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The precarious position of clubs in administration

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Matt Slater | 14:54 UK time, Friday, 23 December 2011

Over the last few years, Brendan Guilfoyle has been called a hero and a liar, a saviour and a crook. Lauded in Luton, praised at Palace, the affable accountant is a pariah in Plymouth.

And it is this most recent experience - his stint as Plymouth Argyle's administrator - that has caused Guilfoyle to have a Jerry Maguire moment.

Fellow devotees of the film will recall the "mission statement" the sports agent tapped out during a crisis of conscience: his agency needed to be more honest and personal, which could only be achieved with fewer clients. His colleagues said they loved it to his face, while they engineered his exit behind his back.

This week, Guilfoyle published a blog titled "Football clubs - are they businesses worth saving?" The product of a Plymouth "post-mortem", it finishes with a set of promises for how football insolvencies should go in future. It is coherent, sensible and completely unworkable, a point Guilfoyle acknowledged with a wistful chuckle when I pointed it out.

That does not mean his warning should be ignored - far from it. Amid the wishful thinking is a stark message for British football: we won't have to wait long for the next A&E case and next time the patient might not make it.

And it isn't just Guilfoyle who thinks this.

Having read the Leeds-based insolvency practitioner's appraisal of the landscape for failing clubs, I asked two other well-known "IPs" what they thought about the coming year or two. It was grim stuff.

Gerald Krasner, of AFC Bournemouth and Leeds United fame/infamy, was even more pessimistic than Guilfoyle, while Andrew "Pompey" Andronikou admitted it was now almost impossible to walk away having pleased everybody.

Plymouth Argyle were saved after the local council agreed to buy back their Home Park ground

Krasner's comments were particularly startling.

"The world has changed, the buyers just aren't there anymore," he said. "A lot of people want to own a club but they don't want to write a cheque.

"The market for British buyers has disappeared and that leaves only overseas bidders, which brings a different set of problems.

"Frankly, there is no economic argument for buying most of these clubs - it is political or emotional.

"I said a few years ago that 10 could disappear by 2020. I might have got that wrong but there are two or three on the brink right now and at least one would surprise you."

It was in March when Plymouth Argyle ran out of money and entered administration. Guilfoyle, fresh from successful rescues at Luton Town and Crystal Palace, was put in charge and the countdown to a fresh start began. That countdown finally finished at the end of October.

Mission accomplished: Guilfoyle had fulfilled his duties as an officer of the court, got the best possible deal for the creditors and avoided presiding over the death of a cherished community asset.

This, however, glosses over eight months that saw last rites administered at Home Park half-a-dozen times, staff go unpaid, the club's most valuable assets sold, a state-owned bank accept a huge loss and Argyle sink to the bottom of the Football League.

That period also saw serious damage to Guilfoyle's reputation as a clear-sighted operator in a murky world.

Why? The short answer is that, if Argyle was anything other than a football club, it would have been liquidated. Under these circumstances, any rescue is going to be fraught with compromises.

The slightly longer answer is that he backed the wrong horse, a fact he acknowledges in his blog.

Many fans told him at the time that selling the club to Truro City chairman Kevin Heaney was a bad idea and they were proved right.

The property developer's plans unravelled in catastrophic fashion but it is important to note he was the only one to emerge from the preliminary tyre-kicking phase with cash to keep the club afloat and pass the bank's time-waster test.

Guilfoyle misjudged his man, for once, but his choice was limited. The club's eventual saviour, local businessman James Brent, was still waiting in the wings as a buyer of last resort. So it was Heaney or nobody.

It's a dilemma Krasner knows well from his time at Bournemouth, where he once started a news conference by telling everybody he did not know what to say only to have a colleague wave a just-delivered cheque at him from the back of the room. Panic over, see you next month.

What upsets Guilfoyle, though, is how bad relations got with the fans. Having tried to keep supporters in the loop, his efforts to salvage the Heaney deal enraged large sections of the Home Park crowd, who used every means available to heap pressure on the administrator, his firm and the authorities.

Guilfoyle understands where this emotional response comes from - he told me more than once that he too is a football fan - but is dismayed at how poisonous the atmosphere became. It is for this reason he has written his own "The Things We Think and Do Not Say" memo.

In future, Guilfoyle says he will be more honest at the outset about the club's prospects of survival. He will also refuse to sign any confidentiality clauses and commit to keeping fans updated via websites created for the administration process.

But most importantly there will be a tight deadline of no more than a month for the rescue to happen and the money will have to arrive in full or the club will be shut down.

Just think about that for a moment and remember Krasner's warning of more administrations to come. Sobering, isn't it?

Andronikou, currently attempting to save Portsmouth for the second time in little over a year, said Guilfoyle's recipe for the future was a nice idea but impossible in practice.

"We would all like to go into these clubs, do a deal in a couple of weeks, get paid and get out but that will never happen," he said.

"Football clubs aren't factories. There are local and social implications and you have to bide your time. After all, if you do the deal too quickly you'll only be criticised for not marketing it properly.

"But there is no doubt there aren't as many of those 'mad people' football clubs have relied on, not in this country anyway. Sport is still a sexy investment but there is less money out there."

So, to paraphrase Maguire's mission statement, there is a cruel wind blowing through our business, it is time to think smaller, more personal and more manageable. Perhaps that goes for us fans too?

And as well as my blogs, you can follow me when I'm out and about at http://twitter.com/mattslaterbbc

Comments

  • Comment number 1.

    I think the view taken by the administrators is the correct one - a month in admin and if no buyers or at least due dilligence commenced then it's a shut down. Players released, assets sold to pay creditors and a mechanism to award points to the other sides in that division.

    I know that sounds harsh but the clubs are never "community assests" until things go pear-shaped and the CA line of defence should be the watchword of expenditure in the first place.

