Exclusive: Clubs at risk of going bust, says League chief

FOOTBALL League chairman Greg Clarke believes the game is facing its most serious economic challenges in 70 years and that clubs must adapt or risk going out of business.

The stark warning from one of football’s leading figures comes amid ongoing financial problems for a host of clubs with Plymouth Argyle’s future still unresolved and Birmingham City believed to be struggling to cope with the fallout of relegation from the Premier League.

Even the top flight has not been immune with Everton chairman Bill Kenwright recently admitting that the club’s overdraft facility had been cut following concerns the bank have over a debt that stands at around £45m.

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Clarke, who is today due to speak about the game’s finances at the Leaders in Football conference in London, has been at the League for 18 months and has experienced first-hand the problems being faced by clubs.

These include Hull City, who were rescued from collapse by a £40m takeover last year, and Bradford City, whose financial plight became so serious last Spring that they came close to leaving Valley Parade.

Speaking exclusively to the Yorkshire Post as we continue our series looking into the Future of Football, League chairman Clarke said: “The challenge since I joined the Football League has been to keep 72 clubs alive.

“That remains the case, though in many ways it has become a different task.

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“We haven’t had a recession as serious as this one for 70 years. What was it Gordon Brown said? No boom or bust any more. People thought, ‘We are okay now’.

“It is why many have been thinking over the last two to three years, ‘Ho ho ho, it is just the normal economic recession and we will be 18 months in, 18 months out’. Life will then go on. But it is turning into more of a trial than that.

“I am a raving optimist, you have to be in football. But I am pessimistic about football finances because if we get complacent then we will start losing clubs.

“That is an unacceptable price to pay. What I always say is, just because it is a long time since we lost a club doesn’t mean it can’t happen.”

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Tackling football’s debt problems has been Clarke’s remit since he accepted the opportunity to replace Lord Mawhinney as the head of the Football League in March 2010.

It is quite a task, as illustrated by Deloitte revealing last year that the 72 member clubs owe £700m – 80 per cent of which can be attributed to the Championship.

At a time when the economy is struggling and the next television deal with Sky, which kicks off next season, is down by 26 per cent to £195m, such a financial burden is a major concern.

Clarke said: “I speak to fans all over and they say times are hard. They say things like, ‘Fred up the road has lost his job and I am worried about mine’.

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“I then ask if that makes it difficult to come along to football and they say they have cut down on things like the away shirt or the pie at half-time.

“What the fans are doing is trimming at the edges. But if the economy continues to struggle then people are soon going to have difficult decisions to make with regards going to football games.

“That is why getting costs under control is so vital. The recession will turn one day. It won’t be quick but it will turn.

“The only thing we can do is make sure the clubs have a sustainable cost base. It is one thing to decide to miss a couple of games a year but it is another to think about losing your club.

“That is what we have to avoid.”

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As part of the attempts to keep the clubs on an even keel, the League last summer agreed to implement a salary cap in League One from 2012 to run along similar lines to the one that has been operating for several years in the basement division.

In the Championship, clubs agreed in principle to adopt UEFA’s financial fair play system whereby members will have to break even over a three-year period, more than likely from the start of the next season.

Clarke sees both developments as major steps forward for the League.

He said: “We face a big challenge to keep 72 clubs alive. We are wrestling with the Plymouth problem at the moment, for instance.

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“The interesting thing to me is that the owners have now got themselves in a place where they recognise the depth of the economic problem.

“We have reached a place where the owners know we can’t just talk about doing something about it, we have to do something.

“I was brought in for my business skills. I have a deep love of football and was previously on a football board (at Leicester City) but, principally, my skills are business.

“Most of the problems we have in the Football League are business problems. We have had to scout our way through ways of giving the owners the tools to make their clubs more financially robust.

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“Largely, the clubs are financially sound – which means the football is okay and the fans are okay. The problems come when a club becomes financially fragile, as they then start doing daft stuff and bringing in the wrong sorts of owners.

“They also turn over managers very quickly.

“It is usually the distressed clubs that cause all the problems. My firm thesis, and one shared by the majority of owners, is that if we can restore a sense of stability to the game then we can get rid of a lot of problems around the edges.”