!! History Commons Alert, Exciting News

Follow Us!

We are planning some big changes! Please follow us to stay updated and be part of our community.

Twitter Facebook

Football Business and Politics

Debt/Losses

Project: Football Business and Politics
Open-Content project managed by KJF, mtuck

add event | references

The Spanish football club Real Madrid sells its training ground to the city council for €480m to wipe out a €290m debt. Under the agreement, the football club will relocate to a new training complex on the outskirts of the city by 2004. The council plans to construct four huge office blocks on the site of the current training ground, as well as a new 20,000-capacity sports pavilion for the city’s 2012 Olympic bid. Real president Florentino Perez says the deal will lift a major burden that has been hanging over the club. “I have been working for this from the very day I became president,” says Perez. “This is very important for Real Madrid because we have removed a terrible burden and will soon have a new training ground which will be even better than AC Milan’s Milanello training complex. From now on we can live without anxiety or financial difficulties. Real Madrid has not only to be a sporting leader, it must also be a financial leader too.” [BreakingNews(.ie), 5/8/2001] Real will use the proceeds of the sale to buy top players such as Zinedine Zidane, Luis Figo, Ronaldo, and David Beckham, but the transaction will be investigated by the EU (see March 3, 2004). However, Real will not be forced to repay any of the money (see (November 9, 2004)).

Entity Tags: Florentino Perez Rodriguez, Real Madrid Club de Fútbol

Category Tags: Spain, Debt/Losses

The European Union announces it has begun a preliminary investigation into the sale of Real Madrid’s training ground to the city council in 2001 (see (May 8, 2001)). The sale netted €480m, which wiped out the football club’s €290m debt and enabled it to buy players such as Zinedine Zidane, Ronaldo, Luis Figo, and David Beckham. “We believe Madrid’s regional authorities may have overpaid,” says Tilman Luder, the EU’s competition spokesman. He also warns that the club may have to pay back some money if the price exceeded the market value. “We have sent a questionnaire to the Spanish government: to find out why they bought this land, at what price, and if they can prove it was at the market price. We suspect that the purchase price was influenced by the fact that this property had been reclassified, which increased its value,” says Luder. If Spain’s response to the questionnaire is not satisfactory, the EU may launch a formal investigation. [Independent, 3/4/2010] The EU will later drop the matter (see (November 9, 2004)).

Entity Tags: Tilman Luder, Real Madrid Club de Fútbol, European Union

Category Tags: Debt/Losses, Spain

The European Union drops a competition probe into a transaction in which football club Real Madrid received hundreds of millions of Euros from the Madrid city council in return for its training ground (see (May 8, 2001) and March 3, 2004). The commission concludes that no state aid for Real was involved in the transaction and no government resources were transferred to it. [Sports Illustrated, 11/9/2004]

Entity Tags: Real Madrid Club de Fútbol, European Union

Category Tags: Spain, Debt/Losses

Chelsea announces the club lost £80.2m in the 2005-06 season. The loss is far less than the season before, when it was around £140m, but is still the third largest loss in the history of English football. Total losses over the three years since Roman Abramovich bought the club now exceed £300m. [Reuters, 2/19/2007] Chelsea turned over €221m in the 2005-06 season (see February 2007).

Entity Tags: Chelsea F.C.

Category Tags: Debt/Losses, England

Leeds United enters administration due to debts of £35m that it cannot pay. In return, the Football League imposes a 10-point penalty on the club. Before the points deduction, it was all but mathematically certain that Leeds would be relegated from the Championship to the third tier of English football, as the club required a series of freak results on the last day of the season to stay up. However, relegation to League One is now a mathematical certainty. Had Leeds gone into administration after the last game of the season, the penalty would have been applied at the start of the next term. The auditing firm KPMG is appointed Leeds’ administrators and immediately agrees to sell the club back to chairman Ken Bates without the debt burden. The Independent writes of the administration and sale, “in effect Leeds could wipe out most of their £35m debt at a stroke, and suffer no meaningful penalty.” [Independent, 5/5/2007] However, due to a breach of league rules governing the conduct of the administration, the club will be deducted a further 15 points at the start of next season (see August 3, 2007).

Entity Tags: KPMG, Ken Bates, Leeds United F.C.