    Personally this is a wake up call for the following IMHO:

    x 2 18 team top divisions - PL + C'ship
    x2 1 "national division" i.e. League 1 (that no reserve teams can play in)
    x2 16 team "regional divisions" i.e. League 2 North and South (that reserve teams CAN play in)

    Then everything below that is semi-pro teams. The reserve teams of PL and C'Ship sides can take over the slots of teams going out thru admin/liquidations and/or a desire not to turn FT pro. The books are opened every year to auditors and you need a license to operate otherwise you're out and relegated to bottom tier of semi-pro football.

    Harsh but fair.

  • Comment number 2.

    Touch wood, it means the extinction of pompey. :-)

    Merry Xmas.

  • Comment number 3.

    I wonder which of these gentlemen will get the forthcoming gig at Coventry...

  • Comment number 4.

    With several Championship clubs losing £10m a year and businessmen like Nigel Doughty & Peter Landsown crying "enough", there will be more administrations. Even Premier League clubs such as Bolton continue to pile up increasing levels of debt. Venk's at Blackburn don't appear to have 2 pennies to rub together. Will a further parade of greater fools keep appearing to take on these ailing clubs? I don't think so.

  • Comment number 5.

    @ 2,3,4 & Matt - if it wasn't football, then in no other business sector, although perhaps banks, would these business practices succeed.

    I will stand by the fact that there are far too many teams in England & Wales - there certainly are too many in Scotland!

    Whilst I'm not advocating London United I think if you're watching a Conference North side then instead of watching skint opponents and knowing that you're side can't afford promotion but can survive season to season then wouldn't you rather watch some quality opposition in the form of PL reserve sides - also this I think would help you're team develop and bring in income.

  • Comment number 6.

    It has to be said the administrators do a wonderful job. Owning a football club makes no business sense whatsoever, and getting businessmen to buy them in such a short space of time is incredible. It's no wonder it's getting harder. Sadly many clubs will face liquidation in the near future.

    As a Bristol city fan, I count myself lucky we've got such a great former chairman now major shareholder in Steve Lansdown. He's mega-rich but runs the club astutely, investing on occasion but not going over the top. I'd say we're one of the more solid clubs financially in the championship, yet we still had losses of 11m last year, due to an overlarge squad and therefore an over-inflated wage bill. We desperately need to sell off some fringe players in January, but we also need a couple of players brought in to help us stave of relegation. That is the balance clubs have to make, and it's a nigh on impossible challenge.

  • Comment number 7.

    Around 50% of the teams in Germany's 3rd and 4th division (Bundesliga being the 1st) are now the second teams of Bundesliga outfits. There are 18 teams per league. The 5th division is more or less amateur football. So you are talking about 50 to 60 professional football clubs in a country of 80 Million. Apart from being rich man's toys there is not a lot of scope for business success in football.

  • Comment number 8.

    @5. Whilst I agree that there perhaps are too many sides in the country, football in this country has far too much history to just do away with the smaller teams just because they aren't going to be as successful as a team higher up the league pyramid. It's a ridiculous idea.

    I support Scunthorpe United, but lived in Brigg for many years, a 15 minute drive from Scunthorpe. Brigg town are 1 of the oldest football teams in the world. What you would be suggesting would be to do away with a 150 year old football team simply because they can't compete with their large local team. It will never work

  • Comment number 9.

    What is so difficult about spending 99% of what you earn and having contracts adjustable to the division / revenue they are getting? (like any other business).

  • Comment number 10.

    Don't know exact details but the top sides in Spain also have B sides playing in the lower divisions. The problem is: which teams do these reserve teams replace? You can't just go to a team and say sorry, you're not a big enough club, we're kicking you out of the league!

  • Comment number 11.

    The reality is that until a large club goes bust, most other large clubs will not entertain the idea of living within their means.

  • Comment number 12.

    The trouble with some administrations are that the same clubs pop up time and time again.

    Take Portsmouth.

    Now approaching their third administration in 10 years, and the Football League/FA do nothing - there's a trend at that club, and every owner seems to be worse than the last.

    I feel sorry for their fans (to a point) but just a Google Search holds more weight than the FA's Fit and Proper Persons Test. Let's face it, half of Hampshire is still convinced that Ali Al Faraj didn't even exist, yet he still passed the FAPPT.

    I look forward to seeing how Mr Andronikou gets on selling Pompey, no doubt the FA will do all they can to keep them afloat...

  • Comment number 13.

    You reference Jerry Maguire as "they engineered his exit behind his back" Jerry worked for himself in the film, so this makes no sense as he only had 1 client too didnt he?, So not sure what you mean here? Unless I misunderstood this :) merry xmas by the way. A football club is simply not a business, it is a cow for the footballers to milk and get rich quick.

  • Comment number 14.

    I'm a genuine lover of non league football, and regularly go to watch my local team' gainsborough trinity' home and away. Scundave said about these non league clubs being a part of their small community. I know if gainsborough, brigg, retford worksop or any of the other local non league teams were to go under, it would leave a massive hole in their communities. I can't imagine that 1 month is a long enough time yo find a prospective buyer for my club if it hit the fan.
    Give the fans and local communities time and the money will appear.

  • Comment number 15.

    Personally I wonder what will happen if / when Everton fail to find a buyer, they were at one time after the 2nd WW one of the big five now, it seems the can hardly stay afloat, how is that? No big wage structure, large amount of money via tv, where is all the money going ?

  • Comment number 16.

    Agree with #11, until a high-profile team actually goes under nothing will change, and in a perverse way and with the utmost respect to their fans I am almost hoping to see a Portsmouth or even an Everton disappearing - nothing against those teams themselves, it would just send out a shockwave that might actually kick-start some genuine reform. Unfortunately since the PL's inception there has been a consistent and alarming escalation in wages which isn't proportional to the increase in income generated by TV deals and increased gates, and it shows no signs of slowing down. Teams are forced to offer wages they know they genuinely can't afford in order to compete with those who can, in the faint hope that once the debts become too crippling they'll be able to rely on a billionaire fan with more money than sense, or a foreign sugardaddy who wants a new toy. Even in the Championship it's considered a success if you're only operating on a minor loss (see #6). Hopefully Platini's financial wishful thinking will have a genuine impact on this, otherwise there is an all-too-real potential for a footballing equivalent of the boom-then-bust cycle of the Depression.

  • Comment number 17.

    @1 I am always suspicious of people who start calling for a cut in division size to 18 teams. That would only benefit the greedy clubs at the top of the tree - you're not a supporter of one of them, are you?

    Part of the reason teams like Plymouth and Palace and Luton struggle is because too many people don't get behind their 'community club' and go glory hunting with Chelsea or Man United.

    A salary cap is the best answer to the erratic finances of football - it would stop cash-strapped clubs spending beyond their means, it would prevent the Man Citys from inflating salary and transfer costs, which in turn would stop the chasing pack from overspending and getting themselves into trouble in the first place.

  • Comment number 18.

    Frank_Heaven really interested in how you conclude that Man City inflate wages? For who? Did Man City inflate the transfer market for De Gea, Jones or Young? Or Andy Carroll, Luis Enrique or Charlie Adam? Maybe Mikel Arteta, Per Mertesaecker or Andros Santos? Or maybe none of the above because the only wages and prices that Man City inflate are the ones they have to pay and this herd instinct that claims influence over the entire market is a spurious and specious one. Have City paid over the odds for the likes of Bridge and Adebayor? Almost certainly. Has this effected the entire transfer market? Get a grip.

  • Comment number 19.

    @il_birbone Note I use the term 'Man Citys'. There are several clubs with oodles of wealth who can outspend the rest several times over, and yes, this has affected the entire transfer market. Liverpool would not have paid the stupid £35m fee they did for Carroll if they hadn't received the even more ludicrous £50m from Chelsea for Torres.
    Trying to remain competitive, and keep up with such spending, is what gets clubs into financial trouble. It's happening right now at Everton, it happened with Portsmouth, and it happened with Leeds United when Peter Ridsdale "lived the dream".
    Take a club like Aston Villa. They had the guts ripped out of their team by Man City's spending power. Villa could have hiked the wages of Milner and Barry to hang on to them, but they knew it would have blown their budget, and caused the rest of their squad to demand wage increases too. So they let the players go, but as a result, Villa fall back into mid-table obscurity and their fans are unhappy. So they end up spending £24m they can barely afford on Darren Bent...
    If you can't see how that sequence of events is causing transfer fees and salaries to spiral upwards, then you're the one that needs to get a grip.

  • Comment number 20.

    I said a few years ago (during the last pompey crisis) that the only way football clubs would stand up and take notice of the potential trouble they could be in is if one (and a relativley large one) went out of business. This is a horrible thing to consider (especially for those associated with said club) but I do think most clubs live in the 'it will never happen to us' club and maybe only truely seeing the implications of poor business practice at the highest level will make the penny finally drop.

    @17 I agree with you that a salary cap is the best way for the FA/premier league to manage this situation. However as I have had pointed out to me by a friend (when we discussed this topic) on numerous occasions this is only really possible if it is implemented by FIFA or UEFA as any salary restrictions in England not implemented at atleast a europe wide scale will see players moving aborad for the money (look at the situation with british based rugby union players moving to france).

    @18 I think the entire transfer market is influenced by the big few clubs who inflated salaries and prices for players. Man City are not soley responsible (Chelsea did it when Roman first took over) but this attitude of whatever you're paying them we'll beat has to stop. Also buy paying somebody in the premierleague 200k a week City (and others) are saying that these wages are acceptable and this does inflate salaries across the board.

  • Comment number 21.

    Some of the commenters on here are clearly not thinking straight.

    It simply doesn't matter how many clubs there are, how many divisions or whether they are regionalised or include reserve teams. Wherever you have an open system that allows team to be promoted/relegated and advance themselves there will be groups of fans at every club who want to "push onto the next level" regardless of how unrealistic that ambition is.

    None of the other suggestions like salary caps, forces semi-professionalism, restricted spend, restrictions on number of clubs in an area and the like are even legal in reality. Every league that applies salary caps does so with either the aid of licences (closed shop - NFL, Rugby League, NBA etc.) and with largely little competition from other leagues.

    The real solution is simple, leave the clubs go under. Fans will learn soon enough that financial responsibility is necessary that way.

  • Comment number 22.

    @16

    The reason I'm happy is because we, in the current climate, managed to make a marginal profit in recent seasons, and it was only really this year we slipped into he red.

  • Comment number 23.

    If we only talked about clubs that made money, most of the EPL would default too. The structure is wrong, the prices are wrong. Dont believe the SKY TV hype.

  • Comment number 24.

    The biggest problem with modern football was, and will continue to be, the Bosman ruling. As long as players can hang the sword of Damocles over the head of the their manager/chairman every time they fancy a new mansion/Italian motor, the former will react by offering ever more ridiculous salaries.

    Yes this is partly the modern fans fault due to their insatiable and unrealistic demands for constant success, but it's mainly down to players greed. You simply don't need £100,000 a week. This gets even less funny lower down the League. Players at the 'lesser lights can still command frankly, bearing in mind the gates, silly wages, and it's at that level that crisis has cropped up most often in recent years.

    I fail to see why a wages cap however, would be illegal? Any industry can cap wages, and often do. There is nothing in law that says any business 'must' pay a certain level once you are over minimum wage. Many sectors simply will not pay than an accepted rate, one that's regulated by a central body. It cannot be restraint of trade as you are free to work at any club you want, you just won't get paid any more.

    Frankly, something along those lines need to be done before it's too late.

  • Comment number 25.

