Administration is often seen as a reorganisation device and not just in football. It can be seen as a way of re-launching a business in a leaner and fitter shape free of debt. The creditors pay the price, but employees of a company can also suffer.
Administration is often seen as a reorganisation device and not just in football. It can be seen as a way of re-launching a business in a leaner and fitter shape free of debt. The creditors pay the price, but employees of a company can also suffer.
This is evidently going to be the case at Dunfermline Athletic which was placed into interim administration by the Court of Session yesterday. Interim administrator Bryan Jackson, who has experience of handling football club administrations, has warned that there may be ‘brutal’ cuts and an announcement is expected later today. Jackson emphasied that he was keen to avoid uncertainty in such difficult situations.
Jackson told BBC Scotland, ‘Clearly there is a considerable task involved in trying to save Dunfermline as the 128-year old club has accumulated substantial debts over several years mostly from existing and past directors.’ Redundancies were unavoidable in the circumstances and Jackson said ‘It is likely that the high earners will suffer’, meaning players in so far as there are high earners in the Scottish first division.
The Court will decide on April 11th whether to implement full administration. It is hoped to secure a Company Voluntary Arrangement (CVA). Majority shareholder Gavin Masterton, who has spent millions of pounds trying to prove the infrastructure of the club, is prepared to hand over his shares for that purpose. Most of Dunfermline’s debt estimated at £8.5m is thought to be owed to Masterton and other directors. As the saying goes, if you want to make a small fortune, start with a big one and get involved with a football club.
The club can continue trading as a third party has provided £100,000 to cover trading, legal and professional costs. A consortium has expressed an interest in taking over the Pars. There have been discussions with Revenue & Customs over a tax debt of £134,000 which precipitated the administration.
The Fifers had their golden period in the 1960s winning the Scottish Cup twice and regularly competing in Europe. However, it is difficult in current conditions for a club outside the major Scottish cities to succeed in that way.
The town, which has a population of under 50,000, is within commuting distance of Edinburgh. An Amazon depot opened there recently. The Dunfermline Building Society ran into difficulties in the financial crisis in 2009 and was absorbed by the Nationwide.
Just 2,879 turned up last night, admittedly in freezing conditions, to see the Pars add to their misery by being defeated 0-2 by Falkirk. They are currently fourth in the first division, but effectively out of the promotion race, even if a points deduction is not imposed by the Scottish Football League.