Generic clubs in financial crisis Thread

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Re: Generic clubs in financial crisis Thread

by Uke » 04 Dec 2009 17:13

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?


Yes, because if the industry is in a bad way then it'll come to everyone eventually in different forms

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Re: Generic clubs in financial crisis Thread

by Royal Rother » 04 Dec 2009 19:22

Dirk Gently 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!)

Thanks for the interesting reply.

It is not beyond the wit of man to come up with a scheme that undoes this mess over a period years. It is, in the main, a circle of debt around English Football Clubs, so it sounds to me like it needs its own central banking system. Wetherbys play a (somewhat) similar role in horse racing.

Stamp out credit terms in transfers, it is absolute nonsense. If the central bank (for want of a better term) doesn't approve it, the deal can't go through. All contracts should be registered with the bank; the fee gets paid in full to them, and distributed to the clubs, the agents etc.

I know there would be a million yes buts, and reasons why the above couldn't possibly work but the game needs radical thinking to sort out its finances and it should not be constrained by what has gone before.

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 04 Dec 2009 22:44

Indeed, it ought to be possible, but, as they say "I wouldn't start from here...."

Football is massively protective about the way football runs itself, and It really is unlike any other industry, with its own outdated business practices and a culture that is most unbusinesslike.

It's also extremely defensive about any outside interference - a big, big squabble about to come to a head is who will control club and financial governance - the PL won't let anyone outside them (including The FA & UEFA) tell them how to manage their clubs....

It's also riven by rivalries and hatreds - recently, when the Government tried to get football to clean up it's act (the "Burnham 7 questions" ) the FA, the PL and the FL met several times but were unable to come up with a unified response, so all responded separately. The old rivalry between the FA and the FL still exists, despite the FA setting up the PL (don't forget it started life as the the "FAPL") in 1992 in a bid to out-do the FL once and for all. The irony is that their bastard child has now outgrown them and they have no control over it!

So the whole culture of football would need to change - many in the game don't think there's a problem, many others think there's a problem but not at their club, and other know there's a problem but don't want it resolved because it would stop their particular little dodge or rake-off. Something cataclysmic will need to happen before the game will allow itself to be properly reformed, and even then it'll be a battle royale to make it happen.

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Re: Generic clubs in financial crisis Thread

by Rev Algenon Stickleback H » 05 Dec 2009 08:51

To some extent, administration is doing more harm than good. It should be a safety net, but too many clubs seem to think it's a get out of jail free card, and are unconcerned about running up debt as a result. Chairman see it as a win/win gamble, in that either the overspending is rewarded with success, or they can just have the debts wiped out and start all over again.

The one size fits all 10 point deduction is too inflexible. Clubs that are struggling for unplanned reasons should get that. Clubs that have wilfully run up debt, like Portsmouth, Cardiff or Ipswich, should be treated much more harshly. Something like the German system would be more appropriate, with all players allowed to leave on a free and the club kicked out of the top two divisions. And I'd ban those involved with running up those debts from being involved with football ever again.

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 05 Dec 2009 09:23

Agreed - I've always hated the "sporting sanctions" 10 point deduction because it deosn't stop clubs going bust - it punishes them when they have. I'll come back later and expound for the insomniacs..... but must leave for Sheffield.


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Re: Generic clubs in financial crisis Thread

by Tony Le Mesmer » 07 Dec 2009 14:49

Rev Algenon Stickleback H To some extent, administration is doing more harm than good. It should be a safety net, but too many clubs seem to think it's a get out of jail free card, and are unconcerned about running up debt as a result. Chairman see it as a win/win gamble, in that either the overspending is rewarded with success, or they can just have the debts wiped out and start all over again.

The one size fits all 10 point deduction is too inflexible. Clubs that are struggling for unplanned reasons should get that. Clubs that have wilfully run up debt, like Portsmouth, Cardiff or Ipswich, should be treated much more harshly. Something like the German system would be more appropriate, with all players allowed to leave on a free and the club kicked out of the top two divisions. And I'd ban those involved with running up those debts from being involved with football ever again.


Agree with all of this.

Points deductions are going to make a mockery of the league very soon and for overspending clubs, automatic relegation should be the least of their punishment.

