Windy Millers

By on Mar 19, 2008 in Finance | 0 comments

As the football season wends its way towards its conclusion, it’s easy to forget the harsh realities that many clubs have to operate under in order to put a team out each Saturday. That harsh reality has, however, reared its ugly head again, with Rotherham United becoming the third Football League club to be placed into administration this season after Luton Town and Bournemouth, and the danger is that, for Rotherham, the current financial crisis might just prove to be a step too far. This is, after all, a club that was placed into administration for the first time just two years ago, which no longer owns its own ground and which, according to sources, if no buyer or backer is found within the next couple of weeks or so, the club could face liquidation.

Ken Booth, the scrap metal dealer whose yard borders Millmoor, was the traditional football club owner – the local dignitary with a bit of an ego and a sense of civic pride. He kept the club ticking over until the ITV Digital collapse, when Rotherham suddenly saw their projected television income collapse from an estimated £2.5m to just over £200,000. Sinking fast under an expensively assembled squad that was falling off the bottom of the Championship, Booth offloaded the club to the Supporters Trust for £1, with ownership of the ground transferring to him in return for the writing off of a £3m loan. The Trust, however, couldn’t control the losses and soon transferred ownership of the club to a consortium of local businessmen, headed by Dennis Coleman. The club entered into a CVA in 2006, which cost them a ten point deduction at the start of last season. The club rallied in spectacular fashion, overhauling the deduction in the new year, but the sale of three of their best players saw them sink without trace, relegated to League Two in bottom place.

This season, in League Two, the club has had a decent enough season, and it is this that is one of the most concerning things for Millers fans. At the time that the club entered into administration again, they were in a play-off place. This was a decision borne out of desperation rather than being a tactical one. Coleman has been desperately searching for a new backer, and the current prevailing view is that the club has between two and three weeks to secure either another new buyer or someone willing to fund them, or face closure. A significant part of their problem is that they have been in administration recently. The point of entering into a CVA is to convince creditors that the club can, under prudent management, be brought back into line with a proportion of their debts being settled as an alternative to a winding up order. However, how do you persuade creditors (of which the Booth family, who are known to not be as keen on football as their patriarch was, are believed to be the amongst the biggest) that a club that only exited administration a couple of years ago can bring itself back into line? If the Booth family wish to cash in and don’t care much for their reputation within the town of Rotherham itself, there’s nothing to stop them opposing all attempts to save Rotherham United, and then cashing in from the sale of the ground.

As ever, much has been made of the Football League’s ten point deduction, but this situation is a prime example of the Football League imposing a well-meaning rule which merely has a detrimental effect long after the crime has been punished. Rotherham, along with a good many other clubs, wildly overspent in the race to keep themselves in the Championship a few years ago, and are still paying the price for this now. The biggest victims of the ten point deduction are the supporters and those currently trying to find a rescue package for the club. Also, the sense of resignation amongst the club’s supporters is alarming. The club rallied round in 2006, but I have seen plenty of comments on Rotherham forums this week to the extent that “this time, the game is up”. The club is now dependent on the goodwill of the Booth family and of the Inland Revenue, if it is unable to find yet another new backer. Whether this can be done remains to be seen, but the danger for Rotherham is that both potential new backers and creditors become more difficult to satisfy with each brush with insolvency.

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