R3 slams sanctions of football clubs

Link: Profile: Footballer-turned-accountant Mark Palios

The FA announced last Friday it would dock points from clubs that went into administration, possibly causing them to be relegated.

But R3, the Association of Business Recovery Professionals, said the sanctions were based on the misconception that ‘a club enters into an insolvency procedure to renege on their debts and gain an advantage over its rivals’.

It said the measures would have a disastrous effect on the game and could lead to the loss of some of the UK’s oldest clubs.

According to R3, some believe Leicester City, which has now been promoted in the Football League, used its administration to gain a competitive advantage over its rivals.

‘This over simplifies the true commercial risks facing football clubs – the plain fact of the matter is that financially stricken clubs are forced into administration due to their legal duty to creditors and to avoid prosecutions of their directors for knowingly trading while insolvent.’

The news comes as Leeds United, currently threatened with relegation, appointed an Ernst & Young director as interim chief financial officer.

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