Again, a case of overspending has cased the downfall of one of Britain’s biggest club’s. In the case of Portsmouth, the Premier League withheld television revenue and parachute payments in order to settle debts – including salaries and inter club debt. What we’ve seen in Europe and Spain in particular is most worrying; with the Spanish first and second divisions going on strike for the first week of the season due to unpaid wages totalling £55million. Mallorca are a classic case of a club who were doing exceptionally well a number of years ago, narrowly missing out on Champions League football but falling into significant financial trouble at the same time.
What we’ve seen from clubs such as Arsenal is a case where they secure their longevity and financial safety through a model which they believe to be sustainable. By that they are not spending above their means, but, in turn, rely heavily on income from European football. Even this is a risky avenue to take due to high wage bills and the potential for failure to reach desired goals. But club’s continue to live on the edge, with Leeds providing early signs of a road that would eventually be trodden by Portsmouth. Heavy spending and an excellent run in the Champions League in the late 1990s was not followed up by successes on the pitch, which the club had relied on to get them out of financial trouble. And, much like Portsmouth a decade later, Leeds had to sell their assets and face the drop out of the Premier League.
…continue their seemingly reckless…
The FFP has laid out strict ruling in which clubs can avoid meltdowns in the future. But the problem is, football clubs will continue their seemingly reckless spending in the transfer market. Manchester City and PSG have paid little attention to the FFP, and we’ve seen evidence of that this past summer with each club spending £40million on one player alone. What the Rangers’ situation has done is open up the door to the possibility of much bigger and seemingly untouchable clubs going down.