The English football season kicked off last month and with it came the return of the Premier League, now in its 25th year, and the most successful club competition of its type in the world.
Chelsea landed the spoils last season. But had the 2016/17 league been decided on the company credit ratings of football clubs playing in the top tier, the result would have been very different.
In fact, the team from south-west London would not just have struggled against their arch-rivals, it would actually have been staring relegation in the face.
That’s according to the Credit Worthiness Premier League, a table compiled by business solutions provider, Creditsafe. According to its rankings Chelsea, despite having a turnover of in excess of £335 million, had the third-worst credit score in the Premier League, including a poor debt/asset ratio and an average of paying invoices 28 days beyond the agreed payment terms.
A different league…
Creditsafe’s rating model combines financial variables including trade payment information, financial ratios, industry sector analysis and director history to assess the risk of insolvency. An algorithm provides a rating between 0 and 100 with the higher the score the better.
The league champions on this basis would have been Manchester City with a score of 96 ahead of Leicester City on 93. Chelsea, on the other hand, achieved a score of just 45. Joining them in the danger zone would have been the likes of both Everton and West Ham, which both scored just marginally better on 46.
With the release of football clubs’ financial reports and the transfer fees being paid over the summer, it’s inevitable for leading teams to end up dealing with huge sums of money.
Having a credible credit record enables a club to demonstrate solvency, secure funding and deliver success to stakeholders – a set of aims worth heeding by all companies, both large and small.