It reminds us that despite the worries of the past couple of years, the most over-hyped league in Europe feels somewhat untouchable. Did they seriously think that looking for financial help would not attract criticism when it so willingly makes decisions that portray the league as a slave to conspicuous consumerism?