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 The three clubs relegated from the Premier League provide an interesting contrast. The Portsmouth saga has been a long drawn out one and is by no means over. I think that all commentators were astonished by just how big their debts were. It doesn’t make the task of securing a Company Voluntary Arrangement (CVA) any easier and they need to do that if they are to avoid another points deduction next season and a Leeds-like plunge down the divisions. However, 75 per cent of the creditors have to agree to such an arrangement and Revenue and Customs, which have enough votes with a few other creditors to deny them, are unlikely to agree. The word is that former owner Balram Chainrai is likely to step in again, but there is some way to go before that happens.
The other two relegated clubs provide a strong contrast in terms of approaches to the Premiership experience. Hull City has accumulated huge debts, largely through a massive wage bill, but they have denied repeated reports that relegation will force them into administration. However, the difficulty they face is that there are no let out clauses in the event of relegation in their player contracts. Jimmy Bullard is reported to be receiving £45,000 a week. He has three years left on his contract and would probably fail a medical because of a knee problem so selling him will not be easy.
Burnley, situated in a far from prosperous town with a population of just 50,000, has adopted a very different approach. They will be going down with no debts at all. They will, however, have the money to invest in a new stand which will give them a stream of income from conference and banqueting facilities. This is particularly important to them given that their income from gate money is always going to be limited. Some supporters feel that they could have spent more in an effort to stay up, but a similarly prudent approach paid off for Wolves. In the case of Burnley the loss of manager Owen Coyle to Bolton was probably the decisive blow.
Clubs relegated in the future may have a softer landing. Because of their rising income from overseas broadcasting rights, the Premier League is proposing to increase the amount that relegated clubs receive in the form of parachute payments. They would receive £16m a year for two years and then £8m a year for the next two years. So far the Football League has not agreed to the proposal, although the Premiership insists that the offer has been made on a ‘take it or leave it’ basis.
Some Championship clubs are concerned that it could lead to a ‘two tier’ Championship with relegated clubs having an unfair advantage because of their extra funding. However, it could be argued that such an arrangement already exists. There are clubs that are prepared to invest in players in an attempt to get promoted and others who are content just to avoid relegation to League 1.
The real opposition to the plan came from League 1 and League 2 clubs who would get only a small increase in the ‘solidarity’ payments that go to all Football League clubs from the Premier League. League 1 clubs in particular are concerned that the gap between them and the Championship would be widened, particularly as television revenues are now much higher there. The argument may be settled by making a small increase in the payments to lower tier clubs.
The final day of the season saw a Championship relegation decider between Sheffield Wednesday and Crystal Palace. By drawing Crystal Palace survived. This outcome may help them to come out of what has been a protracted and complicated period of administration. If they had been relegated, the club might not have survived. The process has been complicated by the fact that the ground has different owners to the club and has development potential. The CPFC 2010 consortium which is seeking to buy the club has made an offer for the ground which is said to undervalue it. Hence there has been speculation about a ground share with another South London club. This would not be attractive to Palace fans and may be being used as a bargaining lever to achieve a settlement.
It’s not all gloom for Sheffield Wednesday, as they are poised to be acquired by a Chicago-based consortium. They think that with investment and good management Sheffield Wednesday could become a Premier League club. The club has a proud history and a large if somewhat old fashioned ground, but they are in a not particularly big or prosperous city which is best known in sporting terms for its association with snooker. However, they will certainly be contenders for an immediate return to the Championship.
There has been a lot of attention in the last month to the state of Scottish football, with the publication of the first stage of the McLeish report by a former Scottish first minister. The first part of the report mainly dealt with grass roots football, but it didn’t tell us that much we didn’t know already about the state of the Scottish game. It is also difficult to see where the required investment is going to come from as the Scottish Government is not going to have much money to spare in an era of public expenditure cutbacks and the game itself is unlikely to be able to generate £500m.
The financial woes of Rangers have been intensified by reports that Revenue and Customs is going to pursue them over unpaid tax resulting from payments made to players via offshore accounts. The club said that is going to vigorously contest the attempt to charge them additional tax. Judging from comments made on www.footballeconomy.com some Rangers fans, perhaps buoyed by another Championship victory, are in denial about the extent of the club’s financial problems.
This touches on a much broader problem. Clubs (and fans) do not seem to have come to terms with how much the economic climate has changed. Although football revenues have remained reasonably buoyant in the recession, the tax authorities are clamping down on clubs. There are plenty of clubs available for sale, often at knockdown prices, and relatively few white knights on the horizon. One club, however, that should attract is a buyer is Liverpool now that the American owners have agreed to sell and installed a new chairman to facilitate the process. For Liverpool fans at least, a less than happy period in the club’s history may be coming to an end.
Wyn Grant is a regular contributor to Albion Road and also the publisher of footballeconomy.com, a website covering the business and economy of the game of football.
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