BusinessBusiness RecoveryFootball clubs’ fight for survival

Football clubs' fight for survival

Nationwide Football League clubs are fighting for survival following ITV Digital's descent into administration. Legal settlements allowing, the lower league clubs are set for disappointment, and with investors thin on the ground, several business recovery practitioners predict insolvency as the most likely end.

My colleague Ray Hocking, administrator at QPR, claims that ‘football clubs are run on the economics of a madhouse’. In other words, expenditure far outweighs income.

Today’s saturation of televised football coverage combined with the increasing cost of seats and travel has seen fans abandon live games for armchair viewing.

As a result, turnstile takings have nose-dived.

And while escalating wages for players price lower league clubs out of the market, Premiership scouts are bypassing talent rising through the ranks, preferring to recruit youngsters straight from the playground to elite training academies. Commercial sponsors are essential to buoy club coffers, but without an attractive offering, football at this level is likely to be overlooked. Tempting disillusioned league fans back to the live game is essential and clubs must focus on offering entertainment for all the fan base.

Our advice to debt-laden clubs, as for any ailing business, is simple – maximise income, minimise expenditure. Cost cutting must start with lowering players’ wages – workable only with the support of the Professional Footballers’ Association and the Premiership’s lead.

Only by reducing salaries to reflect the number of fans attending games, and the level at which they play, can the clubs turn around. Other costs like security and grounds upkeep are containable. Ground-sharing and commercial ground leasing to businesses for sporting, corporate hospitality and social events are also lucrative.

Finally, clubs’ management teams need urgent attention. To survive, clubs must be run by serious business people on a commercial basis. The strongest management mix for a football club lies in the combined skills of a chairman and managing director. An alternative management model for the League to consider is the co-operative club, where fans buy shares. Those clubs facing imminent collapse would be wise to consider administration, which stops creditors taking further action and enables them to restructure.

  • Tony Supperstone is the head of business recovery services at BDO Stoy Hayward.

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