TR EMERITUS

With Portsmouth entering administration and facing imminent relegation, the editors have decided to compile a top 8 list of football clubs with the highest amount of debt. The level of debt is by no means a good measure of the club’s sustainability, as shown by Pompey, which went under with about US$100 million worth of debts (much less than any of the clubs listed on this list). The information collated is from Forbes and correct as of April 2009. For comparative purposes all figures are represented in US dollars, at exchange rates correct as of comparative period. We know the data is almost a year old and things might have significantly changed over time, but given the difficulty of data gathering on financial information, we have considered that this data as current. Bear in mind that most of these football clubs are not listed on exchange, thus gathering of information by Forbes would have been tedious. ________________________________________________________________________________________  Ranking Methodology: 100% Statistics _________________________________________________________________________________________ 8 ) Schalke 04 (Debts of US$194 million) The first club on this list is Schalke 04, which is somewhat surprising. This German club is neither the biggest club in Germany nor have they competed in the Champions League regularly. However, this club boosts of the most fervent support in football-crazy Germany and the Board had been way too hungry for success over the years. Over the past few seasons, the club had spent heavily on players like Jefferson Farfan (€10m) andRafinha (€5m), but that has not been translated into success on the pitch as they finished 8th last season (and missed out on European club competition entirely). 7) Newcastle United (US$274m) Much like Schalke, Newcastle is a massive club in England which had not been successful on the pitch recently. Their last major honour was the FA Cup in 1955 and they had not won the league title since 1927. An extended stay in the top flight over the previous decade pushed wages over the top for the club and much of this debt is likely to be a result of that. Since Mike Ashley took over the club in 2007, he is known to have invested heavily to help the club clear its debt, thus a potion of the amount here is likely to be owe to Ashley. Newcastle is now of course a Championship side, but is expected to make a swift return to the top flight. 6) Internazionale (US$285m) Inter may be owned by Massimo Moratti, the Italian oil tycoon, but they have amassed nearly US$300m of debt nonetheless. However, it is worthy to note that the significant portion of this debt is not owed to external banks, but rather to Moratti and his various companies. As mentioned above, this fact puts Inter much less at risk than others. The club has also won the last four Serie A titles and is favourites to win the current campaign as well. 5) Real Madrid (US$311m) In terms of valuation and revenue, Real Madrid is the number one club in 2009 but they have considerable debt as well. This debt is likely to have been accumulated by the club’s lavish expenditure in the transfer market. In the past ten years alone, Real Madrid broke the transfer record four times, as they bought Figo, Zinedine Zidane, Kaka and Cristiano Ronaldo on world record fees – this probably explained where the money had been spent on. Interestingly, Real Madrid’s debt-over-value ratio is 23%, the lowest amongst the eight clubs on this list – meaning that the Spanish giant would probably have little problems trying to clear their debt, should their creditors come knocking on the door tomorrow.  Liverpool fans protest 4) Liverpool FC (US$596m) Liverpool’s debt is mainly due to external banks. When co-owners George Gillet and Tom Hicks bought the club in February 2007, they took up a massive loan from various banks and secured it against the assets of the football club. This arrangement was never popular with the fans, as interest payments over time continued to hamper the club’s ambitions in the transfer markets. Last summer, it was widely reported that the club had negotiated with their major creditors to defer some principal repayments, suggesting that the burden of debt is weighing down the club already.   3) Chelsea (US$736m) Much like Inter, most of Chelsea’s debt is owed to their owner Roman Abramovich. Late last year (after this data was compiled), the Russian announced his decision to convert the amounts due to him by the club into equity, leaving Chelsea relatively debt-free. According to most reports, Abramovich is worth about US$13billion, thus Chelsea FC is about 8% of the man’s entire wealth. 2) Manchester United (US$1,010m) Like Liverpool, much of United’s debts had been amassed by their current owners (the Glazer family) who had borrowed heavily when they took over the club back in 2005. Just like the Hicks / Gillet saga at Anfield, United fans had staunchly opposed the Glazer buyout since Day One but all could be done was the staging of protests and chants. United is estimated to pay about S$100m a year to finance the loans, a situation which had almost necessitate the winning of trophies year in year out. 1) Arsenal (US$1,284m) When this set of data is compiled, it appears that Arsenal had the largest debt outstanding of any football club in the world. Also, their debt represented over 100% of the club value, a ratio considered risky by any measure. Arsenal is owned by several different parties and no one party has a simple majority on the ownership. The debt was accumulated over the years, as the club used leverage to finance the entire construction of their Emirates Stadium. However, in a latest financial statement released by the club, it appears that it had managed reduced this debt significantly, showing that the club has healthy cash flow. With that, it is likely to mean that Arsenal is actually in a much better financial position compared to Manchester United and Liverpool on this list. Editors’ Note: It is by no coincidence that the top four clubs here are the “top four” in English football. It sums up the precarious financial situation English clubs are in and Portsmouth’s demise may be the tip of the iceberg. ____________________________________________________________________________________________________ The editorial team will like to seek the opinion from all  readers on what you think. Do you agree with the Top 8? Is there anyone that you feel is more worthy to be on the list? Leave a comment! If there is something that you will like us to feature as part of this top 8 series please leave a comment and our team will try to accomodate! If you want to speak to us, do drop us an email - [email protected]  Read More →