    As a PNE fan, and with David Ridsdale now on board, Trevor Hemmings bailing the club out on a monthly basis (which is an untenable situation)... I worry about the sustainabilty of clubs... Which will fold next?

  • Comment number 26.

    BCFCTim - I thought Bristol City made big losses for the last 3 years? As a Plymouth supporter, I wouldn't wish administration on anyone so I hope for your sake that Lansdowne doesn't pull the plug on his investments.

  • Comment number 27.

    Trellzaboppin - I hope it doesn't happen, but I fear the worst for PNE - similar size club to PAFC in terms of fans and now Peter Ridsdale has joined. When he's around, it usually means administration isn't far away I'm afraid.

  • Comment number 28.

    Sobering stuff. And not-all-that suprising; these are changed times.

    Thanks Matt. Another excellent piece.

  • Comment number 29.

    It really is going to take a club with the stature and history of an Everton or Portsmouth to go under before we all take notice. The whole of football needs a shake up meaning we scrap the EPL and move away from it sharpish. We need the top 2 leagues followed by North and South 3rd divisions. Clubs should be forced to have at minimum, 5 home grown players and maximum 5 foreign players. I dont buy the EU laws blah blah and we need a salary cap also.

  • Comment number 30.

    @1 - support a team with money, do you? Clubs hardly ever went through financial difficulties in the years before the Premiership. I think the Prem and TV rights have got a lot to answer for, not to mention the ridiculous wages players expect these days. Smaller teams get into trouble because they can't compete.

    We need a bit of fairness to be shown by creditors, too. If club A owes the taxman five million and it's a Prem club, why should the rules be different from club B who owes 500k but it's in League Two? I'll bet that there's not a team that's gone into admin so far (with the possible exception of Portsmouth) that owes half as much money to its creditors as an average Premiership side.

    And @2 - wow, I'd NEVER wish for any club to go bump. not even my team's local rivals. I wouldn't even wish it on Man United!

  • Comment number 31.

    The numbers of teams are irrelevant but having proper auditing procedures and licensing systems in place are not.

    Part of the spending problem is fans expectations and the 'sugar daddy' model, particularly at the top-end of the game: year on year squad improvement and investment; and almost 'instant' success.

  • Comment number 32.

    Our problem isn't so much over paying players but we've got such an unnecessarily large squad. Players like nicky hunt and damion Stewart we pay a lot of money but they don't get in the team even with injuries - we put midfielders like kalifa cisse and cole skuse in defense instead. Hopefully they'll be a massive clearout in January.

    Also things like lowering attendances don't help - we're getting 3-4 thousand less now than a few seasons back when we reached the play-off final. Plus the council stalling over our new stadium (I mean who thinks a village green will be more beneficial to a city than a footy stadium!!).

    However, we are certainly not in crisis and there are a hell of a lot of clubs worse off than us. I suppose it does come back to what kalgoroth was saying that you're almost happy with your club only running at a small loss

  • Comment number 33.

    @30

    I wouldn't blame it all on the premiership. A lot of clubs struggled and nearly went bust back in the 80s but sadly we don't seem to have learnt our lesson

  • Comment number 34.

    Lord knows we all want a bit of a nest egg upon retirement, but the 5 and 6 figure weekly salaries are totally unjustified for the 'job' they do (or don't do.) Yes, you can argue that a footballer has a limited career - time-wise - but how many players go on to have another job outside Football altogether when they hang up their boots? Not too many, because they've been effortlessly turned into multimillionaires in just a few years. To an average Fan such as myself, this is a mindless road to take in running a business, and is severely detrimental to the players. It is indeed an 'ill wind' that is blowing harder and harder, and only damage will result.

  • Comment number 35.

    I think we'd see an immediate change all around if HMRC scrapped all Tax Relief that is afforded Companies for advertising of any kind. Sponsorship would soon dry up, salaries would have to be lower and perhaps the Players would be more mindful of their pennies when contemplating yet another luxury car for their collection, or sending their WAGs out shopping.

  • Comment number 36.

    There is nothing really new in all this. Go back to the 1960's and the scene was much the same, so were the predictions of clubs going out of existence. Acrington Stanley did and so nearly did Brentford when QPR got very close to taking them over for their bigger ground.

    Football has always attracted people who havr big ego's, some with more money than sense and some who have no real money to invest but give the illusion they have.

    At the heart of it is always OTT expectations of owners and fans alike and the ludicrous sums played for some players and their wages. Some clubs just don't get it that if are relegated you have to adjust salary budgets and expectations. If you look behind Plymouth's problem I am sure this would have the cause of their demise. Most lower league teams have been adjusting to the real world for some time, its a struggle but fans are starting to realise that survival long term is better than short term gain but possible extinction.

  • Comment number 37.

    I'm sorry Frank Heaven but you have failed to establish how anything has changed since the introduction of professionalism into football and that is what a transfer market will always do. Football has long been called a "prune juice economy", does that make it a good thing? No. But the finger pointing can be directed at any time at any number of clubs.

  • Comment number 38.

    @Saint_In_Staffordshire

    Just remember your club was recently in a similarly precarious position!

    The theme of this blog is a good one. I've been saying for a while now that football clubs aren't businesses, yet the business models they use are identical to if they were a big business. Too much emotion is involved in football. It isn't run properly from top to bottom. Wages and transfer fees have been left for decades to spiral out of control and we're now in a position where it's gone too far to make that much of a difference. You can set the same financial rules that are part of running a club in League Two, but there are always going to be loopholes, and until the wage cap is re-introduced we won't see any improvements. Simply because football is not a business and the powers in charge will pay out sill money with no regard for the consequences. Just look at Kevin Heaney throwing £300K away at Plymouth.

    How the hell the FA allowed yet another foreign buyer in at my club Portsmouth with dodgy money is bemusing to me. The guy that bought Notts County after he gave the FA a letter from a bank saying he had millions was just laughable. My money's on Crawley to be the next club in difficulties.

