Will the Credit-Crunch Hit the Premiership?!

With the World and particularly Britain’s desperate economic situation, will the Premiership suffer?

What effects could the recession have on the Premiership? Last year saw top-flight clubs total £1.8-billion in revenue, with the main bulk of this coming from TV coverage, sponsorship and match day income. If rugby is anything to go by, TV money will not be affected too badly. Last month, Premier Rugby was able to announce two-new deals which will see an increase in revenue for clubs by 45%. There is no reason to think that this would not be even greater for football, especially given its increased demand across the globe.

However it will be the other two sources of money which might dry up. Manchester United’s principle sponsors – AIG – almost went into liquidation after the Lehman Brothers collapse. The Premiership champions signed a £56.5-million shirt deal last year with the American firm, which is the biggest of its kind in English football. Obviously if the insurance company had gone under, then Manchester United would have been in a very difficult situation. However, for a club of their stature, they probably would not have had too much of a problem finding a new deal. But smaller clubs, such as West Ham who lost their sponsorship at the beginning of the season after the holiday firm XL went into administration, do not have as easy a time.

West Ham are just one of the clubs who are in financial difficulties, with rumours linking such star players like Matt Upson, Craig Bellamy and Scott Parker with moves out of the club. This policy to ease their debt and wage bill was evident in the summer: with the transfer of Anton Ferdinand to Sunderland, without the manager’s consent lead to Alan Curbishley tendering his resignation.

Match day income is undoubtedly going to take a hit. As thousands lose their jobs across the country, people are not going to be able to afford the replica kits and the various other bits of club merchandise. Further, unless the price of tickets decreases, attendances will also tumble. Moreover, corporate hospitality is a very important source of income which is often overlooked. Premiership grounds claim vast income from corporate boxes. But with many of the companies which occupy them needing to make cut-backs to prevent themselves from going under and laying off staff, an obvious and logical first step would be to reduce executive-perks.

Can we then see the lack of spending in this transfer window as a demonstration that clubs are struggling? Man City are obviously an exception with their trillions from the Middle East – expect to see much more action from them before January 31^st. Equally, despite the £15-million fee Spurs paid for Defoe, in reality it is only a fraction of this which left the North London club’s bank account: not only was there a £4-million future transfer clause which was to return to Spurs; but Portsmouth also still owed the Carling Cup holders monies from the Kaboul and Pedro Mendes transfers.

Furthermore, with ignoring the speculation about how Mark Hughes will spend his Abu Dhabi millions, there are very few big transfer rumours. Sir Alex Ferguson and Phil Scolari have both ruled their clubs out of spending any money in this window, as well as David Moyes: but this decision has probably been forced upon him rather than out of choice.

Having said all of this, by this point last year the two largest transfers to have gone through were far from inspirational moves, both by bottom of the table Derby – who bought Robbie Savage from Blackburn for £1.5-million and Emanuel Villa for £2-million. Equally, January has not really seen the same spending that has been associated with summer transfers: last year only Nicolas Anelka’s £15-million move and again Spurs’ signings of Jonathan Woodgate and Alan Hutton from Rangers commanded large fees, which mainly happened in the second half of the window.

At this moment in time, there does not appear to be too much danger of a Premiership club falling into administration, but the memory of Leeds will perhaps make some chairman sleep uneasily. There certainly is, on the other hand, the very real threat that teams lower down the divisions will fall into financial difficulties – with many examples of clubs nose-diving through the divisions because of lack of funds, like Luton, occurring even before this crisis.

This season, the shirts and season tickets had already been bought before economists and newspapers were talking of world recession. However, I think we will have to wait until next season, when the new range of merchandise comes out, season tickets need renewing and sponsorship deals get signed before football feels the real effect of credit-crunch.

Will Gilgrass - 9th January 2009