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

Southampton’s attempted ‘holding company’ loophole

Posted by John Beech on April 24, 2009

Southampton have been docked 10 points by the Football League (although this will subject to an appeal [1]). The club had hoped to avoid the penalty on the grounds that it was their parent company, Southampton Holdings, which had gone into Administration rather than the club itself (2).

Had the deduction not been imposed because of this technicality, it would have been ridiculous. As the statement from the Football League (3) points out inter alia, “the Holding Company has no income of its own; all revenue and expenditure is derived from the operation of Southampton Football Club Limited (SFC) and the associated stadium company” – hardly a hands-off parent company!

Even putting aside the matter of the intended appeal, this does not mean that there is no loophole. Some clubs have far more complex company structures, and in such cases the key points in the Football League statement may not be so black-and-white. Where the club is exploiting property other than the stadium, for example, it may well not be that “[the companies involved] are inextricably linked as one economic entity”.

The Football League needs to review its regulations and make sure that this potential loophole is well and truly sealed – one case does not prove the robustness of the current regulations. At the same time, it needs to ensure that in a repeat of the Birmingham City case of 1992 (see my earlier posting ‘Southampton‘), a club is not unjustly penalised for matters that had nothing directly to do with the conduct of the club.

Meanwhile the Administrators can now focus on the rather more vital matter of trying to ensure the club’s survival. 10 points will be neither here nor there, this season or next, if they cannot find a credible buyer for the club.

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