Pic: BBC

As the European Super League collapses – the real truth about football as a business is it isn’t one

Six English football clubs threw their hats into the ring for the new European Super League (ESL) and when fans, managers, players and even the Government objected they quickly withdrew their support for the league.

Pic: TalkSport

One of the motivations to join the was the huge amount cash on offer. Morgan J Stanley in America were thought to be offering millions in a welcome package as the bank prepared to bank roll the league with the prospect of increased TV revenues. It had the added attraction of being a closed league with no relegation meaning clubs always knew how much cash they would get each season and could plan ahead without fear of failure. And yet the money on offer is nothing compared to debts most so-called super rich Premiership clubs have accumulated. Chelsea owe £1.3bn, Spurs £384m, Manchester United £271m and Liverpool £157m. Most businesses with that amount of debt would be on the brink of collapse – like Liberty Steel is today with their debts of more than a billion pounds.

Normal business practices go out of the window when it comes to football clubs as egos get the better of the owners and directors as they spend ever more money on players to chase elusive glory. If the richest clubs in the land cannot balance their books then there’s little hope for those further down the league. Surprisingly the smaller the club the more likely there is to be fiscal discipline as they are run on a shoestring budget with players often playing for free or very little.

Newport County FC in 1980. The club had played in Europe with the best but went bust and it took 30 years to reform and eventually gain entry in the Football League

Since the 1980s Newport County, Bury, Rushden & Diamonds, Chester, Wigan, Mansfield. Wimbledon, Maidstone, Aldershot, Middlesborough, Tannmere Rovers, Walsall, Northampton, Kettering, Maidstone, Hartlepool, Barnet, Exeter, Gillingham, Doncaster, Millwall, Bournemouth, Crystal Palace, Chester, Portsmouth, Hull, QPR, Halifax, Notts County, Barnsley, Leicester, Port Vale, Derby County, Wrexham, Cambridge United, Rotherham, Crawley, Leeds, Luton, Southampton, Stockport, Northwich Victoria, Salisbury, Plymouth argyle, Rhyle and Coventry City  have all hit the buffers owing collectively millions to suppliers, landlords and the taxman. Some entered administration and found buyers almost straight away, others lost everything including their ground and have been reformed by the fans and others have been able to negotiate a CVA with creditors. In each case suppliers – from the local printers of the match programs to the caterers supplying burgers and chips – were left unpaid. And yet most have either managed to trade their way out of administration of in effect done a phoenix.

Ian Carrotte of ICSM gives this sage advice to potential suppliers: “If you decide to trade with a club then don’t go in too deep, stick to your payment terms of 30 days maximum and be prepared to suffer if they go bust. It’s best to be a supporter of the team as at least that way you could argue you have invested in the club and could solve your conscience that way if the worst happens. My advice is treat clubs like you would any other business – and don’t let them fob you off with late payments.”

About ICSM Credit

ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel – while at the moment there’s a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach – ask for details from Paul.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk