Huge loans may cripple PL clubs
MILLIONS LENT AGAINST TV CASH
PRemIeR LeaGUe clubs are facing a further financial headache with many having taken out bridging loans on the basis of receiving all of their TV money.
If the season is cut short due to the coronavirus, clubs could be forced to repay up to £762million of broadcast rights money for fixtures that are not played.
having suggested a return date of april 4 and then april 30, the Premier League acknowledged yesterday that football will not return at the beginning of may and will only do so when it is ‘safe and appropriate’.
Clubs are paid their TV money from Sky and BT over the course of the year, receiving one payment in august, another around January and a third at the end of the season.
In anticipation of receiving the funds, it is common practice, especially for clubs outside the top six, to take out short-term loans to ensure they have significant money in the bank while they wait for the payments.
Some clubs use the advances, which tend not to cover all the money they are expecting but are still worth tens of millions, to ensure they have sufficient funds to sign players.
Should the worst-case scenario occur, clubs will have taken out loans but be unable to keep all the TV money they require to pay them off.
Clubs have held discussions among themselves about trying to reach an agreement with Sky and BT should money need returning. There is hope that a deal can be reached that allows any refunds to be spread over a long period rather than paid immediately.
half of the Uk broadcast revenue is shared equally between the 20 Premier League clubs. Last season that amounted to just under £35m each.
The remaining 50 per cent is shared between the clubs based on how often they are on TV and their final league position. Those payments are made at the end of the season, along with any of the remaining guaranteed money that has not been paid.
They also receive cash for international TV rights and commercial revenue, worth £44m and £5m respectively per club last season.
For the next three years, the biggest clubs will receive a greater share of money from international rights after pushing for the cash to be divided on a merit basis.