By Jerome Cohen from South China Morning Post The most formidable challenge to China's establishment of a credible rule of law is neither the quality of its legislation nor the professional competence of its judges, prosecutors, lawyers and police. Laws and the skills of those who apply them have both witnessed substantial progress in the People's Republic during the past three decades. The real challenge to the administration of justice in China is, rather, the undue intrusion of politics and, even more broadly, of guanxi, the network of interpersonal relations of mutual protection, benefit and dependency that is one of the enduring hallmarks of Chinese society. Courts and judges have much to lose and to fear if they ignore these influences. Such well-known distortions of the legal process as "local protectionism" and corruption are specific manifestations of politics and guanxi. Although Chinese communist leaders do not publicise the party's intervention in important cases, they openly insist on party control of the judiciary. But they cannot be happy about other distortions of judicial decision-making that undermine the nation's laws. Of course, to some extent, politics affects the legal system in every country, and every society consists of informal human interaction and influence. Yet governments that practise the rule of law - not merely proclaim it - seek to limit political and personal interference with the wheels of justice not only by enacting norms that prohibit these universal phenomena but also by promoting values, ethics, policies, institutional changes and customs that support these legal prohibitions. Crucially, the better rule-of-law systems provide their judges with enough financial and professional security to enable them to resist external blandishments. Read rest of article here  Read More →

Written by Our Correspondent Finance Minister Tharman Shanmugaratnam ended the three day Budget "debate" with a key message to Singaporeans: Singapore cannot do away without foreign workers. He repeated the circular argument mentioned earlier by other PAP ministers like PM Lee Hsien Loong that foreign workers are needed in sectors shunned by Singaporeans: "If we had not brought them in, we would not have been able to ease the supply bottlenecks in the private property markets, build HDB flats, or expand our MRT network,"  he was quoted as saying in the Straits Times. While Singaporeans understand the need for foreign workers to take up manual jobs as such, they are adamantly against foreigners competing directly with them in PMET positios which can otherwise be filled by locals. Mr Tharman seemed to be ignorant of the fact that foreigners are increasingly employed in semi-skilled jobs such as technicians, assistant engineers, managers, administrators, clinic assistants, accountants and customer service executives. He also claimed that "the healthy growth of wages for low wage families from 2006 to 2008 corresponded with the period when the foreign workforce was growing most rapidly." "It was how we were able to offset the decline in wages for our lower-income group that had taken place in the first part of the decade," he added. However, Reform Party's Secretary-General Kenneth Jeyaretnam who graduated with a double first class honors in economics from Cambridge University had already pointed out the error in the statistics used by Mr Tharman in a comprehensive review of the Budget: "The majority of these new residents did not have dependents (hence the much faster rise in the resident labour force than the resident population) and all of them would have had jobs so the proportion of working adults in the average resident household would have risen. As a result we would have seen an increase in real median income per household member without any real increase in the median incomes of Singaporean citizens who were already here before this period began, i.e., the majority of us. Another reason why the Minister’s figure is misleading is that it excludes households consisting solely of non-working persons over 60." [Source: Reform Party: A complacent Budget]  A quick check on the website of the Singapore Department of Statistics reveals only a marginal increase in the incomes of low wage households between the years 2006 - 2008 which do not keep pace with the runaway inflation during the same period. In fact, the median wages of Singapore households decrease by 3 percent last year. According to a recent Wall Street Journal editorial, the relentless influx of foreigners into Singapore over the last few years had depressed the wages of ordinary Singaporeans, increased the cost of living, especially that of public housing, decreased labor productivity and led to an overall decline in the standard of living. It is pretty obvious that Mr Tharman remains quite "dissociated from reality" and is unable to comprehend the hardships and sufferings faced by ordinary Singaporeans in their everyday lives. His latest speech is more than sufficient proof that there will not be any reversals in the PAP's liberal immigration and pro-foreigner policies and the latest policy changes are nothing more but a pre-election gimmick to placate angry Singaporeans and to secure their votes. Singaporeans should send a strong message out to Mr Tharman and his colleagues that they are no longer willing to put up with their chicanery and that it is time to put a stop to the continued influx of foreigners which is fast eroding the national identity of Singaporeans and relegating them to being second class citizens in their own country of birth.  Read More →