Football FDs ‘cautiously optimistic’ says survey
FOOTBALL club finance directors are cautiously optimistic about their club’s financial position and the forthcoming season according to a survey by accountants PKF.
With the new season now under way the firm warns that the mix of a fragile economic environment and the impact of the recent budget on consumer and corporate spending could mean continued challenging times for the sector.
PKF’s ninth annual survey, Back on the Ball? reveals a combination of tighter controls on club finances, closer oversight from banks and HM Revenue & Customs (HMRC), but some cautious optimism for increased revenues next season.
Billy Cairns, VAT partner at PKF and football sector specialist, comments: “Overall, the respondents are fairly optimistic with a clear leaning towards stable or growing revenues for all income streams.
“It is good to see such optimism, but does the rose-tinted view adequately reflect the problems that could arise from the combination of a potential double dip recession and the austerity measures from the Government?”
Less than 20% of respondents are concerned about their financial position, which is a marked improvement on the 2009 survey. However, profitability remains an issue with only 22% expected to make a pre-tax profit in the next accounting period.
Mr Cairns adds: “Once again the overwhelming majority of clubs operate with the expectation of making a loss which may lead to increased scrutiny from HMRC.
“For instance, nowadays, HMRC is much quicker to take action against clubs which have failed to pay tax on time, as last season demonstrated, especially if this has happened more than once.
“Whilst HMRC does not take insolvency action lightly, it views repeated failures to pay on time as a high risk of tax being lost and needs to protect its position.”
The survey reveals that football club finance directors are more comfortable with their position with their individual banks, but shows that late payment of tax to HM Revenue and Customs is more likely in the lower leagues.
According to PKF a further trend is the increasing percentage of clubs whose benchmarking range is above 65% for wages to turnover ratio.
This has risen from just 17% in 2008 to 25% in 2009 and 38% this year. Two thirds of respondents use the wages to turnover ratio as a key performance indicator (KPI) of the club’s financial health.
The inflexibility of players’ salaries is once again the biggest concern for the overall sample, although it is not a top priority for all leagues, with FDs in the Premier League fearing the consequences of relegation far more.
