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Non League Debt
Non-League: Non-League Turmoil - Non League Football Feels The Pinch
Lee Bennett
As the furore of another eventful season dies down all eyes turn towards South Africa and the first World Cup to be staged on African soil. Unless your loyalties lie in non-league football, in which case you are probably keeping a keen eye on the maelstrom that began unfolding early in the season and is blowing a gale through next season's planning.
At the start of every season there are promotion places and there are relegation places. If you finish in one of these positions you go up a division or you go down a division. Simples? Not so in this climate of financial uncertainty. Ground suitability, geographical location and, in particular, financial solvency are playing a greater part in who plays where next season. The fixture computer might need a redesign.
Away from the recent high profile cases of Portsmouth, Leeds, Southampton, Luton, Leicester, Charlton, Notts County and Crystal Palace (with potentially Hull City, West Ham United and more not far behind) the picture outside the top four divisions is equally as gruesome, perhaps more so. The twist is that clubs that go bump in the night turn out to be the saviour of others.
Administration Or Bust
Since 1986 there have been 68 cases of English clubs becoming insolvent, some more than once. Most use administration as their way out of the jam but in some cases liquidation is the denouement. At least three clubs were dissolved in the 2009/2010 season, following on from the likes of Scarborough in 2007.
Recent estimations say that there are some fifty clubs currently in debt to HMRC, totalling over £50m. The bulk of this is saddled by league clubs but the effect is felt the sharpest outside the professional leagues where survival is more difficult. It is debatable whether Portsmouth's incredible debts of £135m will be more difficult to pay off than Hyde United's £150,000.
When HMRC (Her Majesty's Revenue & Customs) come calling they are the one creditor that can't be put off for long and will happily drag a club to the high court. Interestingly, if a club goes into administration HMRC generally receives around 10p for every £1 owed, which goes some way to explaining HMRC's recent no nonsense attitude to clubs that have chosen this route. Here are some of the more serious examples from last season:-
Conference North side, Hyde United, were issued a winding up order in the high court in September, the result of unpaid HMRC debts. The club managed to raise the funds and get the order rescinded but the spectre of dissolution still lurks in the gloom.
Farsley Celtic had to resign from the Conference North and all their results were expunged. This had a dramatic effect on the league table - it had a bearing on the top spot and removed one relegation place. Northwich Victoria have been in similar difficulties for some time and their future is uncertain. The league is watching with interest as it plans for another season.
Chester City resigned from the Conference National in February and, like Farsley, had their results expunged. The club was later wound up and by March ceased to exist. Chester are a beacon in how not to run a club – since the late-90's off-field problems have caused havoc on it. In and out of the football league, in and out of administration, spiralling debts, and multiple league rule breaches, all resulted in the death of Chester City and the birth of Chester FC. We wait to see where the reborn club will play their football next season.
Kings Lynn resigned from the Unibond Premier and were dissolved in November with all their results expunged. Their reincarnation, Lynn FC, will be playing United Counties League football next season - a return to the league they last competed in for the 1947-48 season.
And it's not just English clubs. Over the water in Ireland, Cork City were another casualty. Wound up in February 2010 following a long period of turmoil and controversy.
Two Up, None Down?
The starting grid for a new season is always complicated by the regional construct of the amateur and semi professional leagues. The Conference North is made up of northern based clubs, and the Conference South of southern based clubs, but the difficulties of balancing the divisions are exacerbated by the continued uncertainty surrounding many clubs.
Of the relegated Conference National sides, Forest Green Rovers can be classed a Midlands team and will ply their trade in the Conference North, but Ebbsfleet United and Grays Athletic are from Kent and Essex so will contest the Conference South. Worcester City currently play in the Conference South but will move North in a reshuffle to join promoted Guiseley & Boston United. With Farsley no more and the troubles at Northwich the two relegated Conference North sides got reprieve and stayed where they are. That means NO clubs were relegated; a farcical situation but no longer uncommon.
In the Unibond Premier a relegation place was lost before a ball had been kicked. Newcastle Blue Star went under leaving 21 teams instead of the full quota of 22. The Kings Lynn dissolution then resulted in Ossett Town and Durham City* filling only two relegation spots. How this will also settle itself in the reshuffle is still to be seen. Unibond North side Ossett Albion, who finished second from bottom, have already been handed a reprieve and bottom side Rossendale United are hoping for the same for the second year running.
The Problem
So what has caused this wide reaching problem? It seems there are many reasons.