  • Comment number 39.

    Football IS a Business, but works in a way that I believe not many of us really understand. Quite frankly, I am of the opinion that it should operate as all other Businesses do, so I, for one, simply do not understand the concept / model on which it is allowed to continue - unrestrained.

    I am free to leave one Employer to join a different one at any time with due Notice given. No transfer fees involved anywhere other than Footy.

  • Comment number 40.

    I've been reading articles on how many football clubs will disappear in the next ten years for about the last 30 years. Maybe this time it will really happen, but something or somebody usually comes along when a club gets into trouble.

    More seriously for someone brought up near Preston, Peter Ridsdale... how? Why?

  • Comment number 41.

    This is a fascinating discussion which, as usual, is divided between those who support clubs with money and those who do not. Thus far, I consider that two keys points have been made:

    1. The Bosman ruling has put the real power in the hands of the players, allowing them to demand increasingly ridiculous wages which are unsustainable.
    2. The change in culture brought about by the onset of the Premier League which causes kids throughout the country to support 'winning' teams rather than their local community teams.

    For those who argue that the Premier League clubs should be allowed to field their reserve teams, I cannot think of anything worse. Manchester United, Chelsea, Liverpool etc already have far too much attention anyway and the whole structure of football is designed to ensure that those at the top remain there.

    Clubs should live within their means, even if they do not remain competitive and fans should start to lower their expectations. There is a huge fear of clubs folding but teams like Merthyr Town have done exactly that and have then started again. Merthyr had to start in the Western League 1st Division but they won that league and are now challenging at the top of the Premier Division for a return to the Southern League Division 1. Playing your football at that level is not all that bad and it is exciting to watch the new team gradually regain their old status. Ask Newport County fans, who were a league club that did fold - back in 1989. They are now back in the Conference and have been enjoying the journey.

    Big clubs should be allowed to fold, reform from scratch and start at the bottom of the football pyramid. Those who have to suffer this fate may go through great pain but at the same time you will rediscover the game again, rather than the money mad business machine that it now is in the upper echelons.

    Somehow, we also have to start increasing the profile of local clubs and move away from the glory supporting idolisation of clubs who win all the time.

  • Comment number 42.

    I would be surprised if any club going out of business made any difference at all. What difference would it make if Pompey went out of business to anyone other than their fans and fans of Southampton? Pompey could easily have been wound up in the High Court last time around. That should have made people sit up and take notice, but I can’t see it made any difference. The same levels of debt could happen to another club at any time. As far as I’m aware the football authorities had so little interest that there was not even any serious investigation to what happened at Fratton Park.

  • Comment number 43.

    A salary cap is the only way wages will be brought under control in the Premier League, and there's nothing illegal about it. Rugby league has had one since the mid-1990s before licensing was recently introduced. But some people say it wouldn't work in football, the players would move to other leagues abroad, it would be unworkable etc. Maybe they just don't want to upset the 'big clubs' who want to pay players whatever they demand ? But for many Premier League clubs, wages are largely being paid by the Sky tv money and will that last forever ? The % that tv money contributes to many PL clubs turnover is similar to the % that players wages contributes to those clubs' costs.

  • Comment number 44.

    @41

    Very good point, folding isn't the be all and end all. You just have to look at teams like Wimbledon or accrington Stanley to see football clubs can be resurrected. And I agree with you entirely that this is what football is all about, it's not some plaything for Arab billionaires like it seems to be becoming.

    Reminds me of one of the great footballing stories of recent years: fc united. Manu fans unhappy with the ownership formed their own team and reached the 2nd round of the FA cup. Who knows, maybe in 5, 10 years they might be in the football league?

  • Comment number 45.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 46.

    Man City have (Probably still do) operated with a wage bill that EXCEEDS THEIR ENTIRE TURNOVER

    that's how!!!!! are you really that dumb!!!!

    mentioning Utd and Arsenal for example - city have spent on average £25mil per season on transfers since 1992 whilst Utd have spent on average half that and arsenal just over £1mil per season

    City (without charity) would be teetering on the brink of the championship AGAIN!

  • Comment number 47.

    comment 46 was for deluded il_birbone

  • Comment number 48.

    @42

    Would Southampton really want to see their arch rival to go off the map? The derby matches are always the biggest of the season, local rivalry and bragging rights. Thats what makes football in England better than anywhere else in the world.

  • Comment number 49.

    Only in Football...

    When Pompey were last in the High Court for the winding up order by HMRC, had they been any other Limited Company other than a football club, they would have been wound up - there and then.

    I look forward to the results of the forensic accounting of the 'old' club - IF the results are ever made public.

    Many football fans would be livid (as some Pompey fans are) regarding the way the authorities have dealt with it...

    Google 'Saints Forum Pompey Takeover Thread' for a laugh.

  • Comment number 50.

    @5 - do you support a football club?

    My team, Woking, are Conference South. If I am reading what you have said correctly, you're indicating that I should give up hoping for us to one day reach the Football League, and instead support Chelsea Reserves? Or that come Boxing Day we should be playing Reading B rather than Farnborough?

    If so, and I'm stuggling to take your comments any other way, then I can only conclude that you A) support one of the bigger Prem teams and are arrogant enough to believe that English football ends there, or B) don't support anyone and don't realise that the majority of football fans, at most levels of English football, watch their team because of a loyalty towards them, for whatever reason, rather than the level of football they play at?

    I completely agree with all the comments, including yours, that there needs to be more control over money spent on wages. But I also think that in order to such a measure to be successful there needs to be a more level playing field in the first place i.e TV money split evenly and sharing gate receipts, otherwise any salary cap that restricts spending to a % of turnover will immediately play into the hands of the global brands, particularly Man Utd.

