Penalties could kill off clubs
New penalties set to be imposed on football clubs in administration will kill off troubled lower division clubs, according to financial experts.
Link: Football league adopts new administration rules
The new rules, agreed by the Nationwide League last week, say that clubs going into administration will be docked 10 points unless a panel decides that the procedure was inevitable. The club would then have 18 months to emerge from administration before being kicked out of the League.
But Oldham FC administrator Philip Long was disappointed, saying: ‘If clubs in the lower leagues find they get into administration and then lose 10 points and get relegated, it’s going to be a massive problem.’
Mark Fenoughty, previously finance director of Leicester City and now at Sheffield United, said: ‘The law of the land is making it easier for companies to go into administration, but these rules don’t achieve that. The League should be protecting competition so that clubs don’t go out of business,’ he said. ‘My own experience is that you don’t go into administration to clear your debts. It is a really grim situation and one that is really quite painful.’
Joe McLean, Grant Thornton’s national spokesman for football, said: ‘In the real world clubs do not want to go into administration. If a club is several million pounds in debt, it is unfair to impose a double penalty.’
‘You wonder if there is a legal challenge whether this would be legally valid,’ he added.