Football clubs in administration21 December, 2007
This topic has a particular interest with recent events at Coventry City FC. I had, however, started developing an interest some time before the crisis finally happened locally.
Much is written about whether sport, and football in particular, is a business or not. My view is that football in particular is a business, but a very peculiar one. In five consecutive seasons the top 92 clubs in England and Wales made losses totalling over £1 billion pounds – hardly a typical industry! I started building a data set of the 40+ clubs that actually went into administration, initially looking at when this happened.
As expected, there was a peak following the collapse of ITV Digital, but there are signs that we are approaching a second peak.
Other factors are likely to be involved, and, working with my colleague Simon Horsman and with ex-FA Director of Finance Jamie Magraw, we hope to identify a number of archetypes which will help in identifying clubs at risk.
Noting the case of Coventry City, who at one time were reported to have debts of £59 million, a challenging complication is the number of clubs who have just avoided going into administration – Coventry City avoided it by 35 minutes!
The background research was reported in a presentation at the Play the Game conference in Reykjavik at the end of October.