According to recent findings by Begbies Traynor, football clubs are facing increasing financial hardship, with 8% of 72 clubs (from the Championship to League two) suffering. The Red Alert Football Distress Report highlights the ‘downward spiral’ of smaller clubs that are unable to attract enough funding to continue going for much longer. Poor attendance and wavering season ticket revenues has contributed to the financial problems.
Partner at Begbies and previous administrator for AFC Bournemouth, Gerald Krasner, believes the way forward is the Community Interest Company model to keep football clubs alive. The income gap between the top and bottom of the league is ever increasing, so the idea of a CIC is thought to be a positive step forward to ensure a club’s future stability.
Darlington FC and Eastbourne are using this company model to lead the way for fan-based ownership in a bid to maintain stable funding and long-term security for the club. Barcelona club is an example of a CIC working well, showing the community model can still bring in big money and increasing interest.
Krasner stated, ‘aside from an overseas benefactor, community ownership is the only viable long- term solution for many clubs.’ Both the government and HMRC are currently supporting this company model which will likely give an incentive for clubs to review their business structure.
A CVA can give struggling football clubs the space and time to revaluate and restructure the business in order to find a suitable way forward as well as protect the club against aggressive creditors. Some clubs have even entered administration before using a CVA. Have a look at our page on football clubs and CVAs for more information.