Stoned Rose
Well-Known Member
Just to be clear, the PL use profit as a prima facie measure of sustainability. As I've pointed out on here, it's nothing of the sort.
You could usefully argue that a club that sustained continuous, significant net losses probably wasn't sustainable. But you couldn't reasonably argue that a club that made profits, or only suffered small losses, was sustainable. One of the reasons for that latter position is clubs like Pompey or even us in 2008 just before the takeover. The financial issues which caused Pompey to go into administration, or us to be on the brink of that, wouldn't have been apparent from the P&L account.
The Bank of England subjects banks and other financial institutions to 'stress tests', which test the ability their capital bases to withstand severe economic shocks on both the demand and supply side. The PL should be doing the same to clubs with large debts. They should also look at forward liabilities rather than a 3-year old P&L account. In other words, like La Liga do, they should be trying to make future spending commensurate with anticipated cash resources.
This. A million times.