13 football clubs showing signs of corporate distress
SIGNS of financial distress are “alarmingly widespread” among professional football clubs in the Football League, according to a new survey.
The research into the corporate health of the English Football League by insolvency specialist Begbies Traynor – which is curently handling the administration process at Port Vale – found that of the 68 clubs currently playing in the Championship and divisions one and two of the Football League, 13 are displaying signs of corporate distress.
The Red Flag Alert survey, which monitors business distress levels, also revealed that while ony 1% of UK businesses are showing symptoms of distress, 19% of the football clubs surveyed show the same degree of financial ill health.
The unnamed financially distressed clubs include three in the Championship, six in League One and four clubs in League Two.
Business distress signals measured in the survey comprise a range of financial problems, including clubs with serious court actions against them, including winding up petitions and high court writs; clubs that have been issued with striking off notices for late filing of accounts; those with county court judgments against them; and those with serious negative balances on their balance sheet.
Gerald Krasner, a partner at Begbies Traynor, said: “That 19% of clubs in these three divisions are showing signs of ill-health when directly compared with just 1% of all businesses in the wider economy clearly shows the sector is facing a very challenging time commercially.
“Football’s popularity and income are holding up comparatively well in the economic downturn, but nevertheless many clubs are continuing to spend too much, principally on players’ wages, as they always have done.”
Krasner added: “Football as an industry also suffers from an enormous financial gap between the Premier League and the Football League. One effect of this disparity is that Football League clubs are often tempted to overspend on players to try to gain promotion, and the promised riches and prestige that come with it.”
He said disparities between the levels of television income between the top league and the rest was also a contributory factor for clubs.
