Generic clubs in financial crisis Thread

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Dirk Gently
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Generic clubs in financial crisis Thread

by Dirk Gently » 30 Nov 2009 12:57

Let's try and consolidate all the many stories of clubs in finacial troble into one thread.

Chester are likely to cease to exist in the next few days (as already noted elsewhere), but Palace and Cardiff seem to have financial troubles.

Palace are 10 days late paying wages :
Crystal Palace’s financial crisis has deepened after manager Neil Warnock and his players were asked to take a 10-day pay delay.

The club’s football staff and management were called into an emergency meeting after Saturday’s 3-0 home win over Watford to be told their wages would not be paid tomorrow....


http://www.dailymail.co.uk/sport/football/article-1231895/Crystal-Palace-pay-crisis-wages-delayed-10-days.html?ITO=1490

And also persistent stories rumbling around that Cardiff won't be able to last the season out - almost certain that if they don't go up this year they'll go into administration, but there's a fair chance they won't last that long to find out. (apologies, no links I can give on this one.) Ridsdale does have "form" on this, of course.

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Re: Generic clubs in financial crisis Thread

by TFF » 30 Nov 2009 13:08

So just "one worse team" than Reading needed this season.

Oh. Wait. They can both take a 10 point penalty and still not be in the relegation places.

Seriously, this is the kind of news that makes me glad we have SJM. Yes, I'd love him to have invested more in the team but I'd far rather be watching football next season in whatever league than not.

Sad news about Chester City - relegation's one thing but to cease altogether is another. They look doomed don't they?

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 30 Nov 2009 13:11

That Friday Feeling So just "one worse team" than Reading needed this season.

Oh. Wait. They can both take a 10 point penalty and still not be in the relegation places.

Seriously, this is the kind of news that makes me glad we have SJM. Yes, I'd love him to have invested more in the team but I'd far rather be watching football next season in whatever league than not.

Sad news about Chester City - relegation's one thing but to cease altogether is another. They look doomed don't they?


Yep - see the post I've just added here

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 30 Nov 2009 13:16

I think this season will be one of the worst ever - we're now getting to the stage of the season where the season ticket income has been spent at many clubs, and with no source of credit (except an owner with deep pockets) times will be hard.

Even more so since the FL's new HMRC monitoring scheme started in July so FL clubs can no longer juggle money around by delaying paying their tax bills, and those clubs with outstanding tax debts will be forced to come to terms with them.

I can honestly see 10-15 Fl clubs going into administration this season, and quite possibly three or four Tier 5/6 clubs going out of business completely.

Absolute carnage, but at least perhaps people will start to understand the financial realities of football.

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Re: Generic clubs in financial crisis Thread

by T.R.O.L.I. » 30 Nov 2009 13:19

Dirk Gently Absolute carnage, but at least perhaps people will start to understand the financial realities of football.


Unfortunately, I think it will take a "big" club going into administration before this happens - and by "big" I mean high profile. Pompey were looking good for it but that seems to have gone fairly quiet in the last couple of weeks....


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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 30 Nov 2009 13:32

T.R.O.L.I.
Dirk Gently Absolute carnage, but at least perhaps people will start to understand the financial realities of football.


Unfortunately, I think it will take a "big" club going into administration before this happens - and by "big" I mean high profile. Pompey were looking good for it but that seems to have gone fairly quiet in the last couple of weeks....


Still question marks over West Ham & Bolton, and Hull have a black hole of £23m.

Interestingly, the PL recently changed their rules so they can now take over and run a club that's failing, including using TV monies owed to that club to pay off creditors. They're happy to shell out big money to support their "brand"

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Re: Generic clubs in financial crisis Thread

by Yellowcoat » 30 Nov 2009 14:27

Watford are in trouble now. Their Chairman has lent them 1m to cover immediate problems but they will run out of money again on 22nd December. I can also see a number of FL clubs going into administration or worse.