    As for the various comments regarding Bosman, yes it has given more control to players. But I see this a similar to raising a kid - what is wrong with saying 'no'? We've had more than our fair share of overpaid timewasters over the past decade and more...

    @38 - interesting what you say about our "friendly neigbours" from Gatwick! I've also wondered how they can spend so much on wages, quarter of a million on a non-league striker, within a couple of years of coming out of administration. Have we ever found out who actually owns them?

  • Comment number 51.

    Whilst I have a great deal of sympathy for the argument that small clubs are a very important part of the game, and in many ways preferable to their richer cousins - there is absolutely NO WAY that we should consider them (or, indeed, the larger clubs) as sacred cows of the community and deserving of state support through local councils or leniency from the tax man.

    Let's be honest, football is hardly a rare cultural phenomenon, in danger of fizzling out - nor are these smaller clubs the bedrock of life for vulnerable members of the community. They are not vital for anything other than the vanity and elected lifestyle of their fans. There are a hundred better managed clubs ready to take their place - if they are mismanaged and fail administration, put them down.

    There are many, many better causes allowed to perish.

  • Comment number 52.

    There is, of course, one further detail that needs to be brought into the equation which, to the best of my knowledge, nobody has yet mentioned on this blog. This refers to the distribution of payments, which has become ever more disproportionate towards the Premier League. With so much money available through television deals, a much more even distribution of income would have helped ensure the survival of all football league clubs (though one can never compensate for total financial mismanagement).

    A more even distribution of income would also have ensured a more level playing field in terms of resources and given teams a much better chance of competing without the need to spend enormous sums of money. Of course, that would have meant the likes of Swansea would still have the opportunity of getting promoted and finishing second in the top flight the season after (as happened in the early 1980s), which is to the detriment of the big clubs.

    The big clubs argue that they deserve more of the money because they are the 'glamour' clubs who people want to watch. However, this is in some ways a circular argument because the very reason that they have become such glamour clubs is because they have dominated in terms of visibility on television and through their greater capacity to spend on players.

    There will always be issues and challenges in football, but the English league (with Welsh teams) has traditionally had the greatest capacity to excite, great competitions such as the FA Cup and the possibility of tiny clubs rising to a very high level. We need to try and return, in some small capacity, to those days.

  • Comment number 53.

    @48 See post 2. The answer is yes Southampton fans want Portsmouth to go out of business.

  • Comment number 54.

    @50 You are so right about those that spout on about regionalisation of lower leagues and part time players. They generally have no idea of football outside of the top flight.

    One of the most arrrogant interviews I have ever read was that with Peter Kenyon when at Chelsea. Advocating effectively PL 1 and 2 and regional leagues with part time players for everyone else , his only interest was furthering the nest of top Premiership teams.

  • Comment number 55.

    Blogs like this should be a wake up call for football fans everywhere. For example Blackburn fans, yes you are bottom of the league, but you aren't likely to go into administration any time soon.

    Quite a sobering article in that respect. I still struggle to understand how people can run their football clubs so poorly.

    The new financial fair play rules will help, but it shouldn't take things like that for clubs to run as a proper business and in a profitable manner.

    The ideal football model of producing your own players from youth academy's, is not highlighted in this article, but perhaps it should be.

    I would be interested to find out how many clubs actually operate at a profit each year, I imagine I could count them on one hand.

  • Comment number 56.

    @53

    I don't understand that at all. I hate Man Utd, but I would want them to go out of business because without that rivalry, what else is there???

    I personally wouldn't want any club to go out of business.

  • Comment number 57.

    All clubs should be treated like any other busniness. Most of the time clubs are owned buy people to boost there own ego's. Through out the history of football clubs have always been owned by dubious people. Portsmouth have had many even before Mandaric owned the club.

    My answer to the problem is:
    1) wage cap, no person is worth more than £40,000 per year
    2) have a transfer cap off £1m
    3) limit the amount of loan players (to many at moment and they don't care about the club)
    4) make all clubs have a youth policy
    5) all clubs to be community clubs, owned by the fans
    6) limit the the broadcast monopoly of SKY
    7) Regionalise the leagues and have playoff s to determine Champions
    8) create a British Cup by merging the English, Scottish league cups and what ever cups they play in wales & n ireland
    9) limit the amount of over seas owners and players. clubs now discriminate against English born players by constantly buying foreign players.
    10) have one football governing body and make it a 21st century organisation

  • Comment number 58.

    I don't think football clubs should be treated differently from other businesses. The truth is that if a club has enough support then it can generate the revenue it needs to stay in business appropriate that level of support. If not, it should be allowed to go out of business or to reduce its expenditure to a level that it can afford. That might mean playing at a lower level in the pyramid but, if so, then so be it. To me, if a club is "the centre of a community" - a "community asset", if you like - then that club would not have gone bust in the first place. And, if some idiots want to rack up huge amounts of debt, either an overly optimistic owner or, more probably, a bunch of fans who have a exaggerated sense of their own entitlement, I don't see why local businesses should be put out of business because of it. Neither do I see why the taxman (and ultimately, the rest of us) should pay for it either.

    Neither do we need to invest reams of arbitrary rules. There only purpose of those rules would be to allow clubs to compete above the level which the size of its fanbase or the depth of its owners pockets allow. This is not new, it has always been the case. Liverpool broke the bank to sign Ian Callaghan. Bryan Clough often travelled to meetings carrying suitcases of the Derby owners cash, Man United has been breaking transfer records for years and continue to do so. Chelsea and Man City are simply more recent exponents.

  • Comment number 59.

    If you look around the football pyramid, there are plenty of clubs who have gone bump and returned from the dead. Accrington, Stanley, Chester, Wimbledon, Bradford PA etc etc.
    I support Bolton Wanderers in the English league. They owe over a hundred million pounds to Eddie Davies. He could in theory pull the plug at any time, highly unlikely but it could happen.
    Not in the slightest bit worried about any future bankruptcy, we would surely start again. Although small in premiership terms, Bolton have enough support to regroup and fight their way back into league football.
    Looking at the likes of Portsmouth and Preston, both clubs have decent hardcore support. Cities such as these will always have a football club, premiership maybe not but that isn't important. It's about the local community having a club to support on a Saturday afternoon.