Category Tags: Debt/Losses, England

Chelsea announces a loss of £74.8m for the 2007-08 football season. The figures show a 25 percent increase in turnover, to £190.5m, making the club second only to Manchester United in the Premier League, but the loss fell by only 7 percent compared to the previous season (see February 19, 2007). Chief executive Peter Kenyon allows that the club’s aim of breaking even by 2010 is “ambitious,” but adds: “I don’t think it’s something we are postponing, but it’s always been ambitious. We are determined to meet it, or get as close as we can.” [Guardian, 2/22/2008] The club will actually make a loss of over £70m in the 2009-10 season (see January 31, 2011).

Entity Tags: Chelsea F.C., Peter Kenyon

Category Tags: Debt/Losses, England

Chelsea announces that the club lost £65.7m in the 2007-08 football season, down from the £74m lost the previous season. The club generated revenues of €268.9m in the 2007-2008 season (see February 2009). Chelsea chief executive Peter Kenyon says, “There is no doubt that the positive upward trends of turnover and the continued reduction in losses shows that Chelsea is building a strong business base to build on in what will be challenging times.” [BBC, 2/13/2009]

Entity Tags: Chelsea F.C., Peter Kenyon

Category Tags: Debt/Losses, England

Chelsea announces that the club made a loss of £44m the previous season. This is the smallest loss since the football club was taken over by Roman Abramovich in 2003 and was achieved despite a fall in turnover from £213.1m to £206.4m. Chief executive Ron Gourlay comments, “It is still our aim to be self-sufficient and we will achieve this by increasing our revenues as we continue to leverage off our brand.” [Guardian, 12/30/2009]

Entity Tags: Chelsea F.C., Ron Gourlay

Category Tags: Debt/Losses, England

FC Moscow withdraws from the Russian first division just over one month before the football season begins. The withdrawal is announced by Sports Projects, a subsidiary of the club’s owners Norilsk Nickel. The reasons given for the withdrawal are that the parent company’s operations are based in other parts of Russia and support from Moscow city council is not forthcoming. FC Moscow was an offshoot of the famous FC Torpedo Moscow club and was founded in 1997. The club’s place in the league is to be taken by Alania Vladikavkaz. [CNN, 2/5/2010]

Entity Tags: Alania Vladikavkaz, Norilsk Nickel, FC Moscow

Category Tags: Debt/Losses

The Premier League deducts nine points from Portsmouth because the club, which is insolvent, is to go into administration. Portsmouth previously had 19 points, but now has only 10, 14 less than 19th-placed Hull. The deduction therefore virtually guarantees that Portsmouth will be one of the three teams relegated to the second tier of English football when the season ends in two months’ time. A Premier League statement says, “Following the High Court’s decision that Portsmouth FC’s administration is valid, the Premier League board convened today to apply the League’s rules and policies in relation to a member club suffering an event of insolvency.” Portsmouth’s debts are said to be around £65m. [Daily Telegraph, 3/17/2010]

Entity Tags: Portsmouth F.C., Premier League

Category Tags: Debt/Losses, England

University of Barcelona professor Jose Maria Gay publishes a report into the finances of Spanish football clubs. The report paints a grim picture, showing that the 20 La Liga clubs owed a total of €3.5bn in the 2008-2009 season, a €40m increase from the previous term. The report also shows the slowing pace of revenue growth in 2008-2009—down from 10 percent to 4 percent—and total expenses of €1.7bn, up €249m. Salary costs, in particular player wages, accounted for 85 percent of turnover. [Forbes, 5/19/2010]

Entity Tags: Jose Maria Gay

Category Tags: Debt/Losses, Spain

Real Mallorca, which finished fifth in the recently concluded La Liga season, applies to go into bankruptcy administration. The club has a debt of €85m (US$103m). Majority shareholder Mateu Alemany comments: “Over the past two years, Mallorca has suffered a very complex economic situation, with serious financial problems and an inability to meet its commitments. This is a legal instrument that enables Mallorca to see the future in another way—to have a budget structure that has logic and controls debt, to take stringent budgetary measures to bring spending in line with earning capacity.” According to a recently published report into Spanish football finances (see May 18, 2010), Mallorca made a loss of €5.2m for the 2008-2009 season, on revenues of €28.1m. Its playing staff budget for the 2009-2010 season was €34.6m. [Forbes, 5/19/2010]