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Re: Generic clubs in financial crisis Thread

by Wax Jacket » 30 Nov 2009 14:49

T.R.O.L.I.
Dirk Gently Absolute carnage, but at least perhaps people will start to understand the financial realities of football.


Unfortunately, I think it will take a "big" club going into administration before this happens


it's already happened though - at Leeds - and everybody treated it as though it were a specific problem and the people involved were the only ones who could run a club so badly. so nothing's changed.

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Re: Generic clubs in financial crisis Thread

by Wycombe Royal » 30 Nov 2009 15:33

With regards to Cardiff, they have just secured a new rich Malaysian investor who has taken up a place on the board and they have already reached an agreement with HMRC. Cardiff fans are not worried by it in the slightest.

Rich foreign investors don't always work out as planned though.


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Re: Generic clubs in financial crisis Thread

by Super_horns » 30 Nov 2009 16:26

Yellowcoat Watford are in trouble now. Their Chairman has lent them 1m to cover immediate problems but they will run out of money again on 22nd December. I can also see a number of FL clubs going into administration or worse.


Sounds like we are in the Southampton situation of a club's parent company likely to go bust.

Sadly Elton's summer concert might be too late for us this season.

Already know we'll lose players but was hoping to avoid going down so losing 10 points would be a total disaster.

We've been after investment but naturally no-one wants to put money into a club with a 3 sided ground and small gates.

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Re: Generic clubs in financial crisis Thread

by Wycombe Royal » 30 Nov 2009 16:47

Super_horns
Yellowcoat Watford are in trouble now. Their Chairman has lent them 1m to cover immediate problems but they will run out of money again on 22nd December. I can also see a number of FL clubs going into administration or worse.


Sounds like we are in the Southampton situation of a club's parent company likely to go bust.

Sadly Elton's summer concert might be too late for us this season.

Already know we'll lose players but was hoping to avoid going down so losing 10 points would be a total disaster.

We've been after investment but naturally no-one wants to put money into a club with a 3 sided ground and small gates.

And here's the link.....

http://www.watfordobserver.co.uk/sport/watfordfc/watfordfcnews/4767105.VGS_lend_Watford_another___1m_but_it_s_still_not_enough/

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 03 Dec 2009 21:34

Being reported in the football trade press today that Watford need to find £5.5m within the next 3 weeks to avoid administration

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Re: Generic clubs in financial crisis Thread

by (.)Boobies(.) » 03 Dec 2009 23:15

Cardiff and administration; you're giving me an erection here.


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Re: Generic clubs in financial crisis Thread

by Royal Rother » 03 Dec 2009 23:32

Personally speaking, having predicted this long and hard for the last 2 years or so, although I wish no misfortune to other clubs or their supporters, I'm rather looking forward to seeing all the asterisks in the League tables in the next couple of seasons, whilst RFC runs serenely on.

Will the smell of coffee be strong enough to effect lasting change though?

It is interesting that HMRC are aiming to be much tougher on collecting tax debts from football clubs when they are, acting on instructions from government, being extremely lenient with other businesses as a general rule (at the moment).

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 03 Dec 2009 23:48

Royal Rother It is interesting that HMRC are aiming to be much tougher on collecting tax debts from football clubs when they are, acting on instructions from government, being extremely lenient with other businesses as a general rule (at the moment).


That's mainly because the HMRC fundamentally objects to the Football Creditors' Rule, which says that clubs in administration must pay all "football debts" ahead of any others, coupled with the fact that in the last Companies Act HMRC lost their status as "preferred creditor" - so they now get paid a pittance from any settlement, whilst football creditors get paid 100% of what they're owned.

Because of this, HMRC are not agreeing to any settlements - on a point of principle as much as anything else.

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Re: Generic clubs in financial crisis Thread

by Geekins » 04 Dec 2009 00:02


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Re: Generic clubs in financial crisis Thread

by Royal Rother » 04 Dec 2009 00:14

Dirk, I know HMRC lost their preferred status in September 2003, it was actually under the Enterprise Act of 2002 not Companies Act but I nitpick :wink: - thing is though, how on Earth did it become the law of the land that football creditors be paid in full?

