A recent survey has provided some hope that football clubs in England are beginning to adopt a more sensible approach in relation to their financial affairs. The survey looks at clubs in the three divisions below the Premier League and has discovered that of these 72 clubs, 6 of them, in addition to Portsmouth are in financial distress. Portsmouth FC has continued to trade whilst in administration and was last week the subject of an historic fans takeover. A similar survey has also concluded that one in eight Scottish clubs are in financial distress.
The Football Distress Survey, carried out by Begbies Traynor, concludes that the above results are seasonal; stating that football clubs are actually doing better in terms of managing their finances despite the fact that several clubs are in trouble. Gerald Krasner, a partner at Begbies Traynor and former Chairman of Leeds United believes that Spring is a particularly tough time for football clubs as season ticket sales are at their lowest and television money and other income arriving earlier in the season begins to run out. Krasner, who has also acted as administrator for Port Vale and Bournemouth, states that the recent figures are healthy when comparing the current number of clubs in financial trouble with this time last season.
Despite this evidential decrease in the number of clubs suffering financial turmoil the warning signs are still present. The well publicised situations at Portsmouth and Coventry are indications that financial mismanagement can quickly lead to serious problems both on and off the pitch. It has also been reported that another 5 Football League clubs are struggling to make ends meet with only a few matches of the 2012/13 season remaining.
Last week it was reported that League One strugglers Bury need £1 million of external investment in order to survive. Bury, currently under a transfer embargo, are bottom of League One and could be relegated to League Two as early as this Saturday. The news for football fans in the North West was further compounded by initial reports suggesting that Preston North End will need approximately £4 million worth of investment between now and next March in order to stay afloat. The problems at Preston are largely due to a high wage bill in comparison with the revenue the club generates. Preston were relegated from the Championship in the 2010/11 season and have struggled financially ever since.
Here at Farleys we have a dedicated sports law team along with corporate insolvency solicitors, who regularly advise struggling companies and organisations on the options available to them. If you or your company have been affected by any of the above issues, or indeed if you have any matter to discuss with our sports lawyers, then do not hesitate to contact us today to discuss your options at the earliest possible opportunity.