Pompey lived the dream, but woke up to a nightmare

As was widely expected, Portsmouth FC – bottom of the Premier League, with debts of around £60m, and on their fourth owner of a troubled season - went into administration today. Although considered a necessary step to ensure survival with a winding-up order looming next Monday, the action carries a mandatory nine point penalty. That will effectively leave Pompey 17 points adrift of safety with just 12 games left of the season.

In effect, Portsmouth have accepted becoming a Championship side today as the lesser of two evils – the less palatable alternative being extinction.

Yes, the fans enjoyed their 2008 FA Cup triumph, won with a squad which we now know the club could not actually afford. But the glory has come with a significant price tag attached, and who knows what the ultimate cost will be? Whatever, it’s hard to feel sympathy for the club’s senior figures, no matter how many times Peter Storrie proclaims his lack of culpability – excuse me, but aren’t you the chief executive of the football club? – they rolled the dice, and they lost big time.

A spreading disease?

Beyond Portsmouth, it’s been a bad day for English football, with Chester City expelled from the Football Conference after failing to fulfil two fixtures (as a result of failing to pay their players and other bills) and League Two’s Bournemouth being served with a winding-up petition over unpaid tax debts less than two years after going into administration.

This comes hot on the heels of Crystal Palace being put into administration last month with debts of close to £30m, with other clubs such as Southend United and Cardiff City known to be peering over the precipice. And even the likes of Liverpool and the mighty Manchester United are known to be struggling, with the latter attempting to renegotiate their £716m debt burden.

In total, according to a UEFA report published this week, Premier League clubs have accumulated debts of £3.5bn (this figure excludes Portsmouth and the equally debt-riddled West Ham) – four times the level of Spain’s Primera Liga, the next most indebted division in European football.

It’s not a pretty picture.

On the bright side

But it’s not all bad either.

Whatever the merits of it, the hundreds of millions ‘owed’ by Chelsea and Manchester City to their deeply-pocketed sugar-daddy owners are effectively risk-free and cannot be regarded as traditional debt. Other, smaller clubs are run as extremely tight ships: Stoke City, for instance, have no external debt, and teams such as Everton seem to balance their books well without foregoing sustained achievement.

And then there’s my own team, Arsenal, who published mid-year results this morning in stark contrast to Portsmouth’s travails, with pre-tax profits significantly up at £35m at the half-year and – more importantly – net debt down from £333m to £204m in the space of six months.

Unlike Portsmouth, Arsenal’s debt – which was taken on to build the money-spinning Emirates Stadium rather than to fund ill-advised purchases of overpaid players - is largely long-term and well-structured. Repayments are demanding, but do not strain the club’s finances excessively. And, given Arsenal’s position as one of Europe’s more successful clubs (in both commercial and football terms), the wage structure is - if not exactly modest - certainly in keeping with its means.

For all that some Arsenal fans complain about Arsene Wenger’s reluctance to splash the cash in the transfer market – and, to a certain extent, they have a valid point – there is much to be said about a club which puts its long-term well-being ahead of short-term, count-three-and-pray expenditure.

Portsmouth are by no means the first club – nor will they be the last - to reach for the stars only to shoot themselves in the foot. Leeds United were Champions League semi-finalists in 2001, but subsequently over-reached themselves in a fog of grasping ambition and financial mismanagement. They were relegated to the Championship in 2004 and, after going into administration, dropped into League 1 three years later. Currently second in that division, they look well set to return to the second tier of English football next season, but the Premier League and the dizzying heights of that 2000/1 season remain a million miles distant.

Leeds, at least, managed to stay in business. Portsmouth may not be so lucky. The nightmare is only just beginning for the club’s loyal fans.