And does this really mean that if a club goes down owing £50m to other clubs, players etc. that the 1st thing a new board has to do is work out how they are going to pay off that £50m, or no deal? I think I know that is the case but tbh I've never given it an awful lot of thought and it does seem absolutely ridiculous. No wonder HMRC are effectively withdrawing co-operation.

The knock on effects will be very very interesting - if the football related creditors build up as a result of HMRC no longer providing "generous terms" or what effectively became a 2nd overdraft facility to some clubs, surely the clubs going into administration will find it a hell of a lot more difficult / nigh on impossible to find an investor mug enough the undertake to repay the football related debts of the old company?

Or am I missing something here?

If I'm not then I predict your word "carnage" will hardly do justice to what is about to happen in the next 2 years....

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 04 Dec 2009 09:28

It's not law of the land, but it's law within the Fl and PL - if a club wants to retain its league status then they have to pay all "football" debts, and then it's the residue after that that goes into any pot for paying out any creditors during administration. Otherwise they'd get thrown out of the league, and so there'd be no point in administration, as a club with no league place isn't worth rescuing.

On the face of it, it looks ludicrous, and does give rise to some absurd situations. When Bradford went bust because they were paying Benito Carbone way too much money, this rule meant that Carbone had to be paid in full, but the local business who made the pies and the local bloke who printed the programmes took a massive hit as they got something like 4p in the pound (as did, irony of ironies at Bradford, the local St John's Ambulance and West Yorkshire Fire & Rescue).

So far so outrageous - and you can understand why HMRC oppose this rule so violently.

But the simple fact is that football runs on inter-club credit, and clubs or players didn't have a guarantee that they'd get their money in full the whole system would break down. Liverpool would refuse to play at Reading (or any smaller club) in the cup because RFC collect the money in and then pay it to Liverpool later and so that' a financial risk to Liverpool, and nearly every transfer is done on credit over 2-3 years. Take away the financial guarantees and the whole financial system in football collapses!

There's no easy answer to this one - but football will fight violently to protect this rule while HMRC violently hate it (and good for them, really - it's taxpayers' money we're talking about here...).

So all power to HMRC and the Football League for the new tax disclosure scheme, brought in this July, which will ensure that FL clubs can't use HMRC as a "free bank" and build up big debts. In the short-term, though, it means that those behind with taxes will need to agree settlements very soon, which is why there'll be lots of FL administrations this season.

(Incidentally, a big raspberry for the CCC clubs who delayed this new scheme for a year over a technicality about agents' fees. A much bigger raspberry to a certain FL chairman who ran a vigorous campaign urging FL clubs not to adopt this scheme - of course, it was everyone's favourite wheeler-dealer, KB of Leeds!)

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Re: Generic clubs in financial crisis Thread

by floyd__streete » 04 Dec 2009 13:58

Royal Rother Personally speaking, having predicted this long and hard for the last 2 years or so, although I wish no misfortune to other clubs or their supporters, I'm rather looking forward to seeing all the asterisks in the League tables in the next couple of seasons, whilst RFC runs serenely on.


Is it wrong of me to hope that 3 or 4 clubs go into admin to potentially spare us from an otherwise likely relegation?

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Re: Generic clubs in financial crisis Thread

by Royal With Cheese » 04 Dec 2009 14:48

floyd__streete
Royal Rother Personally speaking, having predicted this long and hard for the last 2 years or so, although I wish no misfortune to other clubs or their supporters, I'm rather looking forward to seeing all the asterisks in the League tables in the next couple of seasons, whilst RFC runs serenely on.


Is it wrong of me to hope that 3 or 4 clubs go into admin to potentially spare us from an otherwise likely relegation?

It's virtually our only escape route.

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