On the same day that Kaka moved from AC Milan to Real Madrid for a world record transfer fee of £56 million, Newcastle United put a ‘for sale’ sign up on their website and put their entire squad up for sale. At the same time, Setanta Sports looks like it’s heading for administration, Liverpool’s financial woes are so severe that the future of the club is in jeopardy, while West Ham United are 48 hours away from being wound up even after just being taken over by a consortium of Icelandic banks.
Even the most successful club, Manchester United, incurred massive debts of £667 million last year.
Ladies and gentlemen, the Premier League bubble is about to burst.
If Setanta goes into administration this week, this will have massive implications on the Premier League unless a new suitor can be found who is willing to pay the £159 million a year that Setanta owes for the 2010-2013 seasons. The Premier League clubs will be hard hit by Setanta’s collapse especially if the TV rights are re-sold at a massive discount which would undermine many Premiership clubs with massive squads of footballers who are paid exorbitant wages.
ESPN is the obvious choice of a broadcaster who might step in to buy Setanta, but there’s no guarantee that the Disney-owned company wants to take on a company that has massive debt especially after the Premier League bubble bursts.
It’s time for Premier League clubs to be prudent. The first place to start is with player wages. Clubs need to stop trying to compete with the Chelsea’s and Manchester City’s of the world and face reality. Just as the global financial crisis hit home last autumn, it’s now time for the Premier League clubs to face reality and realize that the credit crunch has finally now hit football.