The situation with Rangers Football Club and Lloyds Banking Group has been widely reported. Looking in from the outside there seems to be a good situation if you are a banker. Rangers owe money, they have plenty of saleable assets and a valuable brand. Step in and make some noise, a new buyer will appear and the loans are paid back.
Banks in the boom lent an awful lot of money to football clubs. Lloyds (not the new group with HBOS) stayed out, but Barclays and RBS went mad for footie finance as did HBUST.
Key examples are the Arsenal stadium finance (sold on through a securitisation by RBS) and RBS's backing a Liverpool takeover to the tune of a cool £250 million (UPDATED - ta Scrobs).
West Ham were bought by an Icelandic consortium and now is in the hands of the Icelandic Government. They chairman Andrew Bernhardt is an ex-Leveraged finance banker - how appropriate!
Football is big business and it is really showing in the credit crunch. In fact Rangers and West Ham are the first of the many. Unless you have a billionaire owner the future is not so bright for a premier league club.
Hull are next on the hit list and their CEO has already resigned. Hull have huge debts and are going to be forced to sell players. If they are relegated they may well follow Forest, Leeds and Southampton down the divisions.
My view is it is that the billionaires have priced non-billionaire clubs out of the market. In the Premier League Everton, Hull, Portsmouth, Bolton, Stoke, Burnley, (Wigan) and Wolves all have no chance of competing with the other clubs who have mega-wealthy backers. Without a level field to play on financially, they should really just shrink the league and make participation based on how much money owners are up for putting into the clubs - more like Formula One. Radical, but the league would be more exciting to watch with a higher level of competitive teams.
Football clubs are not listed on the stock exchange so much anymore, but all of the above are in danger of over reach on their budgets and any could pop this year. Hull will go first, but how many will follow?
As for the banks I wonder how many football loans have made it into the RBS APS scheme - to think some players wages are likely being guaranteed by the taxpayer!