Generic clubs in financial crisis Thread

[Deadlock]

Barca added to the list

http://news.bbc.co.uk/sport1/hi/football/europe/8797183.stm

The club is not bankrupt because it generates income

Depends on the amount of income, surely, as Mr Micawber would tell you.

[PieEater]

You have to think that the Cardiff situation will continue for most of the season as they have little income this year as ST sales have already been spent.

DG will have to keep bailing them out month to month or with a sizable loan up front since the initial £6m seems to have already gone..

[Dirk Gently]

DG will have to keep bailing them out month to month or with a sizable loan up front since the initial £6m seems to have already gone..

You what????

[PieEater]

Your rich Malaysian cousin!

[Urinal Mint]

portsmouth announce they will have no reserve team next season and they will only have a squad of a maximum 20 players.

[TFF]

From the Pompey thread

Not Pompey related but I heard on the radio yesterday that Jimmy Bullard refused to join Celtic as they wouldn't pay him £75k a week. Instead he has returned to Hull and says he will stay there for the season.

Bullard's contract at Hull is £45k a week with a clause stating that after every 15 games he plays his weekly wage rises by £3k. Hull say they cannot afford to keep him let alone play him again as he is due a wage increase in 2 games time!

HuLOLLOL

[Barry the bird boggler]

Jimmy BuLOLLOLard - I know you'd want more to play in the crap that masquerades as the SPL but to demand a 30k increase If that's true then he deserves to stay not playing at Hull.

[Thankgodisfriday]

Having read the report published today,its made me think how lucky we have been to have SJM at the helm.We could have been ripped apart if some fly by night had owned us.Having said that the majority rise like a phoenix from the ashes.What would you prefer?

"The research showed that 62.5% of clubs in the League's bottom division had suffered an "insolvency event". Only 20% of top division clubs had done so, and of those only Portsmouth became insolvent while actually in the Premiership.

The frequency of reoccurrence of insolvency gives further weight to the assertion. Some 47% of repetitions happened within four years and 68% within seven. In only four cases were debts at the time of reoccurrence lower than they had been originally, suggesting clubs were not learning their lessons.

The report lists four common triggers that have led clubs into financial difficulty.

Clubs fail to cope with financial implications of relegation
Payments to government authorities are missed, prompting cash flow problems and, eventually, winding up orders
Soft debts, such as those from benefactors, become hard debts which clubs have not budgeted to repay
Stadium ownership is lost, leading to reduction in revenues
It also identifies a model of "repeat offenders" who have difficulty recovering from the impact of earlier insolvencies, or which have decided that insolvency is an acceptable process to be used to clear debt.


Penny in the pound
Clubs becoming insolvent currently face a 10 point deduction under league rules and an insistence that they reach a Company Voluntary Agreement to repay creditors. Football-related debts must, according to league rules, be repaid at 100%, while other creditors can be left with 1p in the pound.

Some club chairman, such as Leyton Orient's Barry Hearns, have said clubs spending beyond their means are effectively cheating. This research does reveal a damning attitude to debt. "The picture that emerges," says Beech, is "one of a cavalier attitude to payment and a willingness to drift into confrontation."

[Terminal Boardom]

http://hobnob.royals.org/forum/viewtopic.php?f=3&t=94689

General Football please?

[SLAMMED]

Isn't the saying 'Thank God IT'S Friday' ?

[Row Z Royal]

Isn't the saying 'Thank God IT'S Friday' ?

But then the pun on Robin Friday being a deity is blown out of the water.

[Skyline]

The frequency of reoccurrence of insolvency gives further weight to the assertion. Some 47% of repetitions happened within four years and 68% within seven. In only four cases were debts at the time of reoccurrence lower than they had been originally, suggesting clubs were not learning their lessons.

...

It also identifies a model of "repeat offenders" who have difficulty recovering from the impact of earlier insolvencies, or which have decided that insolvency is an acceptable process to be used to clear debt.

The FA could help to prevent situations like this if they introduced a rule whereby any club going insolvent twice within 10 years is automatically relegated two divisions, and a third insolvency within another 10 years results in expulsion from whatever league they are in.

[PieEater]

I like the idea of 3 strikes and you're out, but each insolvency usually brings in new owners. So why should they get penalised for the previous owners mistakes and it would make it really hard to find a new owner for a club that had already been insolvent twice.

[Dirk Gently]

The frequency of reoccurrence of insolvency gives further weight to the assertion. Some 47% of repetitions happened within four years and 68% within seven. In only four cases were debts at the time of reoccurrence lower than they had been originally, suggesting clubs were not learning their lessons.

...

It also identifies a model of "repeat offenders" who have difficulty recovering from the impact of earlier insolvencies, or which have decided that insolvency is an acceptable process to be used to clear debt.

The FA could help to prevent situations like this if they introduced a rule whereby any club going insolvent twice within 10 years is automatically relegated two divisions, and a third insolvency within another 10 years results in expulsion from whatever league they are in.

But punishments after the event have been shown not to work - as John Beech himself has argued. The only option is to have controls and moniroting in place to stop clubs getting into such trouble.

[Ian Royal]

I like the idea of 3 strikes and you're out, but each insolvency usually brings in new owners. So why should they get penalised for the previous owners mistakes and it would make it really hard to find a new owner for a club that had already been insolvent twice.

Well perhaps it would encourage people to be a little more careful when taking control of a club that had been insolvent once or twice before.

Or not. I'm with Dirk.

Make finances transparent, make agent & player fees go through an FA body. Make clubs pay their taxes. Make clubs run in an economically viable way.

[Barry the bird boggler]

I'd go for 2 strikes in 10 years and you're out.

[Rev Algenon Stickleback H]

I'd go for 2 strikes in 10 years and you're out.

Such a rule isn't really getting to the heart of the problem. Some clubs find themselves in a mess despite their best intentions to avoid debt. I don't think those clubs should be punished so severely. It's only the ones who have shown no financial restraint and have treated their finances as a gamble that should be hit hard.

[Sun Tzu]

I'd go for 2 strikes in 10 years and you're out.

Such a rule isn't really getting to the heart of the problem. Some clubs find themselves in a mess despite their best intentions to avoid debt. I don't think those clubs should be punished so severely. It's only the ones who have shown no financial restraint and have treated their finances as a gamble that should be hit hard.

Would you only apply that to clubs that have gambled and lost ?

Surely you have to put measures in place to prevent the gamble in the first place ?

Currently the biggest gamblers are the most successful clubs but the relatively small clubs are the ones in trouble.

[Dirk Gently]

You're all missing the essential point that a club that gambles and wins isn't punished at all - it's only those that fail that get punished, and they are in deep trouble by then already so any punishment only makes things worse.

A classic example is West Ham under Brown - when they went up via the play-offs in 2007 (?) they would certainly have been in administration if they'd lost that play-off final. They'd bet the house on promotion - and it worked.

This last season Cardiff did the same and it didn't work. But for their Malaysian they'd be in administration now. Let's say he'd not and Cardiff had become insolvent - why should Cardiff get punished when West Ham didn't?

[weybridgewanderer]

coz their gamble would have failed

if i bet my salary on a horse and it wins i can pay my mortgage

if i bet my salary on a horse and it loses I lose my home

i only get punished if my gamble does not pay off