Western Morning News (Saturday)
Huge overspends, financial freefall... grim reality of life
FACE masks, testing, social distancing and the echo of empty stadiums. Many publications and media outlets have spent the past week morbidly claiming this as the new face of football.
As Swindon Town’s financial issues were laid out at the High Court recently, the threat of administration looming, at League Two level, I could not help but feel that this is the new face of football.
The sport we love is in trouble. Television deals will take care of football’s elite to the point where little damage will be caused, a blip perhaps, but those Sky and BT subscriptions will creep up and all will be right in their world. However, in the EFL, the argument over who goes up and who goes down may prove an insignificant footnote in the plight of lower league football.
Let me be clear, the coronavirus lockdown is not the sole reason clubs in the EFL are in financial peril. It will be easy for owners to claim so, but the current situation is purely the straw that broke the back of a weary camel. Poorly run, over-budgeted, under-resourced and barely solvent football clubs are not an anomaly, they are commonplace. The accounts for the 2017/2018 season highlighted that, in League Two, the average weekly loss for a club was £13,500. The average loss per club over the season a staggering £802,000.
How many sectors in business would exist with those numbers? League Two sides receive an estimated £472,000 for competing, regardless of the position they finish within the league.
Clubs also receive a £430,000 “solidarity payment” from the Premier League, the type of “solidarity” that allows a Premier League club to purchase a young talented Welsh player for a pittance of what they are actually worth for example. So before clubs start pencilling in the budget for a season, they have £900,000 guaranteed income to rely on. Yet, the average loss is still £802,000! Incredible.
Swindon Town’s situation was of little surprise. In their relegation from League One in 2016/2017 they were losing £34,000 a week, a deficit of £1.768 million over the year.
Lee Power, an owner who is not universally liked in Wiltshire, has loaned the club close to £6 million in his tenure. I read one supporter mock the notion that Power was a “Sugar Daddy” owner, if throwing six million pounds at something and getting nothing in return does not qualify him for that then I am not sure what does.
Power’s investment has kept the club afloat, just. By September 2019, football finance expert Kieron Maguire, devised that the club’s losses were at £11 million and exceeded their assets. A grave situation it would seem. Fast forward to January 2020 and the “Ginger Pele” Eoin Doyle signs a lucrative deal to stay at the County Ground and ultimately secure promotion. The stupidity of it all blows my mind. It is like if Flybe had tried to resolve their financial issues by purchasing a
Jumbo Jet.
Swindon are not alone, just the latest club off the rank. You do not need to look too far in League Two to find other red flags.
Forest Green Rovers have established themselves as a competitive League Two side, yet the cost of getting the club to the Football League totalled £12 million worth of losses over a six year period. Clearly running a budget at over £2 million a season will help achieve success, but as a business model? If Dale Vince has spent this fortune building the Gloucestershire club, I dread to think what money is going into Salford.
A legal loophole used by the Greater Manchester club prevents access to their wage budget through the published accounts. I wonder why they might want to keep that from public knowledge? As millions has been invested into that football club, I present their average attendance for this season of 2,997 without further comment.
Newly-promoted clubs are not the only guilty ones. In 2017 Colchester United published a loss of £3 million. In 2018 they published a loss of £2.37 million. The Essex club have now borrowed close to £25 million from their parent company, that is a figure that feels worthy of a pause for thought.
Northampton Town lost £42,000 a week in 2018, the monies they owe on borrowings are now £5.5 million. With the knowledge that this is a club who received a £10.25 million loan from the local council, seemingly “lost” a significant portion of it that resulted in a £3 million public investigation into the club and it’s then owners, the fact they are still not run on budget is simply staggering.
Cambridge United and Crewe Alexandra are other clubs who appear to struggle. Both have reported losses around £800,000 in the last two years of their accounts. I would like to think that if you lose close to a million pounds in one season, then you make necessary cuts to avoid a repeat, not in football, it appears the “we go again” mentality reflects into the boardroom.
Locally, Plymouth Argyle are a club not making money. The stadium is a magnificent venue, the redevelopment of the Mayflower Stand evolving Home Park to a level beyond the one the club plays at. However, that is