What is the rule the Conference operate? it seems that clubs are kicked out back to Step 4 for a lot less than league clubs.

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Re: Generic clubs in financial crisis Thread

by Uke » 07 Dec 2009 14:59

Why not just allow Darwinian principles to work and let the clubs go bust

New clubs will eventually rise to replace the old over the next 20 years or so

Keeping the clubs alive does not improve the "Meme pool"

There would probably be about 10 or 12 new clubs in the top four divisions if this happened - about half a division of new talent/faces

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Re: Generic clubs in financial crisis Thread

by Arch » 07 Dec 2009 15:39

Derby's troubles rumbling on... and on....
Rams set to sell stars

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Re: Generic clubs in financial crisis Thread

by Barry the bird boggler » 07 Dec 2009 15:45

Tony Le Mesmer
Rev Algenon Stickleback H To some extent, administration is doing more harm than good. It should be a safety net, but too many clubs seem to think it's a get out of jail free card, and are unconcerned about running up debt as a result. Chairman see it as a win/win gamble, in that either the overspending is rewarded with success, or they can just have the debts wiped out and start all over again.

The one size fits all 10 point deduction is too inflexible. Clubs that are struggling for unplanned reasons should get that. Clubs that have wilfully run up debt, like Portsmouth, Cardiff or Ipswich, should be treated much more harshly. Something like the German system would be more appropriate, with all players allowed to leave on a free and the club kicked out of the top two divisions. And I'd ban those involved with running up those debts from being involved with football ever again.


Agree with all of this.

Points deductions are going to make a mockery of the league very soon and for overspending clubs, automatic relegation should be the least of their punishment.

What is the rule the Conference operate? it seems that clubs are kicked out back to Step 4 for a lot less than league clubs.


The Conference have something like that rule I believe but then totally failed to apply it to Chester City instead asking member clubs to vote on whether or not to keep them in the league - as a result I think the FA censured them for failing to apply their own rules

There should be a rigid approach applied to any club big or small that first hits them with a large points penalty, then automatic relegation, and if they hit administration or financial problems for a third time that sees them kicked out of the league altogether.

It would also help if the Inland Revenue also took the hard line in all cases and refused to negotiate on over any monies owed.


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Re: Generic clubs in financial crisis Thread

by Tony Le Mesmer » 07 Dec 2009 15:52

Uke Why not just allow Darwinian principles to work and let the clubs go bust

New clubs will eventually rise to replace the old over the next 20 years or so

Keeping the clubs alive does not improve the "Meme pool"

There would probably be about 10 or 12 new clubs in the top four divisions if this happened - about half a division of new talent/faces


But when you look at it, the current situation is already like that.

The conference is full of ex league clubs fallen on financial stoney ground (York, Oxford, Cambridge, Chester, Wrexham, Luton not to mention the further demise of Halifax, Scarboro and Boston)

Whilst the chamionship is full of teams crippled by the premiership, with Bradford, Leeds, Soton Charlton etc even further down.

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Re: Generic clubs in financial crisis Thread

by Uke » 07 Dec 2009 16:32

Tony Le Mesmer
Uke Why not just allow Darwinian principles to work and let the clubs go bust

New clubs will eventually rise to replace the old over the next 20 years or so

Keeping the clubs alive does not improve the "Meme pool"

There would probably be about 10 or 12 new clubs in the top four divisions if this happened - about half a division of new talent/faces


But when you look at it, the current situation is already like that.

The conference is full of ex league clubs fallen on financial stoney ground (York, Oxford, Cambridge, Chester, Wrexham, Luton not to mention the further demise of Halifax, Scarboro and Boston)

Whilst the chamionship is full of teams crippled by the premiership, with Bradford, Leeds, Soton Charlton etc even further down.


I'm talking more along the extinction of a species, rather than continued survival.

It'll happen eventually, the metaphorical meteor strike is coming

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Re: Generic clubs in financial crisis Thread

by Wycombe Royal » 07 Dec 2009 16:55

Rumours on the Palace forums is that they might be going in to administration on Thursday.

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Re: Generic clubs in financial crisis Thread

by Jerry St Clair » 07 Dec 2009 16:58

Uke Why not just allow Darwinian principles to work and let the clubs go bust

New clubs will eventually rise to replace the old over the next 20 years or so


Depends whether you think that football should be subject to unforgiving capitalist market forces, or whether football clubs are greatly loved institutions at the heart of their community and should be supported.

