SO YOU think your football team is immune from the current credit crisis? Think again.

Fears are mounting that an English Premier League (EPL) football club could very well be the next high-profile victim of the financial crisis that has brought banks to their knees across the world.

The global credit crunch is set to make it a grim winter for British business and a football industry that has long displayed a hedge fund manager's appetite for excess risk will be no exception, according to some within the game.

Paul Duffen, the chairman of EPL newcomers Hull, warned this week that his club's highly-geared rivals could easily go the way of Northern Rock, HBOS or Bradford and Bingley, the British banks that have been submerged by the crisis.

Hull are rare among England's top flight clubs in being debt-free, a status their chairman savours in the current climate.

'We're not as rich as Croesus, or as some of our competitors are, but in some ways we're maybe one of the wealthiest clubs as we don't have any debt,' he said.

'A lot of the clubs have themselves highly geared and in these highly uncertain banking times I think there could be a few casualties in the Premier League later in the season sadly.'

Rising debt

Portsmouth are seen as the club most likely to sink under the weight of their rising debt. It stands at £53 million ($136m) but outstanding instalments on the transfer deals that enabled Harry Redknapp to build an FA Cup winning squad means it could be nearer £80m by the end of the season.

The club's Russian owner, Alexandre Gaydamak, denies he wants to cut his losses and sell up while admitting he would 'listen to offers' - hardly the stance of a man convinced he has a sustainable business model on his hands.

Portsmouth are not alone in their current predicament.

Newcastle's owner, Mike Ashley, is so keen to get out he has cut the asking price for the club from £450m to £300m, while Everton are also desperate to find a new cash-rich backer.

At the end of the 2006/07 season, the 20 clubs that then made up the EPL had combined debts of just under £2.5 billion.

Set against combined turnover of £1.5 billion, that is not an exceptional figure by the standards of other industries.

Where English football differs however is in the general lack of profitability born of a desire for success at almost any price.

Of that £1.5 billion generated from television rights and the sale of tickets, corporate hospitality and replica shirts, an astonishing £1.4 billion went to pay the wages that have attracted the cream of the world's talent to the EPL.

Now, the new reality for the majority of clubs is that, unless they start cutting costs drastically, their debt can only go in one direction at a time when the liquidity crisis in capital markets is pushing the cost of financing any form of credit sharply upwards.

Vulnerable

Just ask Liverpool's American owners Tom Hicks and George Gillett, who announced an indefinite delay in the construction of the club's planned new 73,000-seat stadium because they cannot currently raise the £400m needed to finance it.

Only clubs like Chelsea, underwritten by Roman Abramovich's personal fortune, and Manchester City, now cushioned by the reassuringly deep pockets of the Abu Dhabi United Group, can claim to be truly immune from contamination by the tsunami of toxic debt that triggered the current crisis.

Even Manchester United, England's most valuable but also most indebted club, could be vulnerable to a cocktail of rising bank rates and a downturn in merchandising and match-day revenues.

Not so, say their American owners, the Glazer family, who insist that operating profits (£60m for the 2006/07 financial year) are high enough to service debts that stood at £666m at the last count.

It has not gone unnoticed however that recent hikes in season ticket prices have eliminated the long-standing waiting list for a guaranteed seat at Old Trafford.

A sign of the times? Certainly.

But United and other EPL clubs are also arguably better-cushioned against any economic downturn than companies in almost any other sector.

Their main revenues - from television - are guaranteed for this season and next and the apparently limitless loyalty of fans makes them hard to compare with any other consumer business.

A full-blown recession will inevitably have an impact but a bit of belt-tightening all round may be what is required rather than bank-style bailouts.

AFP