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

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.

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3 Responses to “2011 – The Year in Insolvency Events”

  1. You could add Croydon Athletic to the 2011 stats. Haven’t played in a month.

    All the best for 2012

    • John Beech said

      Thanks Jeremy, and all the best to you.

      A tricky one this. Their website says “The Ryman Isthmian Football League have confirmed that all our fixtures have been postponed for the time being. Further information will be posted as soon as it is available.” [My italics]

      If I don’t end up retrospectively adding them to 2011, it looks rather like they will be making an early entry for 2012.

  2. Dear John, hope that your beloved ‘Pompey’ don’t keep featuring in these alternative ‘league tables’? Certainly, times remain tough in following clubs that have had the stuffing knocked out of them from ‘insolvency events’ and some don’t always bounce back aka my ‘County’ which has monies lent from its local Council this week to assist cashflow – and I report on the woes often on www,s-port.co :((

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