Pubs and football clubs most distressed business – Red Flag

PUBS and football clubs have become among the most distressed businesses in the country, according to the latest Red Flag Alert statistics.

Figures for the first quarter of 2011 show that distress levels among football clubs were 19 times greater than average, while the pubs and bars sector witnessed a 95% increase in the number of companies showing signs of critical financial difficulties.

Pubs have faced long term downward trends as consumer behaviour has changed. The smoking ban, higher alcohol duties and cheaper supermarket products has led to greater numbers of people drinking at home.  Longer opening hours have also increased costs for landlords.

Ric Traynor, chairman of Begbies Traynor Group, said: “The fact that pubs, football and other sports clubs are on their uppers is not simply a matter for economic concern, as these once thriving hubs of community and regional identity are part of the fabric of British society, and once lost can never be replaced.  

“Whether you view that as a good or a bad thing, the fact is it will, in the long term, change the character of the country as a whole and this should be recognised.”

The Red Flag Alert statistics showed there had been an improvement in fortunes for the manufacturing sector, with fewer firms reporting signs of stress. Property services, construction and civil engineering companies are still facing financial strain, though as investment projects are delayed or cancelled.

John Fairbrother, partner at Begbies Traynor in Liverpool, said: “We have seen numerous construction firms, contractors and suppliers restructure or withdraw from markets recently, and there are concerns that the impact of the sustained spending freeze on this sector is being masked by the fact that many sub-contractors are not immediately counted in government unemployment numbers.  

“There is a great deal of consolidation and contraction still to come in this sector.”

Red Flag Alert is a credit information service which was set up by Manchester-based insolvency firm Begbies Traynor, but was spun out of the company last week.

Although Begbies Traynor still owns a minority stake in Red Flag Alert LLP, it is now majority-owned by chairman Ric Traynor following a deal which saw him agree to inject up to £1m in new capital to fund ongoing losses.