The ban on football fixtures, due to Covid-19, could cause an insolvency crisis which will hit Football League clubs hard, warn experts at Begbies Traynor.
Paul Stanley, regional managing partner for Begbies Traynor in Manchester, said “Cashflow through the turnstiles is what keeps football clubs afloat. It’s the pies, pints and programmes sold at the matches that pay the wages. More clubs may go to the wall and too many are teetering on the brink already.”
“More will follow Oldham Athletic and Bolton Wanderers into trouble. Make no mistake, it’s a major crisis. Finance directors and club owners may need to restructure and react swiftly to survive.”
“Clubs may be able to negotiate payment terms with HMRC for PAYE and VAT as the Government has indicated it will take a sympathetic view on cases caused by the virus. Similarly, landlords and financiers may decide not to take draconian actions due to adverse publicity and the fact that any court would, in my view, take a sympathetic view to any company’s honest attempt to keep its business afloat when faced with a pandemic when abiding by the decisions made by governments and ruling bodies.”
“That said, it is not clear whether sponsors and TV companies, now not able to show matches, will be willing or contractually obliged to make payments to the various leagues when their own advertising revenues will fall if events aren’t taking place. The leagues then won’t be able to pay the clubs who in turn will struggle with paying wages. This may not be a problem for today but in a few weeks’ time it could become an issue.”
“When the current situation is under control, the long term effects on the global football economy should be minimal but there will inevitably be some fall out in the short term and I’m particularly concerned about smaller Football League clubs.”