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Archive for April, 2010

Premiership Football “the computer says NO”

Recently the Times published an article highlighting that a credit agency had “blacklisted” fourteen out of the twenty premiership clubs. Amongst those included were Spurs, Liverpool, Aston Villa and Chelsea. Remarkably enough, to anyone who follows the game, West Ham were given a clean bill of health

http://www.timesonline.co.uk/tol/sport/football/article7076652.ece

Not good is it? But are that many clubs seriously a real high risk for an unsecured creditor? Faced with an order for £5k would you only deal with Chelsea, Liverpool or villa on a cash with order basis? 

There is no doubt that some football clubs are in great difficulties. Portsmouth of course and it is quite well known that Hull City are struggling. Yes , it is a high risk business and many would argue that caution should be the byword.

But what is the real issue here? To my mind these credit ratings illustrate the danger of using cheap and cheerful systems and taking their opinions as gospel. They crunch the numbers and come up with a yes/no. Fair enough. They are not going to be able to offer in depth analysis on millions of filed accounts at those prices, but the user has to be aware that the credit report is the starting point of the evaluation, not the conclusion. The key to constructive evaluation is to look beyond the balance sheet at the wider picture and on the other hand, look for elements within the accounts which signify unexposed risk. Tricky of course, but credit decisions are big decisions. I have to mention of course, that this is where I step into the picture….

A bad debt is horrible enough but losing a good sale to a sound client because of an overreaction or a lack of thought, is nearly as bad

I would not hesitate in recommending credit to Chelsea FC (or Villa, or Spurs).  The computer may say “no”, but i think that they are quite well backed. And I support them of course.

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