Here is Robert Peston’s commentary on the refinancing of Liverpool FC, a situation on which I have had my beady eye for a while.

But Peston does not get to the nub of the problem. Liverpool and Manchester United have been borrowing to sustain performance. They will both find themselves having to pay back the money they have borrowed in aggregating their costly squads. And when they cut back on the spending their teams’ performances will most likely slip as well. But with less success, their revenue will decrease, limiting the clubs ability to repay debts further. With the danger of this de-leveraging spiral of decline looming, the future looks a bit bleak for the reds.

Arsenal is looking good, and will benefit if Man U and Liverpool go down the pan. They have virtually no debt, and are still in the top four simply because of Arsene Wenger’s sheer managing ability and resistance to media pressure to spend money on overpriced [English] players, seeking out undiscovered value from farther afield.

Chelsea are all right too. Abramovich is still flush, despite his massive losses due to the recession. He bought the club without masses of debt, unlike the Glazers and Gillett/Hicks who were more or less acting as agents for international banks and debt salesmen.

I hope that Liverpool is not an economic model for anything more widespread. Otherwise we really could all be in the brown stuff a few years down the line…

Quoting from the BBC website:

“Liverpool’s net spending over five years on players is £82.5m and United’s has been £85.5m. Meanwhile, Chelsea spent £154.8m net on players during that time and Arsenal just £3.4m.”

Net spending, of course, is how much more they have spent than total revenue. Ferguson, probably still smarting from the shame of his 1-4 thrashing by Liverpool, refutes claims they have out-spent Liverpool recently with these figures. This is clearly a load of crap because Man U’s revenue is £40m greater than Liverpool’s to start with.

But you can’t really blame Sir Alex for writhing in the shame of defeat. He likes to be a winner, and, as McLaren’s Ron Dennis once said: “Show me a good loser, I’ll show you a loser.” It doesn’t mean we can’t enjoy it a bit though…

These figures also show that Arsenal is the only team to live within its means. They have had no choice, lacking the big external cash injections of the other of the big four. They have  had to make do and subsist, with the funding gap plugged by Arsene Wenger’s wiliness and his talent in spotting greatly undervalued talent in foreign, cheaper players (English players are way too expensive – they need to be kept in emerald crack pipes, and rare albino prostitutes, I imagine).

Hang on, did I just say ‘cash injection’? I should have said ‘debt’ injection of course… Abramovich was the grandee football investor who was least highly leveraged apparently, and even he has lost half his wealth in the recession. It is not beyond the realms of possibility that the finances of Man U and Liverpool could come crashing down around their ears. They have strong brands, yes, but the financial situations of their respective owners are far more important than the disciplinary problems of Vidic, or Torres’s hamstring niggles. We all thought our banks were untouchably strong but look what was happening there behind closed doors, in those incomprehensibly complex ledgers.

Malcolm Glazer’s takeover bid was built on debt, not oil cash, and it looked shaky even back in 2005. As the figures show above, Manchester is taking on more debt, not reducing it.

But this is a big conundrum of sport finance: money is crucial to success (unless you have a Wenger of course).

Back in the nineties, Italian teams were in the ascendancy with their investment and beautiful big new stadia from the 1990 World Cup. In 2009, English teams have just dumped Juventus, Inter Milan, and Roma from the Champions League. You don’t have to be Sepp Blatter to see the relationship between this success and the extra cash in the Premiership. Oops, did it again, I should have written ‘debt in the Premiership’.

But if the major English clubs keep on obtaining growing success with growing debt, when on Earth will they ever pay it back? Not in a recession at any rate. Despite being Champions of England and Europe, Manchester United are still borrowing more than they can pay back.

When greedy investors believe that a particular investment is rock solid, a ‘bubble’ will form. Will there be a point when this bubble bursts ravaging the Premiership as badly as the global financial institutions in the last year? Will the government have to step in and save our sport? Who will be left standing? Apart from Arsenal of course.

Sir Alex bitterly mumbles: ”There’s talk about a recession but I don’t think there will be one at Liverpool this year.” It could be closer to the Premiership than he thinks.