Modern day owners tend to put the debts on the club and not themselves which can lead to a lax attitude due to the mitigation of personal risk. The two ends of this spectrum are The Glazer family at Manchester United, surely running with unsustainable debts, and the suicidal hierarchy at Chester that orchestrated the club's doom. What is the attraction for a wealthy owner to put his money into a non league club like Farsley Celtic unless he's a dyed in the wool fan?
In the current financial climate banks are not likely to hand out loans to football clubs which means that football clubs need to become self-sufficient, generating their own income without having to borrow. This ultimately impacts the wages that a club can afford, which limits the standard of player available, which may affect the performances on the pitch and hence the attendances in the stands. It is a vicious circle but one much less vicious than the alternative road to oblivion. Just ask Scarborough or Chester.
The assumption is that success is not possible without big spending but this is fast becoming myth as the boom years lie behind and clubs realise they must cut their cloth accordingly. However, this is easier said than done.
Travel can be a problem for lower league clubs, particularly the northern based ones. Clubs located near the M25 tend to have much lower travelling costs due to the geographical concentration of fixtures. Average attendances have been down for some time which doesn't help. And like all levels of football wages are too high. For every Sheik or Russian in the Premier League, there is a wealthy local businessman in the lower leagues, pumping abnormally high amounts of money into a club and inflating the wages. When this ‘sugar daddy' walks away (and is relabelled a ‘poison daddy') it is usually the club that is left to pick up the pieces. They find out the money was a loan, not a gift.
An ever recurring perception that shines through when you speak to people at grass roots level is the precise same one levelled at the current greed culture embedded in top flight football - too many people in it for themselves. Be it players, owners or those that run the game - greed is endemic and will ultimately be the pin that bursts the bubble.
Food for thought - it is fine to point the finger at players on huge wages. It is fine to point the finger at a greedy boardroom concerned only with profits. And it is fine to point the finger at the authorities continually chasing the next sponsorship or TV dollar. But what about the fans? Greed comes in many forms and the continual desire to outdo the neighbours applies to football rivalry. How many boos are heard at football grounds because the team isn't winning the league? How many forums and local newspapers are ablaze with demands to sign the best players and splash the cash?
If every club in a division caved in to fans' demands and doubled their spending, still only a couple would go up and three would still go down. This is the difficulty that all football clubs face and one that is often the root cause of the misguided ambitions that set the ball rolling on a trip to financial oblivion.
The Solution
There is a solution to all this. It's a simple and dramatic solution but it would be a hard reset that would level the playing field in an instant. Formula One recently took the step of introducing team budget caps, a decision that was hugely unpopular with the teams and caused some to walk away from the sport. The same rule would work perfectly in football.
Sure it would be unpopular and some players would leave the Premiership for foreign lands; most wouldn't and the other leagues would be unaffected. Some owners may sell up and move on but so what, they will be the ones we didn't want in the first place. The game would continue, there would be the same number of teams, the same number of leagues, players would still earn good money (but no longer obscene amounts), the fans' trust would be regained, and the game would be just as exciting - more so at the top end.
A little smoothing of the football pyramid would also help, ensuring that the vast sums trickle more freely down to the lowest rungs of the ladder. The rich are getting richer while the poor crash and burn and as we have recently experienced, a little cloud of ash can bring the entire world to a standstill.
Durham City
The Durham City story is an interesting one in itself. They won the Northern League in 2008, gaining promotion to the Unibond North. This they won in their first season, moving up to the Unibond Premier. They had a wealthy sponsor and everything was in place for a successful era. However, their artificial surface was deemed unsuitable and just one week before the start of the 2009/2010 season they were informed that they would not be permitted to rise any higher unless they changed their pitch. This didn't fit with the sponsors' ambitions who immediately pulled out, removing all income and causing the entire team to leave. The club continued with a team made up of local sixth form school kids and won just two games (surprising back to back wins in March that included a derailing of FC United of Manchester's promotion push) all season. They finished by a record of played 38, won 2, lost 36, a goal difference of -141, and zero points due to being docked 6 points for fielding a suspended player under a false name!
West Ham's current financial status makes interesting reading and shows how close they may be to becoming another Portsmouth. Their current squad cost £56m to assemble and currently sucks £37m out of the club each year in wages. They have four players earning £70k, two of which (Kieron Dyer & Luis Boa Morte) have hardly been seen on the pitch. Danny Gabbidon is paid £2.6m a year. Benni McCarthy was brought in for £2.5m in January, is paid £40k a week and has played five games without finding the net once.
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