English Premier League clubs risk financial ruin if they attempt to compete with the spending power of Manchester City, the Uefa general secretary David Taylor said.
Premier League's financial plight worries Taylor
English Premier League clubs risk financial ruin if they attempt to compete with the spending power of Manchester City, Uefa general secretary David Taylor said yesterday, and that could see another team following the way of Leeds United. City have signed the likes Carlos Tevez, Roque Santa Cruz and Emmanuel Adebayor during the summer, but Taylor believes they, and Spanish giants Real Madrid, may be setting a dangerous precedent that other less financially stable clubs cannot afford to follow.
"I would say in this financial climate, it is surprising, a little bit destabilising of the market," Taylor told BBC Radio Five. "It is raising the ante in terms of the player costs, in terms of the general market place, which is not a thing that gives us a great deal of comfort in these difficult times. There is certainly disquiet in the corridors of power here [at Uefa]." The demise of Leeds United, who were relegated from the Premier League in 2004 saddled with debts, is often used as an example of how a big club can hit the rocks and Taylor said their plight should be a warning.
"There are stories concerning some English clubs that are of significant concern," he said. "There are a number of English clubs where the value of the club itself has fallen significantly and they are effectively on the market. We've seen what has happened in recent years with a number of very high-profile clubs, Leeds United for example. They fell into serious financial difficulties by over-extending themselves.
"In this current economic environment, I would never say never to anything like that. "Clearly we do not see that as imminent but the concern is that we have to establish a stronger financial basis on which clubs can compete." City have always maintained that they buy sensibly and within their limits. Khaldoon al Mubarak, the chairman, and the chief executive Garry Cook say they have walked away during transfer negotiations when "crazy numbers" have been raised.
But the situation is less rosy at some of their rivals. Liverpool's parent company Kop Holdings, owned by Americans Tom Hicks and George Gillett, announced a loss of £42.6 million (Dh265m) last year mainly due to interest payments to service the debt taken out to buy the club. They recently renegotiated the club's debt with the Royal Bank of Scotland, believed to be around £290m. Manchester United's American owner Malcolm Glazer also borrowed heavily to complete a takeover of the English champions in 2005, sparking unrest among supporters.
Portsmouth are another club in a financial predicament. With delays continuing over UAE businessman Sulaiman Al Fahim's proposed takeover, the club have been forced to sell their biggest assets to pay the interest on loans, including England right-back Glen Johnson, who went to Liverpool, and international teammate Peter Crouch, who signed for Spurs for £12m last week. Yesterday, executive chairman Peter Storrie was reported as saying that the club must "sell to keep going".
"Until this takeover happens, neither the old nor the new owner is placing any money into the business," Storrie reportedly told The Sun. "When - and if - it does, I'm not yet aware of what finance will be available for [new] players. The business has debts to pay and the banks are not releasing funds, so this leaves the club with no option but to sell to keep going. "I agree we need new players, a stadium, but we can't do it without finance and we've had none of this for more than nine months."