Demise of Portsmouth: Warning to others

Portsmouth’s fall from grace might have come as a shock to the rest of the world, but a lot of people can’t really say they didn’t see it coming. How can a club with a stadium capacity of just over 20 000 and with no new plans expansion explain all those signings they made over four years; Players such as Sulley Muntari, Nwanko Kanu, Peter Crouch, Glen Johnson, Jermain Defoe, Pendro Mendes, Nico Kranjar and John Utaka — who all came commanding high signing-on fees and high salaries.

They also don’t have a global following that can rival big clubs like Manchester United or Liverpool. Over the last three years they paid £131-million to players in wages, but they were not world beaters or world stars to rival the Rooneys and Ronaldos.

Is the Portsmouth crisis a warning to the rest of the football fraternity? This meltdown comes in the wake of Uefa publishing English Premier League club debts stand at a whopping £3,4-billion, 56% of the total across Europe. The bar has been raised with high competition, so clubs are pushing for success which means that they end up securing huge loans from banks and individual financiers to buy success. They do this to avoid relegation, they then sell season tickets in advance — sometimes 2 seasons in advance and use tv revenues as collateral.

As much as Portsmouth is the first Premier League club to go into administration, I don’t think they will be the last. A lot of the clubs are sitting with huge debts and investors are not rushing to sink money into clubs since the global economic downturn came into effect.

Matchday tickets are also down as fans feel the effects. These problems mostly affect clubs in the English Premier League and the English Championship as we saw recently with Crystal Palace having financial problems. So far we know the bigger clubs also need Champions League payments to survive and make payments on their loans or else they will have to sell their best assets which are their star players.

Hull City were also on the brink of a meltdown almost a year back when it was revealed that they had an annual wage bill of £40-million, a figure more suited for clubs that belong in the upper half of the league table but yet they were fighting for survival in the league and it was only ensured on the last day of the season. This season they have already sacked their manager and with nine matches to go they are 18th on the log.

There are some exceptions to all this, clubs like Manchester United have big debts (just over £700-million from that £3,4-billion) but they are far from going into administration because their brand is massive and very valuable — this past two weeks they signed huge sponsorship deals with Telecom companies in Asia and Africa. They will also be investors who will always see the potential of how to maximise this global brand, so its far from its meltdown.

How do we ensure survival of the smaller clubs yet retain the competitiveness of the league? Michel Platini — the president of Uefa recently suggested that clubs should be forced to spend within their means looking at the revenues they generate on and off the field or else they won’t be allowed into European competitions. Do you think that will help as the laws come in effect from the 2012/2013 season?