QPR Project may not be Derailed by Relegation

Should they lose against Stoke City on Saturday, and all the relegation-threatened sides currently above them in the table win over the weekend, QPR’s descent back to the Championship would be confirmed with fully four weeks of the season remaining.

The financial impact on a club that have consistently outspent their natural resources will be vast. This is a business that, at the last count, was £89 million in debt and running at an annual loss of £23 million.

Since that accounting period, QPR have taken out a £15 million loan with Barclays Bank that is secured against Loftus Road and spent heavily on the likes of Loic Remy, Christopher Samba, Julio Cesar, Esteban Granero, Ji-Sung Park and Robert Green.

They also made a costly change of manager, replacing Mark Hughes with Harry Redknapp. None of this has had a dramatic impact on the fortunes of the team and the stark reality is that, even with a £16 million parachute payment, they now face an annual loss in revenue of around £40 million.

Comparisons with Portsmouth have become frequent but there are crucial differences. For a start, it can be argued that QPR’s football failure has been greater. Portsmouth, after all, did at least enjoy some brief on-field benefit and their fall basically coincided with the loss of committed owners. QPR have managed to go backwards while their spending has gone upwards and it is difficult to see them mitigating that situation by selling many of their squad at a profit.

What appears far more positive for QPR, however, is both the ambition and potential safety net provided by the owners. Much of the existing debt is owed to Sea Dream Limited, a company controlled by the Mittal family who also own 33 per cent of QPR. The Mittal family feature regularly in the Forbes list of the world’s richest people.

Aside from the new Barclays loan, it is understood that the remaining debt is to Tune QPR Sdn Bhd, a company owned by chairman Tony Fernandes, Kamarudin Meranun and Ruben Gnanalingam. This is not an inexperienced group of businessmen and their longer-term plans should not be dismissed. Yes, relegation is a massive immediate setback, but not definitely game-changing in the context of their overall strategy.

Fernandes revealed on Wednesday that the Barclays loan was for a new stadium and, according to sources it is on this project rather than QPR’s immediate place in the Premier League that the club’s long-term success is likely to depend. QPR are looking at new sites in west and north-west London and the ambition can hardly be overstated.

There is the 40,000 football stadium but, when chief executive Phil Beard talks of “a wider entertainment destination with good transport links”, this is fundamental to understanding QPR’s dream. Beard was one of the architects behind making the O2 Arena – previously the Millennium Dome – an unexpected success. It is no coincidence that he has been identified and appointed by Fernandes and the Mittal family.

It is also no coincidence that they have chosen to invest in a club that is in a different part of London to the re-generation already provided in the east by the O2 and the Olympic Park.

There is further significance in the fact that all this is happening at the same time as the Crossrail project, which could significantly transform the transport links to the west and north-west of London.

There is the belief that a new sports, leisure and entertainment complex – alongside a thriving Premier League club – could create enough revenue to wipe out the current debts and actually make their QPR investment both profitable and successful. There are huge challenges, of course, finding the right site will not be easy.

There were hopes, after all, of a detailed announcement last year. It would be mistaken, however, just to ignore the underlying plan. Many of those involved have a history of delivering in business – if not football – and Fernandes has remained relentlessly bullish.

It also explains the new loan. Despite their collective wealth, QPR’s owners would seem unlikely to want to meet the collective cost of a new stadium and training ground, for which they hope to gain planning permission next week and build within a year. The current plan is also to repay the ¬£15 million loan quickly, potentially within four months.

None of this is to detract from the dangers and challenges ahead. New financial regulation in the Football League means that relegated clubs who make losses of more than £8 million in 2013-14 face either a transfer embargo or a fine of up to £10 million. It is difficult to see how QPR will avoid this fate without immediate and wide-scale restructuring.

Remy will be sold, but there is still a desire to keep Samba. The obvious wider problem will be finding a home for players whose contracts have exceeded their actual contribution.

Huge change is certain this summer. Beyond that and QPR’s future will hinge on the staying power – and wealth – of the investors. For all their mistakes, there is no sign yet that the club’s impending relegation has decisively sapped those particular reserves.

Jeremy Wilson – The Telegraph