By Harry Mottram: The majority of professional football clubs in England and Scotland are technically insolvent. It’s one of the reasons the Football Governance Bill is set to become law this year forcing clubs to ‘clean up their finances’ and to end ‘dodgy’ owners buying clubs and mismanaging their finances. Everyone in the game is keen to see that the new football regulator is given powers to end the ludicrous situation where people without the cash or the management and finance skills can take charge of a club.
At the moment the various football governance bodies can impose fines, deduct points and even relegate clubs who break the rules but with recent examples of Bury FC’s owner Stewart Day who ran up debts of £12.5 million leading to the club disappearing from the league. Darlington FC was bought by ex-criminal George Reynolds who ran the club into the ground, and he was done for tax avoidance – and once again not only did the club go bust, the players and staff were unpaid, suppliers left with unpaid invoices and the fans had no team to support.
The most famous mismanagement and collapse of a football league club is that of Wimbledon. People who had no experience or interest in football were allowed to take over the club, sell the ground and then sell the club to a property developer who moved the Dons to Milton Keynes. In turn the fans voted to form a new club of AFC Wimbledon while the retail community of Milton Keynes who had backed the move had a football league club as the FA supported the move. Before the move the club went into administration as Wimbledon before Pete Winkelman bought the club out of administration moved it to Milton Keynes and MK Dons became the new name while suppliers and lenders were left high and dry.
Ian Carrotte of Somerset based ICSM said: “Football clubs are often treated as an ego trip by the owners – they frequently have no training on how to run a large business and ignore advice. Technically most clubs – even well-run ones – are insolvent when you look at their liabilities. Essentially, they rely on their lenders and banks to continue their credit lines. Once those are withdrawn – usually because they lose confidence in the owners – the club collapses and administrators are called in.”
Scottish outfit Inverness Caledonian Thistle FC are insolvent and currently in administration but hope to end their troubles with a Company Voluntary Arrangement meeting to be held on 5 June. Also, in Scotland Dumbarton FC are struggling to stay alive – with the team fulfilling their fixtures this season. A rescue bid failed in April with businessman Gareth Phillips and the Pendragon Group but it was withdrawn and now hopes rest on Canada businessman Mario Lapointe who has made an offer to buy the club which has been agreed.
In England Blackburn Rovers Championship Women’s Team has been disbanded unprofessionally by owners Vestry by an email to the players and manager at the end of the season. No details on whether they will be paid. The owners have blamed the new regulations introduced by the FA Board and WSL Football to up the standards at clubs including the pay of players which at Blackburn are a fraction of the men’s side. The BBC have a full report on the story at https://www.bbc.co.uk/sport/football/articles/c9wgg8y881lo
Ian Carrotte said so many clubs are run without taking into account the infrastructure required to maintain a them. “It’s like a printing company not bothering to mend the roof even though water is damaging the paper stocks,” he said. “Or a logistics firm ignoring health and safety regulations or simply not paying the Inland Revenue. There will be consequences. At Wimbledon after the Hillsborough Disaster the authorities brought in new safety regulations which seemed to take the club by surprise. The same is happening now in the WPL – hence the owners at Blackburn failing to spend money on improved facilities for the fans and wages for the players. Instead they have folded the club which goes against the reason why someone would buy a club. When that happens it’s the staff and players, the supporters and suppliers who all lose out.”
These are some of the clubs in England and Wales that have gone bust in the past and who have then returned after being reconstructed:
Bradford City in 1983, Charlton Athletic in 1984, Middlesborough in 1986, Tranmere Rovers in 1987 and Newport County in 1989. In the 1990s Walsall, Northampton Town, Kettering, Aldershot, Maidstone, Hartlepool, Barnet, Exeter, Gillingham Doncaster, Millwall, Bournemouth, Crystal Palace, Chester and Portsmouth all entered administration or applied for a CVA to survive – in this century Hull, QPR, Bury, Halifax, Bradford, Notts County, Barnsley, Leicester, Port Vale, York, Derby County, Ipswich, Wimbledon, Oldham, Darlington, Bradford City (again), Wrexham, Cambridge, Rotherham, Crawley, Boston, Leeds, Luton, Bournemouth, Rotherham, Halifax, Darlington, Southampton, Stockport, Chester, Northwich Victoria, Farsley Celtic, Salisbury, Weymouth, Crystal Palace (again), Portsmouth, Plymouth, Rushden and Diamonds, Darlington(again), Portsmouth (again), Port Vale (again), Aldershot (again), Bolton, Bury, Rhyl, Wigan, Bury (again) and Derby County (again).
In Scotland the same situation saw these clubs also hit the rocks in this century: Queen’s Park, Greenock, Clydebank, Airdrieonians, Motherwell, Dundee, Livingston, Gretna, Livingston (again), Dundee (again), Rangers, Dunfermline and Hearts.
Glasgow Rangers hit the rocks in 2012 when the club went into administration when debts hit £168.9 million pounds. More than half of the debt was to the taxman – but the list of unsecured creditors included the corner shop by the Ibrox ground (£567.45), a face painter called Susan Thomson (£40), the police £51,882 and the ambulance service £8,438. And they also owed other football clubs a total of £3.3 million pounds – a shocking list of creditors.
Ian Carrotte again stressed suppliers to be especially cautious when granting credit to sports clubs as they so often trade off the notion they can never go bust. The opposite is true when you look at the list of insolvencies.
ICSM CREDIT
For information on ICSM visit www.icsmcredit.com or call 0844 854 1850.
ICSM, The Exchange, Express Park, Bristol Road, Bridgwater, Somerset TA6 4RR. Tel: 0844 854 1850. www.icsmcredit.com. Ian.carrotte@icsmcredit.com