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Over the past decade more than 30 professional football clubs have entered administration. It is rare for there not be to at least one club in administration in the British leagues (currently Gretna and Rotherham). However, the special nature of football as a business means that club administration is far from a routine matter for insolvency practitioners. David Acland, a partner with Begbies Traynor, which has handled a number of football club administrations, told the Financial Times, 'With Wrexham, we have debated for ages whether to accept the appointment because of the effect all the hours spent dealing with media and customer fan enquiries would have on our mainline business. You can't delegate down responsibility for handling such enquiries, no matter how time-consuming they can become.' Given that, why take the business at all? It may be that its high profile means that a successfully completed administration could attract business in other spheres, although I must admit that I am not sure how one selects an administrator for a business in trouble. Certainly, I cannot recall an administrator going bust and some football fans resent the fees involved.
Nevertheless, they are well earned because of the particular challenges that football clubs present. Trade union representation is generally strong and Philip Long, head of corporate recovery at accountancy firm PFK (UK) describes football as 'the last bastion of the trade union movement.' The Football League's insistence that football-related debts such as outstanding player transfer fees and wage arrears are paid in full, meaning that so-called 'football creditors' invariably get the best deal going, especially if the club is sold as a going concern. The league is in a strong position because it decides whether the club can carry on in the competition it was in. Player redundancies are also rare. 'You cannot tinker with the workforce in general terms,' says Mr Acland. 'It is very hard to make redundancies.'
Yet footballers are not the only creditors with bargaining power. Service providers such as the police and the long-suffering St John Ambulance (who are generally owed quite large outstanding bills by clubs in trouble) also have influence since most clubs could not operate without them. 'There is generally little interchangeability in a football club's main suppliers,' says Mr Acland, 'So you have to take pains to offer them a reasonable deal.' Football clubs are also unlike other businesses in that they cannot be sold to a direct competitor. At PFK (UK), Mr Long has yet to detetct any shortage of prospective 'white knights' for struggling clubs. 'There are always people out there who want to get involved in football,' he commented. 'It is usually somebody who has got some strange [sic] connection with the area.' Certainly the 'another bus along in a minute' principle seems to work when a club goes bust. There is always someone willing to turn a large fortune into a small one.
Finding a buyer is not the end of the story for the administrator. It can take a long time to secure regulatory approval for the change of ownership in terms of the 'fit and proper person test'. Mr Long recalled, 'In the case of Oldham Athletic, a buyer "came out of left field" in the shape of three "computer guys" from the American east coast, but the process dragged on. "We got them on the hook to buy it and then we had to trade it [the club] with their co-operation until we could complete the sale."' A final constraint is that because of the 'transfer windows' it is difficult to realise the full value of players. Realising that a 'fire sale' is on, purchasers will ask for a bargain price.
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