Football, Finances and League Two
The new League Two season has started with everybody financially stable – more or less – but Lincoln City supporter Keith Duncombe doesn’t feel that the authorities are going far enough.
In 2002 Lincoln City FC nearly closed down. In fact, the club was 24 hours from having its application to enter administration in court considered when two of the then Board got together to try to secure enough funding to make that a reasonable possibility. One re-mortgaged his house; the other pledged a not inconsiderable sum of money. I shall be eternally grateful to them that they made these selfless gestures, as it ensured the survival of the club that I have followed all my life, and that has had fans from three generations of my family on the terraces and in the stands cheering on the “Mighty Imps” since the 1920s. But it was touch and go, and I know several fellow fans that travelled to Birmingham for the court hearing and who thought at the time that we just wouldn’t make it.
The fans played their part too, and not just those who supported the Imps. I spent many a long hour on the net at work persuading, cajoling and plain begging fans of other clubs to buy a seat (for £10) at Sincil Bank as part of the “Sponsor a Seat” initiative that eventually raised over £80,000. We borrowed the idea from Bury who had recently entered administration themselves. Surprisingly (or perhaps not so), many fans from other clubs contributed and wished us well. In Lincoln, a march in support of the club was held, and buckets taken to every location you can imagine to help raise funds. We survived, agreed a CVA with our creditors, and looked to the future.
Since that time, LCFC have posted an operating profit in all but the last two financial periods, cutting our cloth to our income, and setting the budgets accordingly. Recently, the recession has hit us like every other club, with falling attendances and reduced commercial income streams, and small deficits in the last two years have had to be covered by inward investment form new Board members, and transfer fees for players sold such as Lee Frecklington (to Peterborough) and Danni N’Guessen (to Leicester). But again looking to self-sustaining investment, our youth development programme has been expanded, and we have some of the product of that investment entering the first team now, with Danny Hone leading the way for a whole batch of promising, home-grown youngsters.
The LCFC Board has been the very model of prudence, ensuring the financial stability of the club first, and worrying about promotion second. After 5 heady seasons in the play-offs (but heart-breakingly no promotion), the last two efforts have seen a return to mid-table mediocrity. But still most fans support this prudent approach and are proud of what the club has achieved since administration.
Nevertheless, some are starting to ask: why should we bother? They look at Darlington, Bournemouth and Rotherham and wonder what the point of our honesty and prudence is. All three of these clubs have entered administration twice in the last few years, and as a consequence have written off massive debts. No prudence and living within their means for them; instead, they spend ridiculous sums on their playing squads, and then happily write off the subsequent debts by offering a pitiful amount in the pound to their creditors when their profligacy starts to catch up with them and they have to enter yet another administration.
Just this season, Rotherham – who don’t even play in Rotherham any more – have come out of administration and days later splashed £150k on a player. Meanwhile, the £750k bond that they should have paid to the Football League as a guarantee that they will return to a ground within the city boundaries within four years remains, if persistent rumours are to be believed, unpaid.
In all of this (Chester being the latest example in the Conference), the FL and FA are completely complicit. It’s even the case that if you don’t mind taking a paltry points deduction, you can exit a CVA without paying a penny to your creditors. The list of Darlington’s creditors included a local woman owed £3,000 for having put up a player in her B&B, and the local branch of St. John’s ambulance.
To many Lincoln fans, this looks like blatant cheating, aided and abetted by the football authorities. It means there is no level playing field for honest clubs who try to live within their means. It means that clubs like those mentioned above sign players on inflated wages that we can only dream of signing. It is highly likely that all three of the clubs mentioned above will once again be flirting with insolvency within a couple of seasons, because there are no signs that they have any intention of reforming their financially profligate ways. But so what? They’ll just do the Administration Shuffle again and laugh all the way to the play-offs.
It is clear to all thinking football fans that actually care about the way the game is run financially that this has to change. I would suggest the following reforms as an absolute minimum in order to stop the kinds of abuses listed above:
1. The FL abolishes the “football creditors” rule. This ensures anyone who is a football creditor (including players) will be paid 100% in any CVA agreement (local businesses, of course, often have to make do with 1p in the pound). This would allow financially prudent clubs with lower budgets (like LCFC) to offer deals to players that might be less than the likes of Rotherham, but would at least be guaranteed to be paid.
The PFA only pays a subsistence amount to players when a club cannot pay their wages, and for a limited time: clubs should not be allowed to rely on the PFA to bail them out when they mismanage their finances.
2. No club in administration should be allowed to play in their current division unless and until they agree a CVA with their creditors. This would both stop the ludicrous points deductions that have distorted L2 especially lately, and ensure that creditors receive a reasonable deal.
3. Penalties for clubs entering administration repeatedly should be increasingly severe and far more than they currently are. To err once is human, twice or more is frankly taking the piss.
There are some fans who think that even these measures don’t go far enough, but realistically it is doubtful that even these reforms would be considered by the football authorities. In the meantime, the FA and Football League fiddle while Rome that we citizen fans have built burns.