One in five clubs in the English Football League is in ‘poor financial health’ according to a survey by administrators Begbies Traynor. Of 68 teams surveyed in the three divisions of the Football League, 13 have signs of distress such as serious court actions against them, including winding-up petitions, late filing of accounts and ‘serious’ negative balances on their balance sheets.
One in five clubs in the English Football League is in ‘poor financial health’ according to a survey by administrators Begbies Traynor. Of 68 teams surveyed in the three divisions of the Football League, 13 have signs of distress such as serious court actions against them, including winding-up petitions, late filing of accounts and ‘serious’ negative balances on their balance sheets.
The clubs in trouble include three in the Championship, six in League One and four in League Two. However, Begbies Traynor said that the clubs could not be named. One national newspaper has already asked me if they could be listed but there is not enough up-to-date information in the public domain to do so with any confidence.
However, a figure of 19 per cent of clubs in trouble compares to just one per cent in the wider economy. Begbies Traynor said that clubs were continuing to spend too much, principally on players’ wages. However, one also has to take account of the excessive expectations of owners and fans in modern football. For example, Mancini’s position as manager at Manchester City is said to be in danger if they come second.
In Scotland the position revealed by Begbies Traynor is both better and worse. Better in the sense that only one club in eight is showing signs of corporate distress and poor financial health. Worse in the sense that it is claimed that three clubs are in danger of following Rangers into administration.
Moreover, there is a greater risk of a domino effect in Scotland. In England the football creditors’ rule means that football debts, which include transfer fees to other clubs, provide a safety net for football clubs owed money by a club that goes into administration. There is no such safety net north of the border.
Kilmarnock offer an example of a reasonably successful club that nevertheless face financial challenges. Troubled by falling attendances for years, the club has debts of £9m and it takes close to £500,000 to service that sum.