Club officials from across Europe have expressed concern that a potential UEFA fund of â¬ 6 billion has been raised.
The governing body of European football is working on a financial rescue package to help clubs cope with the significant impact on their balance sheets caused by the pandemic, where clubs could take out a low-interest loan to enable them to reschedule.
And while it will be a welcome source of funding for many clubs that have lived within their means and their recklessness not exposed by COVID-19 to overcome their hurdles, it will be for some of the largest clubs in Europe that have amassed enormous debts and has suffered great losses, it has the potential to break out of its mess and perpetuate the inequality that exists in the European football ecosystem.
For Liverpool under Fenway Sports Group, financial prudence has been something the owners both praised and criticized their rivals.
Liverpool had gross debt of Â£ 268m on its balance sheet for the year ending May 2020, which reflected the first three months of the pandemic, although the amount of that debt can be broken down.
Like most large corporations, Liverpool has had access to a revolving credit facility with a bank for many years.
Liverpool refinanced its current facility back in January 2020 for a five-year period, giving them access to credit of up to Â£ 200m that could be used for general corporate purposes including working capital.
When football was paused in March 2020, revenue streams began to dry up and there was great uncertainty as to whether the Premier League season could have been completed, which would have had a huge impact on clubs and broadcasters.
There were still wages to be paid and obligations to be met, and although the club still had net cash of 92 million, it still had cash flow support during the initial blackout and suspension of football.
A total of 197 million from the credit facility has been brought into business in the last few months.
The Â£ 197m figure is on top of the Â£ 71m Liverpool owes FSG owners, the other Â£ 8m bringing the club’s gross debt to Â£ 268m.
The current loan from FSG is repaid interest-free.
Debt is only an issue when it cannot be serviced, however, and while Liverpool is likely to post larger losses if its accounts for the year ending May 2021 are released early next year and the full extent of a year of the pandemic is shown, club officials expect a strong rebound in 2022, with commercial revenues holding and even increasing during the pandemic.
Manchester United is the most obvious example of Premier League debt, with Glazer family ownership being hugely unpopular with many United fans as the club’s US owners leveraged the Old Trafford squad and hundreds of millions lumped into debt for the club without investing their own capital. However, they reap the dividends every year.
Spurs’ gross debt is Â£ 831 million, the highest in the Premier League. Their new stadium construction, which cost Â£ 1 billion to build, was a major contributor to the huge number. And since the club has not been able to see the benefits of its new home for more than a year due to COVID-19, they have not been able to get the money they were hoping for back.
For Spurs, it can be argued that their debts were taken on for a large infrastructure that could well be worth it in the future. But if you look at La Liga, the Â£ 1.1 billion debt that Barcelona is in comes from a mix of infrastructure projects, reckless wage spending and paying insane sums of money in the transfer market to gain supremacy. Barcelona made a loss of Â£ 411m in the last financial year.
It’s a policy that has failed miserably and they, like Real Madrid and Juventus, three teams who stick to the idea of ââthe European Super League, which should be the answer to their problems, have paid the price.
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But should the biggest, most ruthless clubs have access to a Â£ 6 billion fund to solve their problems and maintain their place in Europe’s football elite? Or should the funds benefit the associations that have managed their finances sensibly and really need help to create a future for themselves after the pandemic?
“This credit facility shouldn’t go to clubs that did a poor job of building a solid balance sheet, such as Barcelona,” said Bart Verhaeghe, major shareholder in Belgian champions Club Brugge said Bloomberg.
“You don’t make money.”
These feelings were shared elsewhere as well.
“These funds should be a reward for good management and financial discipline, not a bailout for clubs that are burning money,” Jordan Gardner, co-owner of Danish club Helsingor, also told Bloomberg.
People like Barcelona and Real Madrid had dominated the transfer market long before the pandemic broke out. And since Paris Saint-Germain was the big donor of the summer transfer window, replacing Lionel Messi from the Catalan giants, the French team have taken advantage of the weak position of Spain’s two biggest teams.
Liverpool’s lack of transfer spending over the summer is well documented with only Ibrahima Konate arriving at Anfield and the Reds paying Â£ 36m for the services of the French defender.
However, should some of the clubs that have suffered poorly financially from the pandemic be able to access UEFA bailouts that would allow them to be stronger in the market next summer, Liverpool in their own efforts could Reaching the top will hinder players.