Partner Article

English Football League clubs show financial distress

A survey into the corporate health of the English Football League has revealed that signs of financial distress are widespread among professional football clubs in the Football League.

Research from corporate recovery firm Begbies Traynor shows 13 of the 68 clubs currently playing in the Championship and divisions one and two of the Football League, show signs of corporate distress, indicative of poor financial health.

The figures show that while just 1% of UK businesses are showing symptoms of distress, 19% of football clubs show the same degree of financial ill health.

Port Vale and Portsmouth football clubs have both entered administration in recent weeks.

Business distress signals are measured across a range of indicators, including serious court actions, including winding up petitions and high court writs; striking off notices for late filing of accounts, county court judgments and serious negative balances on their balance sheet.

Gerald Krasner, a partner at Begbies Traynor who has a track record of dealing with troubled clubs, said: “That 19 per cent of clubs in these three divisions are showing signs of ill-health when directly compared with just 1 per cent 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.

“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.

“While Premier League clubs are guaranteed huge television money every year and some have extremely wealthy backers, there are signs of genuine financial distress among a significant number of football league clubs.

“The sales of season tickets for next season, many of which are paid for during April and May, could provide some short term relief for struggling clubs, but it won’t solve the underlying problems.”

Krasner concluded: “For football clubs, like any other business, when there are signs that a company is in trouble, getting good professional advisers on board before the decline has gone too far is key.

“The earlier a club takes advice, the more options its directors will have available to help turn things around.”

This was posted in Bdaily's Members' News section by Tom Keighley .