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Crisis looming for small football clubs

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Financing football - the new reality, the second survey by accountants and business advisors, PKF, of English and Scottish Premier League (SPL) and English First Division finance directors, shows that only 24 per cent of clubs expect to make a profit at the year end.

The survey indicates that the gap between the Premiership and the rest of the league is now "irreversible", with clubs outside the Premiership forced to reinvent their business models or face extinction.

Of the 21 finance directors whose views are reflected in the report – 15 from English Premier and First Division clubs and 6 from the SPL – 43 per cent have increased their borrowing in the past 12 months and 57 per cent envisage using more than 90 per cent of their bank facility during the forthcoming year.

Whilst tv income is the most important revenue stream for the Premiership clubs, ticket sales are now the most important source of income for the English First Division and SPL, reinforcing the view that a loyal local fan base is critical for their survival.

Both the Premiership and First Division and SPL have different concerns on the subject, with the former worried about the potential fall in tv income when the current BskyB deal expires and the latter concerned about an overall reduction in transfer fees, inflexible players salaries and the consequent knock-on effect on their income profitability.

However, a greater percentage of both would now consider ground sharing to help face up to the cash crisis. Last year only 14 per cent of Premiership clubs would contemplate the idea, compared with 40 per cent of Premiership and First Division clubs and 33 per cent in the SPL this year.

The directors questioned were also not happy with rival clubs going into administration to clear debts, with over two thirds of those questioned considering that clubs taking this course of action should suffer a points deduction.

PKF partner, Stuart Barnsdall, said: "The next two years will be crucial for smaller clubs. Never before has the polarisation within football been so apparent, with the elite of the game clearly running away with the spoils."

He continued: "With the market for football now proven to be finite and largely restricted to the most powerful, those who do manage to survive face the prospect of re-inventing the business models based on non-tv related income targeted at a local market. Those clubs which don’t respond to this changing environment are unlikely to exist in the long term." Details and copies of the full report: charley.gardner@uk.pkf.com

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Financing football – the new reality, the second survey by accountants and business advisors, PKF, of English and Scottish Premier League (SPL) and English First Division finance directors, shows that only 24 per cent of clubs expect to make a profit at the year end.
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