Would the last owner to leave the club, please turn out the lights

money

BY GILES METCALFE

The 2013 edition of BDO’s annual survey of Football Finance Directors (FDs) has discovered that an alarming number of football club owners are considering a full or partial exit from their respective clubs.

BDO state that most teams will meet the new Financial Fair Play (FFP) regulations, but an owner exodus from Football League teams is predicted during the next two seasons as those owners struggle to find funding.

The BDO report, entitled ‘New Dawn for Fair Play?’, and focussing on the FFP regulations and their impact in particular, questioned 66 finance directors from across the professional divisions, representing 63% of the football leagues featured.

The headline findings emerging from the survey show that the current owners of 36 per cent of FL1 and 28 per cent of FLC clubs in the survey are considering a full or partial exit, with only 30 per cent of finance directors describing their club finances as ‘very healthy’. 48 per cent say that their situation ‘could be better but is not bad’, with 17 per cent of respondents’ reporting that their finances ‘need attention’; whilst 5 per cent say their finances are ‘a cause for grave concern’!

The survey also reported a growing reliance on rich benefactors to plug funding gaps at clubs. In total, 65 per cent of clubs acknowledged a dependence on principal shareholder/s to finance operating losses compared with 58 per cent last year; for the Championship the figure is 94 per cent and for League One it is 64 per cent.

The Taxman’s dreaded hand also reaches out to the FDs, with 20 per cent of clubs late with their tax payments during the year. Most had formally agreed the delay with HMRC beforehand however. 52 per cent said that HMRC was contacting them earlier and more frequently to chase payment of the tax due, and 23 per cent of clubs are worried by HMRC challenging complex wage structures, resulting in clubs having to meet large PAYE bills. This issue affects 41 per cent of English Premier League and 39 per cent of Football League Championship respondents respectively.

It’s not all bad news though. The BDO website states:

“Fair play has always been at the heart of the beautiful game, so it is good to see its appearance in the finances of football as well. An encouraging 95% of English clubs are expecting to comply with the Financial Fair Play rules in 2013/14 (the first season when FFP will apply to all English domestic leagues). As a consequence most FDs have reported some form of restraint on wages and transfer fees, a vital step on the road to more sustainable business models for all.”

“In financial terms, the run of play has been going against many clubs – but if we have discovered anything while producing this survey, it’s that football clubs are fighters. Indeed, it’s probably not news that many of our findings this year give some level of cause for concern. But what is perhaps more surprising, and encouraging, is the extent to which clubs are still managing to cope with adversity and take better control of their circumstances.”

However, they also sound a note of caution – one that I’m sure fans of Leeds United and other clubs whose, to paraphrase Robert Browning, “reaches exceeded their grasp”, will recognise:

“This is not to downplay the challenges. We are seeing many common factors which conspire to increase financial instability and risk. For instance, a number of clubs depend heavily upon either a single owner or a small number of key shareholders, who may have their eye on short term glory. Inevitably, the huge potential rewards for reaching the Premier League may lure many clubs into a gambling frame of mind, risking future financial security for the big prize. As a long term model, this is not sustainable, and could result in structural instability for many clubs if it goes unchecked.”

New Dawn for Fair Play? can be downloaded for free from http://www.bdo.uk.com/sectors/leisure-hospitality/sports-and-fitness-clubs/annual-survey-football-finance-directors-2013

Follow Giles on Twitter – @giles_metcalfe – or on his blog – http://nostanding13.wordpress.com/

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