Personally, I am in the latter camp. Every club that goes bust cause anguish for a great many people in a way that would be the case for a "normal" commercial enterprise.


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Re: Generic clubs in financial crisis Thread

by Silver Fox » 07 Dec 2009 17:19

Wycombe Royal Rumours on the Palace forums is that they might be going in to administration on Thursday.


Have they been paid yet? I knwo Storrie made a big thing of Pompey paying up, albeit a bit late, but I've heard nothing similar from jordan or Colin

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Re: Generic clubs in financial crisis Thread

by Uke » 07 Dec 2009 17:42

Jerry St Clair
Uke Why not just allow Darwinian principles to work and let the clubs go bust

New clubs will eventually rise to replace the old over the next 20 years or so


Depends whether you think that football should be subject to unforgiving capitalist market forces, or whether football clubs are greatly loved institutions at the heart of their community and should be supported.

Personally, I am in the latter camp. Every club that goes bust cause anguish for a great many people in a way that would be the case for a "normal" commercial enterprise.


Yes but that pain is the same as removing the tissue around the cancer.

Healthier tissue can replace it, but only if the cancer at the heart is removed

A few clubs actually going bust properly - with the associated pain - will only serve to get the others to fix their own houses!

Shit happens, life goes on.

I wouldn't want it to hapento RFC, but do not think it can't or shouldn't.

If one of the Manchester clubs went bust, think how may local clubs would benefit as the supporters changed allegiances. I'm not sure the anguish would really last that long.

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Re: Generic clubs in financial crisis Thread

by Dirk Gently » 09 Dec 2009 14:41

Very good article about Brian Mawhinney.

http://www.guardian.co.uk/football/2009/dec/08/lord-brian-mawhinney-football-league

Brian Mawhinney, a knight and a peer, as well as a former Conservative Party chairman, is not a man you would expect to be called "a communist". And yet, in his last three months as the chairman of the Football League, having already spent seven years as a surprisingly free-thinking and trenchant administrator of 72 clubs, Mawhinney seems to relish his image within a game that has become dangerously bloated by excess and greed.

"I was called a communist by one club chairman," he says with amusement, "while another said if Margaret Thatcher was dead she would be spinning in her grave. But that told me they were a couple of right-wing free-marketeers and their ideology was more important than the reality of this job."

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Re: Generic clubs in financial crisis Thread

by handbags_harris » 09 Dec 2009 16:48

A good read sent to me by a Watford fan in response to me asking what the score was with their finances. His response was:

Watford Tom Where to start with our finances? We could be in a lot of trouble, however the club have remained quite buoyant, which leads me to believe that this story was leaked by Russo for a purpose – to either go into administration now and take the 10 point hit (foolish but it could work out), or as a move to stymie some of our tight pursed shareholders into generating some revenue for the club. Our major shareholder is Lord Ashcroft – not short of a bob or two – but he’s reluctant to invest more money into the club (which is the only major failing of our current director). Although fans like to slag Ashcroft off you have to ask, he’s a businessman – why would a businessman invest in any football club (let alone Watford), given the current economic environment. Not sure if you’re interested, but I’ve attached a good article about our finances which goes into it in more detail. I think it’s relevant because this must pretty much be a situation lots of clubs who’ve been relegated and not promoted again (such as Reading) will face.

Watford Tom's Article It's logical if you think about it. Try to use a parachute as a trampoline and you won't get very high, and Watford Football Club appear to be the latest ex-Premier Leaguers to have discovered the dangers of life in the Football League Championship without either. Much of Watford's year-long dalliance with administration, which has finally hit the national headlines, is a familiar tale of football-finance woe. An over-ambitious pantomime villain risks everyone's money but his own on an unachievable dream and blames fans, press, and global financial crises when it all goes horribly wrong. Then he sods off before the discovery of buried bodies, leaving a successor to pick up the mess and either start the whole process again, after a short honeymoon period of renewed over-ambition, or desperately scrabble around in the hope of skin-of-the-teeth salvation.

