11/23/24
November 26, 2003
Leeds the first EPL team to go into bankruptcy?: Bottom-of-the-table and coddler-of-louts Leeds United "have announced they could soon be forced into administration after talks with their two creditors to restructure their debts failed." The BBC adds a few more details on what it means to go into administration (for those of us on the non-UK side of the pond). For a little more context, this page dedicated to the business side of football gives interesting peeks into the financial health of today's illustrious (and not-so-illustrious) teams.
posted by worldcup2002 to soccer at 01:32 PM - 16 comments
Don't worry, it never happens, just forget about it.
posted by Fat Buddha at 02:05 PM on November 26, 2003
It better not...
posted by StarFucker at 02:42 PM on November 26, 2003
What I wanna know is who are the "American bondholders" who have them over a barrel? Who knows what evil lurks in the hearts of men?
posted by worldcup2002 at 02:54 PM on November 26, 2003
Seriously, however, I think Leeds, if they are the first EPL team to go Chapter 11 (as we call it in the US), will not be the last. The turning of football teams into "big business", especially once they start securitizing their assets, is not a viable financial exercise. Unless you are Man U, and how many teams do we have of that stature? Even Arsenal is struggling financially, as they fund their new stadium. And Liverpool is probably breaking even at best. Wyn Grant's take on this makes it all pretty clear: "One sense in which football is not a business like any other is that it does not have control of its costs, or more specifically its playing staff wage costs which often exceed the turnover of a club." As a fan, owning shares in your team may be fun, but as an investor, I would stay the hell away. If you want to have fun, buy a kit and a season's pass. At least those are worth something.
posted by worldcup2002 at 03:03 PM on November 26, 2003
I have met Dr. Bill Gerrard (quoted in the story) a couple of times at conferences, etc. Smart economist, nice guy, really wants the club to pull through.
posted by smithers at 03:58 PM on November 26, 2003
Ah. It couldn't happen to a nicer club.. Say goodbye to the Premiership, say hello to Division Two in 18 months.
posted by salmacis at 03:20 AM on November 27, 2003
Cheerio, cheerio, cheerio.
posted by squealy at 03:44 AM on November 27, 2003
Ah, sweet schadenfreude, how I love thee. If they are relegated, they may fall foul of division 1's rule that if you go into administration, you suffer a 10 point deduction as well. I hope they survive (as a club), though if they do get relegated the road back will be long and hard.
posted by BigCalm at 07:21 AM on November 27, 2003
Meanwhile, Leicester comes out of administration with a 4.5mil-pound loss, which apparently was better than expected by the current ownership. Perhaps Leeds will be taking lessons from them next season. Or perhaps Leeds might have been better served by following the example of Charlton, fourth in the EPL, and reporting a nice operating profit of 2.8mil pounds. Their revenue increased 15% from last year, costs increased 7%, but operating profit increased 500%! However, overall, there was a loss of 464K pounds. Which, when you come to think of it requires firing maybe one junior goalkeeper, and pales in comparison with Leeds' latest loss of 50mil pounds. Pay attention, Leeds!
posted by worldcup2002 at 11:15 AM on November 27, 2003
Leeds have been a bit cute here. If they go into administration while they are still in the prem, they won't be deducted 10 points next year even if they are relegated. If they go down then go into administration, the points get docked.
posted by Fat Buddha at 12:47 PM on November 27, 2003
FB: That rule is under review at the moment - they're thinkingg of making teams currently in administration have points deducted too.
posted by BigCalm at 03:17 AM on November 28, 2003
Such a horrible situation. For the good of those asshats on the board and as an example to the rest of us, they should be hung from the yardarm at daybreak. However speaking as a football fan I wouldn't wish it on anyone, and my heart goes out to any Leeds fans who have not already taken cyanide.
posted by walrus at 07:18 AM on November 28, 2003
Well, things may be looking up for the Leedsters. 1-0 win over Charlton today, and a Middle Eastern group may buy them within a week.
posted by worldcup2002 at 11:23 AM on November 29, 2003
I heard on the radio earlier that the investment would be about £20 million. Peanuts.
posted by Fat Buddha at 02:34 PM on November 29, 2003
I should have known Leeds would win as soon as I began wondering Thursday whether they would get a single win the remainder of the season.
posted by billsaysthis at 02:55 PM on November 29, 2003
Administration sounds much like our Chapter 7. Would be a shame for such a historic club to get put out on the doorstep, or worse, but bad decisions often come back and bite one in the arse.