Hey Look, Financial Difficulties

While Real Madrid, Chelsea and Manchester Citeh appear to be unaffected by the economic crisis and are connected to just about everybody under the sun as possible transfers, other clubs have not been so lucky. Valencia and Liverpool, two clubs who are no stranger to financial controversy lately suffered another round of finanical embarrassments.

Valencia's well-documented financial struggles have claimed its president, Vicente Soriano. The President had been attempting to sell the land under the Mestalla Stadium to help finance the club's move to a new stadium. This will do nothing but stoke the transfer rumors regarding David Villa, David Silva, and Raul Albiol. Villa has been linked to Real, Chelsea, Citeh, Barcelona and comically, Liverpool. Silva and Albiol have been linked to more clubs because their transfer costs will be significantly less than Villa.

I say comically in regards to Liverpool, because it turns out the holding company of LFC has posted losses of £42m . Predictably, the British rags are claiming imminent financial doom for the Kop and the club sources are playing it cool. The truth probably lies somewhere in the middle. Hicks and Gillett have been attempting to refinance the £350m debt they hoisted on the club in its acquistion for some time having received a six-month extension earlier this year that expires in July.

Hicks has been attempting to sell some of his other sports interests and even defaulted on a loan payment for those interests in what is claimed to be a strategic decision. Indian and Middle Eastern interests have been linked to purchasing either the entire club or a portion thereof. Who knows if it will happen, but Reds fans would welcome either so long as it stabilizes the situation.

All of this turmoil certainly will not help Rafa Benitez's transfer policies. Rafa probably doesn't have much kitty at this point to acquire his targets and will need to sell assets to get what he wants. The same situation as last summer which caused the transfer sagas to draw out for the entire summer. Not a situation any party wants to recreate as it adds to stress and hampers the negotiation power of the club.

So, all in all, it is more of the same. Expect rumors of Valencia player transfers to fly all summer as the club tries to wring every last dollar out of them and Liverpool to struggle to complete transfers. Also, expect lots of clubs to be linked to acquiring Liverpool players because of the financial issues.

Fun times.

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Are Valencia CF the next AIG/Lehman/Bear/Northern Rock/WaMu/Wachovia/RBS/Anglo Irish Bank/etc....?

As the global economy continues to descend further into the mire, the football world has remained relatively insulated thanks to long term TV deals and billionaire investment (mostly in English clubs). That may all be about to change. Valencia, who are reported to be in debt to the tune of 450 million euros (!!!!), are essentially insolvent and have stopped paying players.

The club is reportedly 15 million euros in arrears to the players, who have taken it out on management by absolutely tanking on the pitch. Valencia lost last weekend to relegation-bound Numancia, haven't won since the beginning of February, and have fallen down to 8th place in La Liga. The new CEO, who was brought in to clean up the mess by the club's chief creditor, told Sky Sports that Valencia would have to consider selling David Villa and David Silva.

"The club has to control spending, grow income and sell assets.

"Selling Silva and Villa? Obviously we will consider that type of action. We have to control costs, and the biggest cost in a football club is maintaining a team."

The proximate cause for the Valencia's problems, as Sid Lowe was talking about on the Guardian Podcast on Monday, is debt taken out to finance the construction of a new stadium (on which work has been halted) to replace La Mestalla, as well as a new training ground. The plan was that the club were going to sell land around the old stadium to pay off the debt. Given the shambolic state of the Spanish property market these days, such a happy outcome is unlikely at best. As Sid notes:

Between 2000 and 2004, Valencia reached two Champions League finals, won two league titles and the Uefa Cup. Then along came Juan Bautista Soler, football's very own Brian Potter. Four years later, Valencia had boasted five sporting directors, three director generals, three medical chiefs, three ostracised footballers, a day in court against their own captain, and no trophies. The club's debt had risen from €125m to over €400m, €17m each had gone on Nikola Zigic, Manuel Fernandes, and Ever Banega and over €30m was spent paying off Claudio Ranieri, Quique Sánchez Flores and Ronald Koeman. But there was always the pelotazo – develop the land upon which the training ground and Mestalla stood. Valencia would sell up, move somewhere better, and make a fortune. "We're going to be the envy of Spain," Soler said.

There was just one tiny flaw in the plan: it was rubbish. The property bubble that propped up the Spanish economy burst; economic crisis hit harder than anywhere else, leaving three million unemployed, two million new homes empty, hundreds of thousands of buildings half-finished, and Spanish football clubs owing the taxman over €600m.

Sid goes on to speculate that Valencia are in real danger of getting relegated, which reeks of what happened to Leeds United, although this implosion would be even swifter. Liverpool and others circling around David Villa - currently injured - would be advised to lowball. As an Arsenal supporter, I thank god that the club didn't decide to build Emirates stadium five years later. Liverpool (a 350 million pound loan coming due in four months) and Manchester United (600 million pounds in total debt, in search of a new shirt sponsor) might not be breathing so easily, however. Too bad none of these clubs can apply for bail out money from the US Treasury.

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Oops...There Aren't Any Stadiums Ready For WC 2010.

Earlier this week it was announced that the first stadium for WC 2010 had been completed. Turns out, this was a lie, or as South Africa WC 2010 officials say, a 'miscommunication.'

Not all the renovations at Pretoria's Loftus Versfeld stadium are complete. In fact, they are so not complete, the officials do not even know when the renovations will be finished. None of the other ten stadia scheduled for use at WC 2010 are complete either.

As Charlie Brown would say, good grief!

On a sidenote, we'd like to take this opportunity to note that this news update was tipped to us by a Newspaper man in Texas. Thanks for reading. You like us, you really, really like us.

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