Watford are on the latter course. It is a very short year since chairman Graham Simpson and his 'evil sidekick' chief executive Mark Ashton 'sodded' off. Simpson had been the bringer of renewed over-ambition when he arrived in Hertfordshire in 2002, picking up the mess known as the 'Gianluca Viallli' era. Within five years, Watford were in the Premier League, managed by Aidy Boothroyd - the next big thing in football management for about half-an-hour. But they couldn't stay there, or get back there while they had millions of parachute payment advantages. Like Southampton, Derby, Ipswich, Sheffield Wednesday and many, many others before them, though,the money ran out before the ambition did, leaving dismal debt in its wake.

Since the mid-1970s, Watford have had a direct line to national media attention via Elton John, a piano player with big glasses. And when he resigned as honorary president in October of last year, asking "Where's the money gone?" the national media turned its head. Despite the departure of £21m worth of players in the previous 20 months, the Hornets' finances made for grim reading, when fans could get to read about them. Simpson was anxious to sell the club and to punt the line about "what a brilliant club this is and how well we are doing". But Watford Observer journalist Kevin Affleck's version of this was "Watford face the grim prospect of going into administration unless they can find £10m through player sales". His article in the Observer on July 25 2008 was withdrawn when Simpson threatened lawyers. But, predictably, Affleck's version of the truth was closer to the truth.

Disaffected shareholders called an EGM of the club's parent company Watford Leisure plc, demanding a vote of no confidence in and the resignations of Simpson and Ashton. Leading the calls were the Russo brothers, Giacomo and Vincenzo - Jimmy and Vince to their mates - who owned 29.9% of company shares. The brothers had been manoeuvred off the board in 2007 after rifts with Simpson and, particularly, Ashton, dissatisfied with the pair's management of the club. They had no chance of success at the December 1st EGM as Simpson, backed by Watford's leading shareholder, the billionaire Tory peer Lord Ashcroft, was able to announce "irrevocable undertakings" of support from 54% of the shareholders alongside the announcement of the meeting.

But the prospect of public debate would eventually prove too much for Simpson. Minutes prior to the EGM, he emerged from a secret meeting to announce his resignation rather than face critics or defend the club's £5.1m loss for the financial year. Grim though the story of Watford's finances was, many believed they were not getting the whole story. Simpson's subsequent resignation, however, soon enough followed by Ashton's, was a temporarily successful attempt to draw a line under matters. Early this year, the Russo brothers assumed control, with Jimmy installed as chairman, and at the end of March the club's unaudited interim set of accounts for Simpson's last six months revealed a whopping £2.3m loss, despite £3m profits on player trading.

The Russos lent the club £1.82m through their firm, Valley Grown Salads (VGS), a name with a situation-comedy feel to it, even though Watford's situation was far from comic. Such loans were to become a regular feature of Watford's year, as the Russos struggled to control the club's wage bill via unpopular redundancies and player sales. The extent of the Russos' lending became clear shortly after the summer transfer window, which had seen more players sold, although unfortunately for Watford's finances, two went to Portsmouth. And non-payment of the fee for striker Tommy Smith, is one reason for Pompey's current transfer embargo. Jimmy Russo claimed that three loans of a combined £3.7m had each saved Watford from administration. The January loan had been due for repayment out of Watford's final parachute payments, but this was deferred. And further loans, of £650,000 and £1.25m in July and August respectively, were required.

Russo said new Chief Executive Julian Winter had told him in January: "Even with player trading built in around £4m, we still have a shortfall of £8.5m," which would need to be found in order for the club to survive to June 2010. Player trading was higher, but with transfer fees arriving in instalments - if at all, from Portsmouth - more loans were required. VGS lent another £1m at the end of November and all loans were consolidated into one big loan (totalling £4.8m), like in those TV ads with Carol bloody Vorderman. This, however, will only last until 22 December. It really could "all be over by Christmas" for Watford. And even if they reach January 2010, they'll still need another £5.5m to reach June 2010. And Valley Green Salads can't have that much more to give. Money is arriving from ticket sales for an Elton John concert at Vicarage Road next summer, and Watford's share of the gate receipts for their FA Cup-tie at Chelsea will be a fair few quid at Stamford Bridge prices, but both could be too late.

