The headlines, of course, have been somewhat breathless. “SWINDON Town are considering the possibility of entering administration, the Advertiser understands,” screamed the Swindon Advertiser, while the BBC led with, “Swindon Town could be forced in to administration in order to reduce their debts – thought to be around £13m.” This is understandable. After all, this seems to have been the way in which the story has been packaged to the media, and a story of financial collapse at Swindon Town would make for an obvious narrative concerning the the dangers of spending lavishly on wages and an exotic, ex-Premier League player as their manager. Something, however, doesn’t quite feel right about the possibility of this club at this time taking the step of placing itself into administration and it is possible – if not likely – that there is more to this than meets the eye.

Swindon Town have been here before, of course. The club has entered into administration twice before – in 2000 and again in 2002 – and financial difficulties have been reported from the club since then, as well. When a consortium involving current owner Andrew Black took the club over in 2008, though, a new era was supposed to be starting for the club. The arrival of Paolo di Canio as the club’s manager in May 2011 thrust it headlong into the headlines, but di Canio did lead the club to promotion from League Two at the end of last season and this season has seen a continuation of the club’s success, with it currently sitting in fifth place in the League One table, just seven points off one of the division’s two automatic promotion places.

It has been clear, however, that all is not necessarily right at the club over the last few months or so. At the start of October, it was placed under a transfer embargo after a tribunal ruled the club had to pay £340,000 for the signagure of two players, James Collins and Troy Archibald-Henville, meaning that the club exceeded its fixed limit on spending on wages and fees for the season. The embargo was lifted after a month, but backstage machinations – which involved the departure of chairman Jeremy Wray, who had been instrumental in bringing di Canio to the club in the first place, and his replacement with Sir William Patey – hinted at the problems that have been so lavishly reported today. Di Canio was subsequently informed that the club may not be able to re-sign three of his key loan players this season, Chris Martin, Danny Hollands and John Bostock, which led to the manager putting in £30,000 of his own money to keep the players at the club for the time being.

It is understood that the club currently has debts of around £13m and that its current wage bill is around £250,000 per month, but such figures only tell part of the story regarding its current financial condition. The total debt is understood to primarily be made up of soft loans to the current owners, which means that there may not necessarily be any pressing need to address them immediately, and it also understood that this quarter of a million pound monthly wage bill is a figure agreed at the start of the season which has been stuck to. If this is the case, then the situation at the club might not be as desperate as the aforementioned headlines make it all seem, but this can only lead us to the question of why the dread word ‘administration’, with all the emotive connotations that come with it, has come to rear its head at this time. After all, January is the only time during the season that a club can raise some money through selling players and Swindon have been performing well enough on the pitch this season for their players,presumably, to have some value on the transfer market. If things were truly that desperate at The County Ground, it would likely have other options than merely to give up the ghost altogether, call in an insolvency practitioner, take a points deduction which would seriously damage its chances of a second successive promotion and face the uncertainty that comes with any insolvency event.

It had been strongly suggested for some time that Swindon Town were up for sale, a fact that seems to have been borne out by the replacement of former chairman Jeremy Wray with Sir William Patey in the latter months of last year and by the club’s statements regarding searches for new investors, which are believed to be ongoing. The rumours that have started this morning seemed to have been fuelled by two separate strands. On the one hand, the club has been reported as ‘failing to rule it out’, which is hardly the strongest reason for believing that administration will – or even may – happen, whilst on the other is the suggestion that the club needs to financially restructure. If Black is not putting any more money into the club, then some degree of financial restructuring would be inevitable, unless any new owners or investors were willing to sustain the same sort of losses that Black has over the last couple of years or so. This, however, also remains a long way from declaring any form of insolvency.

Managing the finances of a football club – and in particular the finances of a football club in the lower divisions of the Football League – could be described as being akin to plate-spinning. The money that clubs bring in at this level from television money, gate receipts and commercial revenue have to cover a lot. FA rules mean that players have to be paid in full, whilst HMRC also has to receive its money on time, with any club not doing so being at serious risk of having a winding up petition served against it. The club states that it has no debt to any banks and that its tax and PAYE bills are paid up to date. If this is the case, then the likelihood of Swindon Town collapsing into administration is slight. As things stand, the only people that would stand to lose anything from the club entering into administration would be those that have put loans into the club and those are, at present, the very people that still own it.

That said, however, the times of milk and honey at The County Ground are likely coming to an end. It could be argued that Black’s money has served a purpose, of sorts, in getting the club out of the basement division, but it could equally countered that this £13m of debt might just as well have been thrown onto a bonfire, in business terms, unless the club can get into the Championship at an absolute minimum. What would any new owner think of coming into a club which has such a debt owed to a former owner? Depends on who the new owner is, but unless the creditors are happy to have £13m worth of loans written off, then the only way to get rid of that debt would be to pay it in full, try to reach some sort of settlement agreement or nudge the club into administration, effectively saying, ‘this is the best we can manage, take it or leave it.’ That latter option doesn’t come without cost or a degree of risk, and the question of why the current owners of the club would take such action is unanswerable. If the financial restructuring of Swindon Town Football Club is to leave it in a healthy long term position, deals are likely to have to be done. An exercise in cloth cutting may turn out to be as good a place to start as any, even if that does mean scaling back on the apparently lofty ambitions of those that have spent the last couple of years ploughing their money into the club.

You can follow Twohundredpercent on Twitter by clicking here.