The most surprising thing about Darlington’s announcement of insolvency today is twofold. Firstly, it’s surprising that they are the first Football League club to have sunk this far this season. After all, it is almost March. Secondly, it’s surprising that it is Darlington that managed to get to the insolvency practitioners first. There have been plenty of clubs (for reasons that we have been into on here before, Southampton spring immediately to mind) that have looked like they are sailing close to the wind, but Darlo have pipped them all to the post. The question now for the League Two club is whether this is the beginning of the end or an opportunity to build a new beginning on a more sustainable basis.
The announcement was made this afternoon, ironically only a day after a new sponsorship deal was announced with local newspaper, The Northern Echo. The club is said to be £5m in debt and losing money hand over fist with crowds having fallen this season in spite of the fact that they were pushing hard for a place in the League Two play-offs. The automatic ten point deduction from the Football League is a massive blow to them, but even this wouldn’t run their season. It would drop them from seventh place, in the play-off places and with a decent chance of winning automatic promotion, to twelfth place in the table. Winning those games in hand could still put them in with a chance of making the play-offs. One suspects, however, that this should be the least of their worries at the moment.
Part if the problem for Darlington is the time of year that this decision has been made. The end of February doesn’t seem like the most sensible time of the year to enter into administration (even working to the supposition that there is such a thing as a “sensible time of the year to enter into administration”). Should they fail to agree a CVA (Company Voluntary Arrangement), they will fail the Football League’s rules on how to exit administration, and will run the risk of further sanctions. The Football League would normally have to look at expelling any club that fails to agree a CVA (as Leeds United did in 2007), but they have the power to allow clubs to use an “exceptional circumstances” proviso in order to continue competing in the League. It cost Leeds a further fifteen points in order to do so. At present, though, a CVA isn’t on the table. Darlington FC is up for the sale, and the rumoured price is a knock-down £2m. Except it isn’t that much of a bargain. The club has no significant assets (their ground, The Darlington Arena, is owned by chairman George Houghton, but is owned by a separate company to the football club), which is millions of pounds in debt and losing £54,000 every week.
The Arena is the other key to the club’s problems. Alienatingly out of town and ridiculously oversized with a capacity of 25,000, it has no facilities that bring serious revenue into the club and is too far from the town centre to attract casual supporters. An ideal solution would be to sell it and use the money to build a smaller stadium with facilities that the club can use to generate revenue, but this seems to be wishful thinking at the moment. Who would pay millions of pounds in the current financial climate for a plot of land on the outskirts of Darlington which may prove to be difficult to get planning permission for? The council blocked the building of other facilities at The Darlington Arena – would they grant planning permission to a developer with deep enough pockets to express an interest in buying it in the first place. It seems likely that they will have to sit tight there, no matter what.
Stuck between a rock and a hard place, Darlington Football Club has reached a critical crossroads. A hardcore of between 2,500 and 3,000 supporters isn’t enough to sustain a professional club without any other source of income. The administrator, Dave Clark of Brackenbury, Clarke & Company, remains upbeat that a buyer can be found. “We’re asking interested parties to provide proof of funding of £2m because we think that is going to be around the level of funding we are going to require in order to run the club effectively. The amount of debt is less than £5m, and is sustainable in these circumstances. It’s then up to a potential purchaser to come forward and think, ‘We could do this or that differently’”, he said, presumably mindful of the importance of sounding upbeat, just in case any potential investors were listening. One might hope that somebody will spot the potential of a club with every chance of getting promotion into League One with a 25,000 seater stadium. Whether a way of harnessing this potential actually exists is a completely different question.