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Ruling due on football creditor rule


An important court ruling is due this week on the 'football creditor rule' which gives so-called football creditors priority when a club goes bust.   The football authorities see it as integral to the governance of the game.

However, Revenue and Customs see it as another unacceptable aspect of the special world of football which is why they are challenging it in court.   So far court challenges to the rule have been unsuccessful because the rule has been implemented with the approval of the majority of creditors.

Football may survive the legal challenge, but the political climate has changed as examples of reckless financial behaviour by clubs have become commonplace.   Against a background of fiscal crisis, there is less tolerance of special exemptions. 

The Government could legislate to change the law.   Earlier this year in its report on football governance, the House of Commons Culture, Media and Sport Committee said that the rule 'epitomises the extent to which financial priorites are being distorted'.   It is not just the tax authorities (and hence the taxpayer in general) who lose out but also small local businesses and charities such as St.John's Ambulance.

However, if the rule was abolished it could undermine the stability of the game and see clubs being expelled from the Football League for becoming insolvent.   That would be a tragedy for the fans of the clubs concerned, but it might have a salutary effect.