BusinessCompany NewsFootball’s FDs predict bleak season ahead

Football's FDs predict bleak season ahead

Just one in four clubs expect to make a profit as almost half of Premiership, First Division and Scottish Premier League FDs polled in our exclusive survey call for the 'preposterous' super-creditor rule to be scrapped.

A full report will appear on the site later today

Read last year’ survey

Just one in four football clubs expect to turn a profit this season.

More than a dozen clubs have filed for administration in recent seasons, and that number could be set to rise given that many expect to run at a loss in their next accounting period, according to an exclusive survey of leading clubs’ finance directors by Accountancy Age and PKF.

Just 30% of clubs in the Premiership, 20% in the First Division and 17% in the Scottish Premiership expect to make a profit, according to interviews with 21 of the 55 finance directors of clubs in those divisions.

Just as worrying is the fact that clubs remain heavily reliant on their banks, with 43% having increased their bank facility over the past 12 months. Almost 60% expect to use more than 90% of their facility over this coming year.

Bryan Jackson, corporate recovery partner at PKF Scotland, said: ‘What’s surprising is that so many are going to make a profit. The main problem is that TV revenues are still falling and players are still on high wages due to fixed contracts. Wages have accelerated beyond realistic levels.’

Given last year’s collapse of ITV Digital, the problem is most acute in the First Division where 80% of clubs have increased the level of their bank facility. And other clubs are potentially storing up trouble with one in four clubs using off balance sheet sale and lease-back arrangements.

The findings come as the Football Association’s new chief executive Mark Palios begins work on readying the game for the financial reality facing football ahead of the new season, which kicks off on Saturday. Palios joined the FA last month from PricewaterhouseCoopers, where he was a business recovery partner.

This is the second year of the survey and, like last year, it shows that club directors continue to personally guarantee loans, particularly in the lower divisions.

Some 40% of First Division clubs have their loans personally guaranteed by a director, almost twice as many as last year.

The survey also suggests that player power is likely to be further eroded.

More FDs than ever want to get rid of the notorious super-creditor rule, which gives football players preferential status if the club becomes insolvent.

Some 43% of finance directors now believe the rule should be scrapped – a threefold increase over 12 months.

Terry Doyle, FD of York City, is no fan of the rule. ‘It’s preposterous,’ he said. ‘The reality is that no-one will challenge the rule because it’s challenging the establishment.’

Accountancy Age understands the government is considering supporting a bid to have the rule scrapped in the autumn. Ministers are said to believe that the rule flies in the face of wider policy that seeks to put all creditors on an equal footing.

But PKF’s Jackson, who is also administrator to Motherwell FC, warned that football’s financial situation was likely to get worse before it gets better. ‘Most clubs are beginning to take remedial actions, but it’s very late in the day. Most chief executives I speak to say that it will be four to five years before most clubs make a profit or become stable,’ he said.

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