Rotherham United chief warns ‘lower league clubs sat on bubbling volcano’
At the moment, football – below the Premier League at any rate – is sat on the equivalent of a volcano which is waiting to erupt if a survival blueprint is not forthcoming to help it through its biggest crisis.
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Hide AdEnglish Football League chairman Rick Perry yesterday warned that clubs face a £200million financial hole by September due to revenue streams being crippled by the Covid-19 pandemic which has put the game on shutdown.
For Peterborough owner Darragh MacAnthony, the day of reckoning may come earlier in July or August, when he believes that deferred payments can be put off no longer, with bills having to then by settled by clubs.
Stewart warned: “We are sat on a volcano and it is mild at the moment, but it could erupt. Because month on month, people have commitments and salaries to pay and are struggling through lack of income.
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Hide Ad“There’s quite a few clubs which will go into administration through no fault of their own. We all know that football clubs take it to the wire. It is very few and far between that clubs make money in League One or League Two.
“It is down to the charity and goodwill of the sponsors, fans and the board of directors. It is not a Premier League run organisation and never had the funding. The higher you get up the leagues, it becomes a casino more than a game of chance.”
Thankfully, Rotherham, a club who have run a tight financial ship and made prudent decisions during the reign of Stewart, are likely to be in better shape than many others lower down.
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Hide AdBut, as Stewart told The Yorkshire Post last month, they are still facing a shortfall of £550,000 by the end of June. That will raise to £1million if games, as many expect when they resume, are played behind closed doors for the rest of 2020.
Many EFL owners have spoken about the need for a relief fund to help clubs through the current crisis on top of existing solidarity payments that they receive.
A strict salary cap based on turnover to reduce wage bills is another suggestion, with clubs in League One and League Two having written to the English Football League asking for salary caps to be introduced next season.
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Hide AdStewart, whose club furloughed a number of staff and closed down their day-to-day operations in late March, said: “In business terms, there are two ways to address mounting debt.
“One is to reduce overall costs or a kind ‘fairy’ from the EFL comes along and says: ‘here’s half a million to bridge that gap’.
“But the type of funding that is coming over is more of a loan or future payments. So what we are doing is getting the money from yesteryear up front today and we have mounting debts going forward. I think the politicians call it kicking the can down the road.
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Hide Ad“I think you have got to treat every club in League Two and League One with the same proposal.
“With the furlough situation with the government, they have not discriminated between anybody.
“They have said that any company with employees can be put on furlough and everybody gets the same. That is one size that fits all and we’ve got to get one size that fits all, so everyone is on the same footing and there’s no back-biting.
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Hide Ad“In football, the problem is that the fixed cost are the players. The PFA are digging in deep and saying: ‘no, they are under contract.’ They are even struggling to allow deferred payments.
“That is again kicking the can down the road as it means not that you won’t pay, but that you won’t pay yet. It is a future debt.
“What is the answer? If the climate stays as it is, the only way that the League One and League Two clubs can manage the situation going forward is getting its debt to come down.
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Hide Ad“I have mentioned that if income comes in to meet that debt, you are fine. But if it doesn’t come in, then the big overhead which are the players has to be dramatically reduced.”
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