  • Comment number 60.

    Bald patch, way to miss the point. So now football clubs are run like any other business are they? That is the core premise of the entire article, we have an emotional attachment that does not stand up to financial scrutiny and people like you trot out some Fair Play opprobrium like you have discovered fire. City are owned by a rich man who is well within his rights to choose how he spends his money much as it offends your socialist principles. I want you to show me that City have distorted the market more than any other club. The short term trite that City ripped the guts out of Villa is no more true than Utd buying Joe Jordan and Gordon McQueen from Leeds or any other number of events but you can't remember that far back.

  • Comment number 61.

    59...ok in principle regarding 'community clubs' but Pompey are doing their best to make their remaining fans fed up by trying to fleece the family of a club legend by charging £500 for use of a room at the club for a wake of all things. The guy himself was a club legend - when the fans get treated like that, is it any wonder some get into trouble?

  • Comment number 62.

    Next on the list will be Port Vale. Some very dubious activity over the last few weeks by our current board of Directors. The last bunch said that they would only hand over the reigns to someone who could ensure the future of the club - yeah, right. Debatable issues regarding shares, allegations that people were voted onto the board before shares had been purchased, CEO has resigned within 6 months of taking on the job, rumours of Vale Park being re-mortgaged with a company from Gibraltar.

    Admin here we come.

  • Comment number 63.

    The Guilfoyle saga at Argyle is far from over.

    He has issued invoices to fans on Christmas Eve for bills that fans paid during his time at Argyle, but he is now saying fans owe P and A money. None of the invoices state what the invoice is for, simply that money is owed to P and A, and that they will not discuss the bill over the telephone.

    This is calculated revenge against Plymouth Argyle, causing distress to ordinary people on Christmas Eve.

    Brendan Guilfoyle is bad news for any football club, his incompetence almost destroyed the club, and now he's bitter and out for revenge.

  • Comment number 64.

    Check this out - any reasonable person will be sickened by Guilfoyle's actions.

    http://www.pasoti.co.uk/talk/viewtopic.php?f=30&t=62017

  • Comment number 65.

    pinnicleoffruit, you missed the first 20 minutes of the movie, didn't you?

    #24, so it's fine for the mega-rich, the Berlusconis, et. al., to try to be rich and famous, but not for sports players? Maybe the Bosman ruling isn't so much the problem as institutional nature of the game?

  • Comment number 66.

    Cannot the FA impose restrictions on how much debt a team is allowed to carry? A percentage of its turnover over a period of 3 years or so. I get it that this would benefit clubs with rich owners but at least there would be some boundary that teams would have to work towards.
    I am Canadian and one of the things I like about soccer/football is it's survival of the fittest mentality, be very careful when talking salary cap, the next step will be eliminating relegation/promotion and then player drafts where the worst team is awarded the best young prospect, how much sense does that make??

  • Comment number 67.

    Everton fans demonstrate against their own club because they want a Sugar Daddy to fritter away money so they can finish 6th in the Premiership.
    The Nanny State generation of fans that want it all now, born out of the economical miracle of the last two decades.
    Delusional expectations and the cold sober realities of real conomics and austerity.

  • Comment number 68.

    Newcastle Fans have a Sugar Daddy worth one thousand million pounds, he will keep Newcastle in the Premiership as long as he is the owner, Mike Ashley also realises the futility of the Economical risk and gamble of finishing 7th do not warrant bankrupting a club or wasting £100 million, better odds are to be had on a roulette wheel.
    Mike Ashley is ambitious for Newcastle and is positioning Newcastle so that when the Sugar Daddy bubble bursts they are ready to step in and they will.
    Newcastle fans are opposed to their owner, his wealth and such good luck. They are just as deluded as the Everton fans

  • Comment number 69.

    Blackburn Rovers have the Asset Strippers in. The purchase was £23 million which is remarkably cheap for a Premiership club and they stand to make lots of profit if they get lucky and finish mid table and sell a few players along the way. Entrepreneurial Profiteers want to make a profit, they are not interested in breaking even, they are not interested in running a football club as a football club that is there for the purpose of sport and its enjoyment and all the social aspects that come with it. The club is utilised as a vehicle that is positioned to make big money. They can sell Blackburn in two years time and stand to profit by possibly £100 million ?

  • Comment number 70.

    Randy Lerner at Villa had a dream and a vision, he backed the manager with big money, they speculated and bought players like Milner, Young and Downing and gave them a platform to develope their careers and grow success in an organic way, how exciting was that ? They stood on the precipiece of greatness just before the mercenaries that are Milner and Co deserted the fans and betrayed the vision and dreams of Randy Lerner.

  • Comment number 71.

    Liverpool fans think they have Sugar Daddy owners ? Daniel Comolli has guided the owners towards the purchase of young footballers, they can all be sold in three years time for double what they cost ? The players can also help to generate success, profits and attract promising youngsters. Sound business by speculators ? maybe ? But Sugar Daddys they are not.

  • Comment number 72.

    Salary caps will not help to attract the best players. Salary caps and Fair Play Financial rules are riddled with a whole plethora of never ending Loopholes and along with Players agents stand to create the birth of a Football Black Market !

  • Comment number 73.

    Tough gig being an administrator for a (any) club many people love and care for. Find it hard to criticize these guys who (As an Accountant myself) seem to work miracles.

    A lot of clubs would have been no longer with us and that would be a shame.

    As fans we really need to support these guys who try to save our teams who have been previously mismanaged, usually not with bad intent.

