Survey Reveals English Football Leagues under liquidity crisis

BDO has recently revealed the football finance directors report for the year 2019. This accountancy firm interviewed the football finance directors to better understand the financial health and operations of football clubs across the English football leagues. This report also gives an insight into the top priorities and concerns of these football clubs. Moreover, the report provides commentary on how they are responding to developments in the game.

The report shows an underlying sense of rising discontent as market disruptions continue to threaten long-term stability. Survey revealed that majority of the club’s economic conditions are not at all unfavorable.

According to this latest football finance survey, the financial inequalities between divisions creates tension. Club’s profitability levels tank even at the top level which leads to lack of contentment across lower football leagues.

Essence of the survey:

One of the finance directors at football club reported that over 25% of the clubs finances needed attention compared with 18% last year.

The survey exposes 70% of the clubs need to rely on shareholders to fund losses (up from 57% last year). whereas less than half are likely to make a profit this year.

BDO’s annual survey questioned the finance directors of more than half clubs in the Premier League, Championship, and Leagues One and Two. They found that after player-trading only 42% of Premier League clubs and 24% of Championship clubs are expected to turn a profit in 2018 compared to 89% and 28% respectively this time last year.

The BDO report indicated the sense of discontentment across the sector, with financial inequality between divisions and player cost inflation which is a major problem.

Moreover, confidence in central regulation is waning, trust in clubs to ‘play fair’ is diminishing and application of the fundamentals of good financial governance are inconsistent. This is causing financial tension. Many clubs are taking unnecessary financial risks to stay ahead of the game. In addition, clubs are potentially sacrificing long-term stability for short-term gain.

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Ian Clayden’s findings

The head of professional sports at BDO, Ian Clayden,stated: ‘Based on what many of the clubs are telling us, the current financial governance structure of English football requires some adjustment.

‘The resulting player cost inflation is forcing many EFL clubs to live hand to mouth, with reliance on player trading as a secondary profit centre.

‘As we embark on the next three years, with 2019-22 media rights secured, perhaps English football now has the headspace needed to consider whether the current structure and financial governance of the English leagues is right for the long term. Financial regulation and media rights distributions should both  high on the agenda.’

The findings reflect the current instability across lower division clubs. One Bury Football Club is facing administration issues after English Football League on 26 August. Bolton Wanderers Football Club got 24-hour reprieve when talked to find a new buyer for the 150-year old club stalled. The Club had to go into liquidation otherwise.

In the Premier League, Chelsea received two-transfer window ban following a breach of fair play regulations, while Manchester City got a fine slip over a breach of image rights for players.

UEFA offers a financial training course

UEFA, the governing body of European football, has launched a financial management course for football players in conjunction with Spanish bank Santander.

The UEFA Financial Management Training (UEFA FMT) programme is an online training course. It contains seven modules giving players grounding in mastering the basics of financial management. Moreover, it  provides tools to plan in advance and keep on top of finances on a day-to-day basis. Modules cover the basic principles of finance such as cash management, credit, savings and investments. It also provides a comprehensive introduction into entrepreneurship.

David James’s advice to youngsters

Number of former players supported the course that also includes England goalkeeper David James. James advises youngsters who are just starting out in the game. Moreover supporters of the course included those who have established careers in football game.

 ‘It sounds so good and you get involved and then it doesn’t work out. As the saying goes, if it’s too good to be true, it probably isn’t true.

‘My advice, and something I’ve learned later on in life, is that if someone gives you a contract or a deal, read it. Even if you don’t understand it, at least get some knowledge of what you’re about to do.’

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