PREMIER LEAGUE:DEBT-LADEN Premier League clubs have been warned to ensure they can cope if they hit problems on the field as a new report showed record levels owed by English football's top flight.

Deloitte’s annual review of football finance reveals the total debt among the 20 Premier League clubs hit €3.6 billion in 2007/8 while wage costs also showed a record rise of €262 million – 23 per cent – to reach €1.4 billion.

The overall debt figure includes ‘soft debt’ such as the €809 million made available as an interest-free loan to Chelsea by owner Roman Abramovich – he has since reduced that to €392 million with the rest becoming his equity in the club.

Other clubs, however, are potentially more vulnerable to servicing their debts if they fail to achieve their targets on the pitch.

Alan Switzer, director in the Sports Business Group at Deloitte, said: “Debt can be sustainable but football should not be complacent. They should make sure the business model works for them to make sure the level of debt is sustainable.

“The more debt you have, the more vulnerable you can be if you suffer a revenue knock-off such as failing to qualify for the Champions League or in the worst scenario, relegation. Having a higher debt is not helpful in those situations and you have to make sure you have some flexibility, and that places an onus on having flexibility around player wages.”

According to Deloitte, Manchester United’s debt stands at €750 million and Liverpool’s at €345 million, both sums stemming from loans taken out by the owners to finance takeovers. Arsenal’s €367 million includes €289 million in long-term bonds taken out to finance a new stadium.

The increase in wage levels may also cause raised eyebrows but they do not appear a major problem as they are slightly less than the rise in income from Premier League TV rights. As a result the wages to revenue ratio improved slightly to 62 per cent from 63 per cent the year before.

Manchester United and Arsenal both paid out less than 50 per cent of income in wages, and Liverpool 55 per cent, but Chelsea’s ratio was 81 per cent.

The report’s other findings include English clubs regaining their status from the Bundesliga as the most profitable in the world and that Serie A was the fastest-growing league with total revenues increasing by 34 per cent but posting a third year of operating losses.