Begbies Traynor: Investigating Financial Distress in Football, Red Flag Alert (England)

The latest Football Distress Survey, conducted by business recovery specialist Begbies Traynor since 2012, highlights a lingering credit crunch among English clubs outside the Premier League.

Financial distress now affects a total of 34 clubs in England and Wales, double the number before the UK football pitches closed in March 2020. Since the start of Covid, two EFL clubs, Wigan Athletic and Derby County, entered administration, triggered in part by the pandemic.

Despite supporters returning to the pitch in August, there was little immediate change in the fortunes of the domestic game below the Premier League, with the temporary financial boost generated by the Covid relief package now over. for most clubs.

“… there was little immediate change in the fortunes of the domestic game below the Premier League …”

In a direct comparison of data between the period immediately preceding the imposition of Covid restrictions on clubs in March 2020, when only 17 clubs were reported as having financial problems, and the end of September 2021, the survey reveals an increase of 100 % of the number of clubs showing early signs of financial distress.

Since the end of March 2021, the number of English clubs showing signs of credit problems has remained relatively stable, dropping from 33 in England and Wales to 34 in the most recent period up to September 30, 2021, while that the County of Derby was placed under administration in September. .

“Rate relief, Premier League payments and leave measures have kept a large number of clubs from going to the wall in 2020, and with the exception of County Derby there has been no significant change in clubs’ creditworthiness over the past six months, but that means that returning fans have not been a silver bullet either, “said Gerald Krasner of Begbies Traynor.

“The fact that we now have twice as many clubs at risk, in addition to the failures of Wigan and Derby County, should be of concern to fans and governing bodies. These were exceptional times and there may be an argument. to argue that they might require remedies or one-off exemptions in the future if the game doesn’t see a whole slew of “zombie clubs” falter to avoid deductions and relegations for financial reasons.

“We are even seeing small indicators of declining solvency in the Premier League, and it has been a long time since that was even a factor to mention.”

Krasner, who was part of the team of three who successfully sold Wigan Athletic FC out of administration in March this year, was previously chairman of Leeds United and is one of Britain’s leading experts in restructuring the soccer.

He said: “Scottish clubs have suffered less negative impact, and whether this is due to a lower payroll, a generally cautious approach to financial management, or a combination of both, the Scottish League faces far fewer financial threats than clubs south of the border. ”