Buyers interested in sport, and particularly football, will be interested in the latest reports by administrator Begbies Traynor, who claims that a quarter of UK football league clubs are in “financial ill health”.
Several major clubs have suffered financial collapse in recent months, including Port Vale, Portsmouth and Darlington. Begbies Traynor is in a good position to report on the situation, as it is acting as administrator for Port Vale.
Begbies Traynor’s Red Flag Alert Survey established that 13 of the Football League’s top clubs (not including the Premier League) are not financially stable. This means that 19 per cent of the clubs in the top tier – consisting of three Championship teams, six League One teams and four League Two teams – could potentially come onto the market or enter administration, representing a good deal for buyers who are able to get spending under control.
It is, after all, the overspending that is behind most of the financial problems, according to the report. Lower league teams are tempted to overspend on players in order to secure promotion, and it’s becoming a vicious circle, the report said.
‘Many clubs are continuing to spend too much, principally on players' wages, as they always have done,’ it stated.
The report went on to suggest that the huge disparity between the wealth of Premier League teams and lower division teams causes many of the problems. ‘One effect of this disparity is that Football League clubs are often tempted to overspend on players to try to gain promotion, and the promised riches and prestige that come with it.’
‘While Premier League clubs are guaranteed huge television money every year and some have extremely wealthy backers, there are signs of genuine financial distress among a significant number of football league clubs,’ the report added.
While some struggling clubs are attempting new approaches, such as supporters pitching in to buy teams, others are desperately in need of buyers to help turn their fortunes around. In Scotland, Rangers Football Club administrators Duff and Phelps are considering offers from several interested parties, while Port Vale has also caught the attention of a number of potential buyers.
Local businessman, Keith Ryder, has submitted the largest of five bids for Port Vale. The club fell into administration in March after it was hit with a winding-up petition due to unpaid taxes. The club was also under pressure over an unpaid loan. Ryder has a background in financial services and is expected to be in a good position to try to return the club to financial stability. His offer will see creditors receive just 3 pence for every pound they are owed.
He told the BBC that encouraging attendance will be a priority and that he may consider lowering the price of individual match tickets to get fans through the door.
However, he said he will not be reversing Begbies Traynor’s decision to increase season ticket prices as this income will help to fill cash flow gaps for the 2012-2013 season.
Individual buyers can help struggling football clubs to succeed once more and there’s no doubt that there could be some bargains to be had in the coming months. For those with the dedication and, preferably, a love for the beautiful game, what could be better than buying a struggling football club for a song before returning it to its former glory?
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