The Russos have almost certainly done as much as they can to turn their inherited situation around. And their honesty and transparency has been in the starkest contrast to the Simpson years, often labelled "Stalinist" by disaffected journalists and fans alike. Yet suspicions of their motives remain among the more cynical and world-weary of Watford's long-suffering support. The Russos' have been criticised because loan repayments will attract interest of over 4.5%, because some of the loans are secured against Vicarage Road itself, and because of their inability to get financial support from the filthy-rich Ashcroft. The idea that club directors and owners should make any money at all out of 'their' football club still remains anathema to some, especially at interest rates in excess of what they as savers may be receiving.

Anything secured against Vicarage Road is bound to put in mind the fates of other clubs in this situation owned by property developers and, surely, they say, the sort of money Watford need is loose change for Ashcroft. But it is difficult to see what other options the Russos have if they are not to bankrupt themselves. VGS are no petro-chemical giant. They supply salads to supermarkets. Jimmy and Vincenzo became agents in 1982 - cucumber agents. The company is small enough to need this money back, plus whatever interest they would have made if they'd not loaned it. And there's precious little else but Vicarage Road to secure those loans against. They aren't making fortunes out of this; they are keeping Watford Football Club alive. The Russos even garnered criticism for denying that summer player sales were for primarily financial reasons, even though it made sense not to alert potential buying clubs of Watford's desperate cash needs until the window was over. Such is the greater desperation of their current situation that the Russos have no choice but to disregard such discretion. So it is that the first casualty of Portsmouth's financial meltdown could be another football club entirely. There's an irony in there somewhere. But even if Watford are not the first to go, there's a sense that one club will go, sooner rather than later, and it's most likely that it will be a club trying to use a parachute as a trampoline.


One sentence stands out to me given RFC's recent financial speculation:

"Simpson was anxious to sell the club and to punt the line about "what a brilliant club this is and how well we are doing"."

The quote sounds a tad familiar does it not? Interesting given that the circumstances are a little similar. Madejski runs a secret ship popping out the propaganda telling us how wonderful things are, yet we obviously have financial issues that need addressing. Granted, Madejski doesn't appear to be a shady character, and this is mere speculation, but it is, in my mind, one to ponder. Given the recent black hole filled by player sales, a scenario that, IMO, is likely to happen again this summer, it may end up happening to us. Christ knows what relegation would do...

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Re: Generic clubs in financial crisis Thread

by Terminal Boardom » 09 Dec 2009 17:16

Cracking stuff Handbags. It does make one think. Now, how much money is the Station Hill redevelopment going to need???

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Re: Generic clubs in financial crisis Thread

by TBM » 09 Dec 2009 17:21

http://news.bbc.co.uk/sport1/hi/footbal ... 402159.stm

Unibond League side King's Lynn wound up by High Court

King's Lynn have gone out of business after they were wound up in the High Court in London on Wednesday.

The Unibond Premier Division side, who were formed in 1879, had mounting debts and a near-£70,000 tax bill.

A potential investor allegedly pulled out of a deal to save the club late last week, leaving chairman Ken Bobbins not enough time to find an alternative.

The Linnets were sixth and their last game was a 2-1 defeat by Retford United in the league cup on 24 November.

Player-manager Carl Heggs revealed last week that all the club's staff bar himself and local-based goalkeepers Danny Gay and Ally McAnally had left for other clubs.

Earlier this week, Bobbins confirmed that an anonymous individual had been in talks regarding a takeover, but the Football Association's ownership regulations got in the way.

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Re: Generic clubs in financial crisis Thread

by Rev Algenon Stickleback H » 09 Dec 2009 18:51

Uke Why not just allow Darwinian principles to work and let the clubs go bust

New clubs will eventually rise to replace the old over the next 20 years or so

Keeping the clubs alive does not improve the "Meme pool"

There would probably be about 10 or 12 new clubs in the top four divisions if this happened - about half a division of new talent/faces


The problem is that once a club goes bust, that's usually it. If Reading went bust that would be the end of professional football in Reading forever, unless some rich tycoon with more money than sense built a new stadium and created a new club.

A "Darwinian" world would see about half of the clubs in the country die out, if not more, and few of those would go bust because they are competing in a congested market. Any one of Reading, Oxford, Aldershot, Swindon or Wycombe could fold, for example, and none of the others would pick up any noticeable support as a result.

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