Entity Tags: Mateu Alemany, Real Mallorca

Category Tags: Debt/Losses, Spain

FC Barcelona takes out a €150m loan to cover the football club’s expenses. The need for the loan was announced a week before it was taken out, when newly elected club president Sandro Rosell said the loan was to pay wages for players, coaching staff, and other employees. The loan is provided by a group of Spanish banks headed by Santander and La Caixa. [Press Association (London), 7/14/2010]

Entity Tags: Banco Santander, FC Barcelona, La Caixa, Sandro Rosell

Category Tags: Debt/Losses, Spain

UEFA bans the Spanish football club Real Mallorca from European competition because it is not in compliance with its financial regulations. Mallorca has had a successful season and qualified for the Europa League, but went into administration in May (see (May 19, 2010)). Villareal is set to take Mallorca’s place in the competition if an appeal is unsuccessful. [Sport Business, 7/23/2010]

Entity Tags: Real Mallorca, Union of European Football Associations

Category Tags: UEFA, Debt/Losses, Spain

Real Mallorca appeals to the Union of European Football Associations (UEFA) to reverse a recent decision banning the club from next season’s Europa League. The club was banned from European competition (see (July 22, 2010)) because it is currently in administration and not in compliance with UEFA’s financial guidelines (see (May 19, 2010)). At the same time as the appeal, Mallorca issues a statement pointing out that the ban will make its financial situation worse, as it would deprive the club “of a series of revenue in different concepts, such as ticketing, sponsorship, and income from the competition.” It adds, “Ethically and legally, RCD Mallorca believes reason is on their side and [the club] will not relent in the effort to show that he has earned the right to challenge the Europa League.” [Goal, 7/26/2010]

Entity Tags: Real Mallorca, Union of European Football Associations

Category Tags: Debt/Losses, UEFA, Spain

UEFA upholds a decision banning Spanish football team Real Mallorca from European competition (see (May 19, 2010), (July 22, 2010), and July 26, 2010). “At its meeting on July 14, 2010, the club financial control panel unanimously concluded that the licence had not been correctly awarded to RCD Mallorca and that the club did not sufficiently fulfil its financial obligations,” says UEFA of the reason for the ban. Mallorca indicates that it will appeal to the Court of Arbitration for Sport. [AFP, 7/30/2010]

Entity Tags: Real Mallorca, Union of European Football Associations

Category Tags: Debt/Losses, UEFA, Italy

Arsenal announces record pre-tax profits of £56m for the 2009-2010 season, although a large amount of the club’s revenues was generated by the club’s property development side. Turnover increased to a record £379.9m from £313.3m, although the club’s overall turnover from its football business was marginally down, owing to five fewer home cup matches, as well as reduced income from merchandising and catering. The wage bill increased from £104m to £110.7m and is now around 50 per cent of non-property income. The club says that the business’s property arm, the Highbury Square development, is debt free and making money. The sale of 362 apartments at Highbury Square and the social housing at Queensland Road, developments that were part of the recent move to a new stadium, generated revenues of £156.9m and allowed Arsenal to repay in full the £129.6m in bank loans taken to fund the construction. The group’s overall net debt was reduced from £297.7m to £135.6m. [Guardian, 9/24/2010] Arsenal is one of only four Premier League clubs to make a profit for the 2009-2010 season, when the clubs’ losses totalled £484m. [Guardian, 5/19/2011]

Entity Tags: Arsenal F.C.

Category Tags: Debt/Losses

Manchester United announces a record operating profit of over £100m for the 2009-2010 football season, but it is more than offset by loans taken on when the club was purchased by the Glazer family. The record profit was helped by increases in commercial, broadcasting, and matchday revenues, the later boosted by increased ticket prices. Nevertheless, the club made a huge overall loss due to interest repayments and one-off costs related to a £509m bond issue. In addition to the bonds, the club also has to service £225m in payment in kind loans, currently bearing interest at 16.25 per cent. The overall result was also harmed by a £40.6m write-down on an interest rate swap that had to be paid when the club launched its bond offer at the beginning of the year, as well as £19m lost on fluctuating exchange rates. [Guardian, 10/8/2010]

Entity Tags: Manchester United F.C.

