But as a result of adding yet another log to the already roaring football insolvency fire, the League could be cutting off its nose to spite its face.
Insolvency practitioners restructuring football clubs have long said that the main problem with the troubled sports teams is as simple as that of troubled companies – their expenditure exceeds their income. And the highest costs faced by most clubs are player wages.
But they also complain that they cannot properly restructure clubs by getting rid of their most costly players because of the now infamous ‘super-creditor’ rule which gives players, managers and the league itself first pick of the creditors’ pie when it comes to insolvency.
The super-creditor rule is, shall we say, not exactly in tune with the new Enterprise Act, which attempts to put all creditors on a level playing field.
And the proposals to dock points and possibly relegate clubs because they have entered insolvency proceedings go directly against the thrust of turnaround culture. The fact that the government has done nothing to halt these proposals just serves to demonstrate the power of football’s governing bodies to play dictator.
Ailing clubs already attempt to continue trading and avoid administration.
Precisely the opposite of what struggling companies slipping into failure are supposed to do in the new enterprise culture.
Insolvency experts fear docking points would sound the final death knell for some of the oldest clubs in the country, which will inevitably struggle before ending up in the more serious procedure of liquidation.
With the problems the beautiful game is having making very distant ends meet, we could end up with a much-reduced lower division.
The biggest losers in all this will in the end be the normal creditors because, as clubs get further into debt, less money will be recoverable and the chances of rescue will become slimmer.
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