Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

Archive for December, 2011

2011 – The Year in Insolvency Events

Posted by John Beech on December 31, 2011

Below is a round-up of the insolvency events I have logged during 2011.  The definition of insolvency event is a debatable one, and I prefer a descriptive rather than prescriptive one.  Broadly I would define an insolvency event as one which reflects a discontinuity in the operation of the ‘club as company’ caused by insufficient funding.

Where the Court or Companies House has been involved, I designate the insolvency event as ‘hard’ (and shown in bold), and, where this is not the case, I designate it as ‘soft’.

Repeat events at a particular club are italicised.  Any errors or omissions posted as comments will be corrected with due acknowledgement.

CLUB

DATE

INSOLVENCY EVENT

‘HARD’ OR ‘SOFT’

TIER

Leyton

12/01/2011

Expelled from Isthmian League because of debts; subsequently dissolved (see below)

S

8

Windsor & Eton

02/02/2011

Compulsory Liquidation

H

7

Plymouth Argyle

21/02/2011

Filed intent to enter Administration,
then did so

H

3

Eastwood Town

01/06/2011

Sold for £1

S

6

Rossendale United

18/06/2011

Expelled from North West Counties Football League because of debts

S

9

Gedling Town

25/06/2011

Again withdrew from East Midlands Counties Football League

S

10

Rushden & Diamonds

05/07/2011

Administration

H

5

Hucknall Town

14/07/2011

Reverted to amateur status

S

7

Leyton

17/07/2011

Dissolved

H

10

Dawlish Town

22/07/2011

Withdrew from Western League

S

9

Prescot Cables

16/10/2011

Returned to amateur status mid-season

S

8

Rothwell Town

17/10/2011

Administration

H

8

For comparison, this second table shows the insolvency events in 2010:

Crystal Palace

26/01/2010

Administration

H

2

Folkestone Invicta

05/02/2010

Entered CVA

H

8

Portsmouth

26/02/2010

Administration

H

1

Chester City

10/03/2010

Compulsory liquidation

H

5

Farsley Celtic

10/03/2010

Compulsory liquidation by Administrator

H

6

Grays Athletic

12/05/2010

Relegated from Conference National; sought to drop a further level to Isthmian League

S

5

Nelson

16/07/2010

Resigned from League; folded

S

9

Ashford Town (Kent)

20/07/2010

Administration

H

8

Gedling Town

25/10/2010

Withdrew from East Midlands Counties Football League

S

10

Atherstone Town

18/12/2010

Resigned from Southern League

 S

8

In an increase from 10 insolvency events to 13, although drop from 6 to 5 of ‘hard’ insolvency events.  These are in absolute terms fairly small numbers so it is difficult to generalise with any certainty.  Nonetheless they are large enough as percentages of the total numbers of clubs in the various to warrant some albeit speculative comment.

Although the insolvency events at Portsmouth and Plymouth Argyle in particular of the bigger clubs have attracted much media coverage, the incidence of insolvency events in clubs in tiers 7, 8, 9 and 10 is rarely even noted other than by local newspapers.  It would easy to dismiss their higher level of incidence as simply a reflection of the fact that there are far more clubs in each of these lower tiers.  While that is certainly part of the explanation, it must be remembered that we are not quite comparing like with like.  At these levels there are no broadcasting rights to be lost through relegation, and the difference in financial scale of operation between successive tiers is low.  Indeed, the business plan B in case of relegation will not be significantly different from the business plan A of staying up.  There should therefore be proportionately fewer insolvency events.

In my view there are  surprisingly high number of insolvency events at the level of semi-professional clubs.  The smaller budgets should be easier to manage, and any shortfall of revenues should be relatively easily absorbable if the club is owned by a local ‘benefactor’.  Even a whip-round with collecting buckets should be enough to ward off an impending insolvency issue, unlike at, for example, Portsmouth, with their debts rising at one point to a reported £135 million.

On the one hand, lower tier clubs exhibit a greater realism than Football clubs, as evidenced by the number of ‘soft’ events with clubs simply dropping a tier voluntarily.  On the other hand, they can be driven into financial doping by a ‘benefactor’, leaving them with entirely unsustainable business models when the ‘benefactor’ either loses interest is unwilling or unable to continue the club’s enforced ‘habit’ for cash injections.

I certainly see the same worrying signs in the football sector as I have done for more years than I care to remember.  Higher level clubs remain as vulnerable as ever, and lower level clubs seem to be becoming more vulnerable.  As the year turns, a number of clubs are in imminent threat, the most obvious being Darlington (1).  At higher levels, few would discount Portsmouth as a prime candidate for Administration unless a ‘benefactor’ buyer can be found, and the club launches off down yet another ownership cycle.

In a nutshell, I fear another depressing year for fans at too many clubs.  Here’s hoping that the various versions of financial fair play protocols can begin to bite and force clubs into sustainable business models.  Let’s also hope that all the words recently expended on football governance by politicians lead finally to an effective licensing system which includes an effective fit and proper persons test.

All best wishes to blog readers for the New Year.

