Between the Lines

"Of all unimportant subjects, football is the most important" – Pope John Paul II

Uefa plan could hit United

Posted by hakanrylander on October 9, 2008

Uefa, the governing body of European football, has set up a committee to discuss how to restrict the levels of debt clubs will be allowed to operate with. Any firm proposal is unlikely to be put forward within the next couple of years, but could potentially hit United harder than their main domestic rivals Chelsea, Arsenal and Liverpool.

According to the global accountancy firm Deloitte, Chelsea have net debts of 620m GBP, the highest among the big four. But most of that is in fact interest-free loans from the owner Roman Abramovich and could be viewed as de-facto equity, or at least very easily be turned into equity. Arsenal’s net debt is significantly lower at 318m, while Liverpool are likely to see a change of ownership before long.

United, on the other hand, carry a large external net debt of 605m (again according to Deloitte). From a business perspective this is not a problem since United also have a strong positive cash flow and an annual operating income well above their competitors. But Uefa tend to look upon large borrowings as a kind of financial doping and will now consider possible ways of restricting debts. At this point it’s difficult to predict the outcome, but if Uefa choose a hard-line approach United could be in trouble.

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