    I support a small team Oldham, not wealthy but glad to say well managed and although we don't need a Mr Guilfoyle I'm glad he is around.

    Merry Christmas to everyone.

  • Comment number 74.

    The trouble with football fans in this country is that they only care for the well-being of their own club and not for the good of the game in general. This selfish, parochial mentality is manifested in some of the comments above, how can fans wish for other clubs to go out of business is beyond my comprehension but it is all a reflection on wider society where greed, individualism and a ' stuff you, i'm allright Jack ' attitude prevails.

  • Comment number 75.

    Thoughtful blog with many interesting comments. Bottom line is about cash flow and investment. TV money should be distributed more equitably among PL, FL and Conference with a condition that a certain % is invested as part of the capital structure of the club to consolidate the club's financial base. Players' salaries to be capped. (Like the comment about legal minimum wage - perhaps the starting point for all palyers is £6-50 an hour negotiated up to a cap!!) Seriously though this is a difficult issue as, though clubs are businesses they are also social entities essential to the wellbeing of communities. Yet in these times of financial pressures on all, spending on social activities is often a low priority - yet football provides an outlet to relieve, briefly, these problems. Wiser heads will hopefully prevail because I don't know the answers.

  • Comment number 76.

    Football fans like to think that their clubs represent their community, but the reality is that only a very small part of the community have enough of an interest to turn up. The rest probably don't care one way or the other. To use an example, Portsmouth has a population of over 200K, yet at a recent game only around 12K actually turned up. If more turned up, the club would have fewer problems. I find it difficult to understand how the interest of 5% of the population can be described as an "essential" part of the community?

  • Comment number 77.

    Football is a business and should be treated as such. Ideally a Football Club would be an organisation that is run by its members. The members of the club should be the ones to elect the board and the board will be responsible for running the club.

    The problem with modern football clubs is that they sold their soul for gold many years ago. They're commodities that are bought and sold by people that don't care much for the communities they are based in. For that reason, as harsh as it is, there shouldn't be as much done to protect those which are really badly run by greed. Also, when a club does go bust, why should the taxpayer and those local businesses who provided support and services get less money back than owners and management that contributed to the clubs downfall?

  • Comment number 78.

    It really is quite easy to criticise Portsmouth FC and I am certain that it looks to many outside the club that going in and out of Administration at the drop of a hat is seen as some sort of easy option, rather than face up to their debts.

    However, there are other issue that also need to be addressed:
    1. We appoint David Lampitt as CEO - A name highly regarded and recommended by the Football Association, therefore it is safe to assume that the club is being run on a tighter rein than previously.
    2. Somewhere along the line of our previous ownership issues, the Football Association re-wrote the Fit and Proper Persons Test. Since this time, we have been owned by the following colourful band - some chancer who looked worse in a Pompey shirt than John Westwood, had no money to buy or maintain the football club, but he managed to pass the FAPPT. Someone that nobody knew over here, or even knew of him in his own country, but even the one who did'nt exist, passed the FAPPT. Then there was the latest guy who's company got turned down from investing in a well-known Car firm, because of who the CEO was, additionally, this was the same company that was refused to open branches of their banks in the UK by the FSA, because of discrepancies in their accounts, you guessed it, even he passed the FAPPT. So, to reiterate, you can pass the FAPPT even if you "checkered past", No Money or even If you Don't Exist!
    3. The Football Assosciaton represent all of our clubs and I believe that they should be doing a much more stringent job of vetting any potential new investor's, especially as just a simple phone call to the FSA could have ruled out the latest criminal from owning Portsmouth.
    4. An enquiry should be orderred into the going-on's at Fratton Park over the past 4-5 years. The Public Purse has lost out due to actions of the owners. Local businesses have lost out due to the same actions, so surely there are grounds for this being in the public interest.
    5. How is that these owners nowadays can speculate and adore all the limelight with their "splash-the-cash" attitude and then all of a sudden when thing don't go quite the way they planned, demand all of their investment back? I thought this was just the reserve of Bankers!

  • Comment number 79.

    To all the speculators that I support a big club - in actual fact I support NUFC (hardly a big club though I know we've bought a fair few overpriced muppets) and Rangers (coming to a Scottish Division 3 ground just as soon as HMRC finish their case - along with the posible intervention of the Prosecutor Fiscal).

    I've never said I'd disbar promotion - but by allowing non-promotable reserve team's into the lower-leagues, where other teams can't afford to be e.g. Blyth Spartans have already speculated, if they'd ever got "promoted" to BSP, then they'd possibly not afford to go up.

    For one I'd say they'd bring in money, they'd increase quality i.e. Telford United would need to play better to beat them, therefore you'd see a better product.

  • Comment number 80.

    Any football club going into administration should be shut-down. If it can not pay its way the close it sell the assets, pay the creditors.

    The HMRC should have any club with a big tax debt that it can not repay wound up.

  • Comment number 81.

    What would be the purpose of closing down a particular football club?

    Could it be to stop it making ludicrous loses? Surely this would better be achieved by better regulation. Could it be that closing down the club punishes the perpitrators of the crime, No not really, again it's only the fans that would suffer.

    Here's a concept for you, what if you made a general rule that stated that any funds you speculatively invest in a football club are the same as any other investment ie. they can go up as well as down. The operators of the football club would then be somewhat more frugal in relation to players that bought and the sizes of the contracts handed out. (Defoe / Crouch / Campbell etc etc).

    Had this been the case at Portsmouth, then either they would not have lived the dream or they would'nt have had the 5 England players umongst their ranks that they had at one point.

    Lastly, how can Portsmouth FC still be being punished for the actions Sascha (Arkadi) Gaydemak. He, (They) were 4 or 5 owners ago! Your Football Assosciation should be chasing this clown (s) down and banging them to rights. It might be Portsmouth FC this (these) year (s), but it could be any other club next. All I can assure you is the the FA will do FA for you.

 

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