Bury's demise shows Football League must tighten FFP rules, review says
The EFL’s review into the expulsion of Bury last August has recommended that the league strengthen its financial fair play rules, blaming the club’s collapse on the current system that allows owners to fund players’ wages.
The review, conducted from the EFL’s own Bury files by Jonathan Taylor QC, details the dramatic increase in spending on wages after the Lancashire property developer Stewart Day took over the club in 2013. Just four years later, wages had increased threefold to £4.5m, while the club’s revenues grew by less than 50% to £3.2m, so Bury were spending 140% of their entire turnover on wages alone.
Under Day, the club were persistently late paying other clubs and loan players’ wages, but he did put £11.5m into Bury. However, when his property companies began to collapse into administration – owing millions to investors and creditors – the club was “effectively insolvent”, the review states.
Reviewing Bury’s calamitous demise under the ownership of Steve Dale, who bought the club from Day for £1 in December 2018, Taylor questions whether the EFL’s owners’ and directors’ “fit and proper persons” test is itself “fit for purpose”, and recommends changes to the takeover rules. However these are “moot”, he says, because the core cause of the collapse was the reliance on funding from Day, which was then lost.
“The real problem is that the EFL’s Salary Cost Management Protocols [its financial fair play rules] do not require League One and Two clubs to pay player wages out of normal operating income, but instead permit them to fund much higher spending through cash injections from the club owner,” the review concludes. “That means the club becomes entirely dependent on the owner remaining ready, willing and able to sustain that level of funding, and if the flow of funds is cut off, the club is immediately plunged into financial crisis.
“I do not see how this furthers the stated objectives of the EFL’s financial fair play rules (to introduce more discipline and rationality in club football finances; to encourage clubs to operate on the basis of their own revenues; to encourage responsible spending for the long-term benefit of football; and to protect the long-term viability and sustainability of EFL football).”
Recommending a tightening of the rules, suggesting that owners should invest in long-term club development and be prohibited from bankrolling wages, Taylor concludes: “The demise of Bury FC therefore highlights the need for a review of the financial ecosystem in which the League One and League Two clubs operate. The EFL and its clubs need to consider again what they want to achieve in terms of financial fair play, and whether the regulations currently in place are fit for that purpose.”