Portsmouth’s demise is linked directly to overspending by Chelsea and Manchester City
It almost works as a neat image to point out that Premier League clubs wearing red – Manchester United and Liverpool – entered 2010 with serious debts, while those in blue – Chelsea and Manchester City – had their loans paid off by indulgent billionaires. That, though, leaves out the deep blues of Portsmouth, who limp on in a financial state more parlous than any Premier League club since Leeds United’s 2003 implosion.

The Premier League, led by its chief executive, Richard Scudamore, remains wedded to the dogma that its football clubs are not clubs but commercial companies with shares available for purchase by anybody. Scudamore presents this as a virtue, pointing to the huge investment which some buyers, most notably Roman Abramovich at Chelsea and Sheikh Mansour at City, have introduced.

Only a tiny fraction of that money has gone anywhere other than in increased wages for players: Chelsea reportedly breaking the £7.5million-a-year barrier for John Terry, City delivering £8m per annum to Robinho – who has been more sulky than silky during his stopover in rainy Manchester.

The free marketeers nevertheless argue that the owners’ investments have trickled down, delivering cash to clubs which have sold players to these two, a long chain which can be traced down the leagues. Yet that overlooks the fact that the excessive spending has inflated all transfer fees, and all wages, for all players, trickling right through the Premier League, Football League and even into semi-professional football. The sport is an intimately connected pyramid in which tiny slivers of superiority between exceptionally talented players are rewarded in millions.

Chelsea and City posted losses of £44m and £92m respectively for 2008-09 due to spending vastly more in players’ transfer fees and wages than they could afford without the financial backing of their owners.

Overspending on that dizzying scale is possible because their owners – both oil magnates, of dizzyingly different backgrounds – are prepared, for their own reasons, to pay for them. Yet there is a direct connection between the good times City fans are now expecting and the cracking up of Pompey. There, Harry Redknapp’s FA Cup win, as recent as May 2008, was attained with players such as Sol Campbell, Glen Johnson, Sylvain Distin, Niko Kranjcar, Pedro Mendes and Lassana Diarra – all now departed.

The club could not afford them without the financial support of owner Alexandre Gaydamak, which he withdrew after Wembley. Now Pompey hover around the knacker’s yard, struggling to pay the players who remain, while staring at insolvency which relegation to the Championship would surely precipitate.

Both Abramovich and Mansour have converted their loans to their clubs into shares – a permanent form of investment which looks far better than providing it as debt. Both clubs have committed not to overspend forever, though Chelsea’s former chief executive, Peter Kenyon, was forced to revise his deadline of this year for Chelsea to break even, partly due to Abramovich’s habit of firing managers and coaching staff with handsome compensation packages.

City have pledged to become “sustainable”, with Graham Wallace, their chief financial and administration officer, saying the 2008-09 loss represents City “in investment mode”. Certainly, the club cannot be expected to sign players with quite the frenzy they did in Mansour’s first year, but Wallace would still not define what they mean by “sustainable”, nor would he put a date on it.

The Premier League’s relaxed, free-market attitude to the random nature of English football’s club car boot sale means that no owner has anything to fear as long as they can maintain the club in whatever financial state they are running it.

But for Chelsea and City there is an emerging threat to the owners’ subsidies – or welcome discipline, depending on your point of view.

Michel Platini has wrestled since he became UEFA’s president with his gut feeling that overspending is unsustainable and bad for football, and he has felt his way into deciding what to do about it. Last August, UEFA came up with “financial fair play”, approved by all its associations and affiliated club bodies, which means that, from 2013-14, clubs competing in UEFA competitions will have to be at break even and not reliant on funding from outside.

The details are being worked out at headache-inducing sessions in functional office rooms all over Europe, but the rule – in some form – is heading for the statute book. It is intended to mean that City and Chelsea will not be able to compete in the Champions League if Mansour and Abramovich are still needed to pay the wages.

Portsmouth, though, are unlikely to be affected. They will surely be a long, long way from European competition when any such rule does come into force.