Posted in Insolvency | Tagged: | 3 Comments »

Round the Lower Levels Part 2

Posted by John Beech on December 21, 2011

At last, Part 2 of my overview of what is happening from a broad financial perspective.  Part 1 ran alphabetically up to Prescot Cables, and is available here.  With a slight jump backwards, we pick it up with:

  • Port Vale
    An interesting case of ‘fan ownership’.  Valiant 2001 bought the club from the Administrators in 2003 (1) – the club had debts of £2.4m and was said to be losing £500,000 a year (2) – and in doing so avoided the real threat that football might have disappeared from Vale Park (3).
    Survival has been a battle, with the problem of sponsors not paying and a threatened takeover (4), and the need for a loan from Stoke City Council (5).  Nevertheless the club managed to complete its CVA in May 2005 and to come out of Administration in October 2006.  Meanwhile local boy Robbie Williams had bought shares for an undisclosed sum (6).  However Chairman Bill Bratt had “taken the club as far as I can” by September 2008 (7), but was denying takeover rumours the following month (8).
    Into the New Year and a row was brewing over the apparently different involvement with local rivals Stoke City by the council (9).  Bratt attempted to clarify the club’s difficulties here, and pointed out his already considerable commitment to the club (10).
    Fan opposition to the way the board was running the club mounted, and Bratt pointed out the obvious:

    Supporters have protested against the board in recent weeks, and Bratt said it could be potentially destructive.
    “If we go, what happens? We fold immediately. If that’s what they want, they could take the club down, not the board,” said Bratt.
    He added: “I’m quite happy to walk away from this club right now, but the banks and creditors would come in straight away, and there’s no Plan B in place. (11)

    Plans B, C and D have however emerged in recent years – the failed attempts by various parties to invest in the club (Harlequin Properties (12); Mike Newton (13); Mo Chaudry (14); and most recently Blue Sky International (15)), although there has been investment by Peter Miller (16).
    All the uncertainty has prompted an attempt by fans to oust the board (17).
    All very sad.  The days of fan-benefactors like Jack Hayward, Jack Walker and Steve Gibson seem to have gone, and fans need to be clear in discriminating between ‘fan-owned’ and ‘Supporters Trust owned’.

  • Portsmouth
    I’d planned to avoid blogging about Pompey until the situation became clearer, but it hardly seems reasonable not to comment in this context.
    The immediate situation sounds reasonable, with the immediate possibility of points deduction probably not on the Football League’s agenda (see previous posting).  The issue is just how long the ‘immediate’ will last – current indications are that it will all too brief, with time and money running out sometime next month.  Whether Keith Harris will have been able to weave his magic in finding a buyer before then (18) seems unlikely – Pompey are hardly the most attractive of clubs to buy in their present mess (19).  I have it on good authority that even the liquidation of the ‘oldco’ is proving to be contentious.
    Administration for the club (as opposed to the existing Administration of CSI) looks increasingly likely, with its inevitable 10 points deduction, threat to keeping up the CVA payments (and further points deduction).
    Increasingly liquidation and resurrection by the Pompey Supporters Trust looks the only viable longer-term scenario.
  • Rossendale United
    The club did not reapply for membership of the North West Counties Football League at the start of this season (20), and a new club is being resurrected (21).  News is scant, any local informed input would be appreciated.  See also my posting in March where I argued that the club was a classic case of Benefactor Withdrawal Syndrome (BWS).
  • Rothwell Town
    In October the Rowellian Football Social Club (trading as Rothwell Town Football Club) did go into Administration (22).  Again, any local informed input would be appreciated.
  • Rushden & Diamonds
    Following their expulsion from the Conference (23), the club tried but failed to get into the Southern Premier League (24), and went into Administration (25).  That appears to be the end of the club in this manifestation, but an AFC Rushden is being formed (26).
    This seems to be another case BWS, although perhaps with twists yet to emerge…
  • Southend United
    In November the club announced “Roots Hall Development Moves Closer” (27).  So, nothing new there then.  Meanwhile, the Fossetts Fantasy Farm project has been “has been removed from the [Council’s] capital programme until the certainty of developer contribution can be ascertained” (28).
  • Truro City
    The club owned by Kevin Heaney, wannabe owner of Plymouth Argyle, is in deep, deep trouble.  Wages have been unpaid (29) and the ‘Stadium for Cornwall’ project now has a big question mark hanging over it (30).
    HMRC are chasing tax debts of over £100.000, and the club has until January 16 to come up with the money or face a winding-up order (31).
  • Wakefield
    A not entirely unfamiliar story here too (32), with unpaid wages and money owed by a sponsor (33).

All too worryingly, I could start going round the alphabet again, with various tales of various woes at Barnet (34), Cheltenham (35), Chorley (36), Coventry (37), Croydon Athletic (38) and Dorchester Town (39), although at least the last of these has a positive side, a possible takeover by Dorchester Town Supporters Trust.

It looks as if the race is definitely on for the club to face the first insolvency event of 2012.  February is the second highest peak for insolvency events (behind may), so it could well be a close run thing.

I’m beginning to wind down (or is it up?) for Christmas, so, in case I don’t post again in the next few days, a very Happy Christmas, or Bah Humbug (delete as you consider appropriate), to all readers.

Posted in Benefactors, Debts, HMRC, Insolvency, Ownership, Stadium | Tagged: , , , , , | 1 Comment »

 
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