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Articles and reports on financial issues within football – soccer – from The Political Economy of Football.
Portsmouth FC are to go into administration again. A formal announcement is expected this evening or early tomorrow. A ten point deduction from the Football League would follow automatically.
Revenue and Customs have issued a winding up order against the club for a tax debt thought to be between £900,00 and £1.2m. This is due to be heard next week.
In a shock development Rangers have lodged papers (termed ‘a paper of part’ in Scottish law) with the Court of Session in Edinburgh signalling their intention to place the club in administration.
Celtic have reported improved results for the six months to 31 December. Turnover was up 3.1 per cent to £29.3m. Particularly encouraging was the reduction in bank debt by £2m to just over £7m.
Chelsea FC have paid £6.4m to settle an investigation by Revenue and Customs into player payments. The settlement arose from an investigation into ‘image rights’ payments in football.
These provide a means by which players can reduce their tax bills. They get two contracts from their club, one for their salary as a player and the other for earnings from replica shirts and other merchandise. These royalties are paid into a company and are therefore liable for corporation tax which is lower than income tax.
Exeter City are so short of cash that manager Paul Tisdale cannot sign any loan players to strengthen the squad which was weakend by the departure of a number of key players at the start of the season.
Attendances are down by 20 per cent on last season averaging at about 4,000. This is a big fall and it is not clear why it has occurred even given difficult economic times.
Despite the setback represented by their unsuccessful prosecution of Harry Redknapp, the crackdown by Revenue and Customs on football clubs is to continue. Football has acquired a reputation for late payment and involvement in tax avoidance schemes and two special units have been set up to deal with the game.
Fears are growing for the future of Kettering Town with a takeover announced last week by Cambridge-based Weymouth owner George Rolls yet to go through. Rolls is reported to be running out of patience with Kettering chairman Imran Ladak.
A meeting is to be held between Portsmouth FC and Revenue and Customs next Friday to try and sort out a mutually acceptable way of dealing with the club’s tax debt. The calling of the meeting follows a favourable response from prime minister David Cameron at question time to Portsmouth North MP Penny Mordaunt. She has been meeting with Treasury ministers to find a way forward.
The combined revenues of the world’s 20 highest earning football clubs have defied European economic woes by growing 3 per cent on the previous year, according to the latest Football Money League from Deloitte, the business advisory firm.
Stockport County FC have secured a £180,000 loan from the local council against an outstanding tranche of a transfer payment.
Whilst this will deal with any immediate cash flow problems, questions remain surrounding the football club’s finances. The wage bill has been slashed following the departure of a number of players and recent average attendances have increased to 3,700, well above a supposed 2,500 break even point in the club’s business plan.