Category Tags: Debt/Losses, England

FC Barcelona president Sandro Rosell announces that in the previous season the football club made a record loss of €79.6m and that its debt has climbed to €430m. Rosell also proposes that the club file suit against previous president Joan Laporta over dubious bookkeeping practices, a proposal that is approved by a narrow majority at the general assembly of club’s members. According to Rosell, when he took over from Laporta (see June 13, 2010), he had the club’s books checked by outside auditors. The results of the audit led him to propose the action against Laporta, with whom he has been in conflict for several years. [DPA, 10/16/2010]

Entity Tags: FC Barcelona, Sandro Rosell, Joan Laporta

Category Tags: Debt/Losses, Spain

Chelsea announces a huge loss of £70.9m for the 2009-2010 football season, in which the club won the league and cup double. In the previous season the loss had been £44.4m (see December 30, 2009), although in the two years before that it was around £70m. Chelsea blames the loss on the amortization of player transfer fees, which means how much a player’s value in the accounts decreases over the length of his contract. Chelsea chairman Bruce Buck describes the results as “significant progress,” and cites what the club calls a “net cash inflow of £3.8m” as evidence. Buck says, “That the club was cash generative in the year when we recorded a historic Premier League and FA Cup double is a great encouragement and demonstrates significant progress as regards our financial results.” The same day as the loss is announced, Chelsea pays Liverpool a record £48m for Spanish striker Fernando Torres. [Independent, 2/1/2011]

Entity Tags: Bruce Buck, Chelsea F.C.

Category Tags: Debt/Losses, England

Sunderland announces that the club lost £27.9m for the 2009-10 football season, £1.4m more than it lost the previous term. The club turned over £65.4m, compared to £64.6m the previous season, so the loss is equivalent to almost 40 percent of turnover. The main cost item was player wages, which were £46.63m, having increased by £2.5m from the previous season. Matchday revenue fell by over a million pounds to £12.6m, whereas television and media payments increased by almost £4m. [Press Association (London), 2/15/2011]

Entity Tags: Sunderland A.F.C.

Category Tags: Debt/Losses, England

Manchester United’s parent company, Red Football Joint Venture Ltd, announces a record pre-tax loss of £109m for the financial year ending June 2010. This means the company lost an additional £29m on top of the £80m pre-tax loss posted for the same period by Red Football Limited, the football club’s immediate holding company, in October. Most of the additional £29m is interest on the club’s payment-in-kind loans, which were £233m in June, although this form of debt has since been cleared in murky circumstances. The business is not concerned by the loss, saying that the club itself is making more money, in particular due to increased commercial revenue. The total borrowings of Red Football Joint Venture Ltd at June 2010 stood at £522m, up from the 2009 figure of £514m. [Guardian, 3/22/2011]

Entity Tags: Manchester United F.C., Red Football Limited, Red Football Joint Venture Ltd.

Category Tags: Debt/Losses, England

Chelsea announce a loss of £67.7m for the 2010-2011 season, slightly less than the previous one (see January 31, 2011). There was a modest increase in revenues to £222.3m from £205.8m, thanks to Champions League and television income. Wages were down by £4.4m on last year and operating expenses down by £7m. The accounts contain an extraordinary item of £28m relating to the replacement of manager Carlo Ancelotti with André Villas-Boas in the summer. This means that Chelsea’s manager replacement costs have been around £64m in the last four years. In addition, the accounts reveal Chelsea paid £6.4m to Her Majesty’s Revenue and Customs to settle claims arising from a failed tax avoidance scheme that involved paying players not salary, but compensation for use of their image rights. The size and repeated nature of the loss means that Chelsea may have difficulty complying with UEFA’s financial fair play regulations, although the consequences of this are unclear. [Guardian, 2/8/2012]

Entity Tags: Chelsea F.C.

Category Tags: Debt/Losses, England

Ordering 

Time period


Email Updates

Receive weekly email updates summarizing what contributors have added to the History Commons database

 
Donate

Developing and maintaining this site is very labor intensive. If you find it useful, please give us a hand and donate what you can.
Donate Now

Volunteer

If you would like to help us with this effort, please contact us. We need help with programming (Java, JDO, mysql, and xml), design, networking, and publicity. If you want to contribute information to this site, click the register link at the top of the page, and start contributing.
Contact Us

Creative Commons License Except where otherwise noted, the textual content of each timeline is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike