The Premier League is planning to introduce a "going concern" test aimed at ensuring its clubs are not laden with dangerous levels of debt. The test, according to Premier League sources, will work out if debts are manageable by assessing a club's financial health, including its turnover and cashflow.
The test is being planned as a response to the culture secretary, Andy Burnham, who called last October for "football to reassess its relationship with money" and posed seven challenges to the game. One was for "greater transparency and scrutiny of clubs' ownership", including the level of debt used to finance a takeover and whether that debt is "sustainable and in the wider interests of the game".
The Premier League plans to publish its reply next month, including the "going concern" test to address the debt question. The league is understood to be keen to avoid a discussion about how debt was taken on – whether to fund investment such as a new stadium, or imposed by new owners to finance their takeover, as the Glazer family did in 2005, giving Manchester United, previously debt-free, £667m in borrowings.
Although Burnham explicitly asked for scrutiny of "debt used to finance a takeover", the Premier League is likely to argue it is not important how debt was incurred, but whether it is sustainable.
The FA is preparing a separate response which is expected to go further; the governing body's chairman, Lord Triesman, is understood to stand by his warning last October, that football clubs' debts are too high.
Triesman includes in his concerns "soft loans" made by owners because, he argues, clubs are vulnerable to the owner's circumstances changing. The Premier League's response is also likely to propose strengthening the "fit and proper person test" for club directors and 30% shareholders, in the light of Thaksin Shinawatra's 2007 Manchester City takeover. The former Thai prime minister was labelled "a human rights abuser of the worst kind" by Human Rights Watch after 2,500 people were allegedly killed by Thai police in 2003. Thaksin denies ordering extrajudicial killings.
