Post by Macmoish on Oct 19, 2012 21:47:52 GMT
Soccerex
Report warns of dangers of chasing Premier League dream
English Championship clubs are putting their futures at risk by spending heavily in a bid to secure a lucrative place in the Premier League, according to a new report from accountancy firm PKF.
‘Leagues Apart’ surveyed finance directors from 62 teams across the Premier League, Championship, Leagues One and Two, and the Scottish Premier League. It revealed that, with the exception of the top Premier League sides, it is becoming increasingly difficult to run a football club without losing money. The report revealed that 66% of clubs were expecting not to make a profit before player trading and amortisation in their next accounting period, compared with 42% in last year’s survey. The contrast between the top flight and the rest of English football was illustrated by the fact that 89% of Premier League clubs expect to make a profit, compared to just 12% of Championship teams.
The importance of securing a Premier League slot increased in June as the Premier League secured a huge 70% rise in the value of its domestic live broadcast rights, with BSkyB and BT splashing out a combined £3.018 billion in an agreement spanning three seasons from 2013-14 to 2015-16. Charles Barnett, head of PKF’s Football Industry Group, has warned of the dangers of Championship clubs overstretching themselves in a bid to win promotion. “With match day revenues continuing to decline, operating costs still rising and a growing reliance on the generosity of major shareholders, many clubs outside of the Premier League elite are balanced precariously on the knife edge between survival and insolvency,” he said. “This tension is particularly evident in the Championship, where many clubs gamble with their very survival for a shot at entry to the promised land of the Premier League. The dilemma is there for all to see – find a generous benefactor, spend more than you earn, gain promotion and pay the fines; or play by the rules and settle for mediocrity. The benefactor model can seem appealing because it has delivered instant success on the pitch in some high-profile cases, but it is inherently unstable – you only need to look at recent history to see what can happen when such a set-up comes crashing down.”
PKF has experience of dealing with the consequences of a failed football club, with administrators from the firm operating debt-laden League One club Portsmouth, which won the FA Cup as a Premier League team in 2008, since February. The Football League has adopted rules based on UEFA’s Financial Fair Play (FFP) model and the report added that 85% of clubs surveyed said they expected to comply with domestic or European financial rules in the current 2012-13 season. Barnett said it is essential that clubs honour this commitment. “Clubs are making the right noises but I suspect that many will need to urgently review their five-year-plans with a strong dose of realism if the industry is going to make it through the next few years without any further insolvency cases,” he added
www.soccerex.com/industry-news/report-warns-of-dangers-of-chasing-premier-league-dream/
Report warns of dangers of chasing Premier League dream
English Championship clubs are putting their futures at risk by spending heavily in a bid to secure a lucrative place in the Premier League, according to a new report from accountancy firm PKF.
‘Leagues Apart’ surveyed finance directors from 62 teams across the Premier League, Championship, Leagues One and Two, and the Scottish Premier League. It revealed that, with the exception of the top Premier League sides, it is becoming increasingly difficult to run a football club without losing money. The report revealed that 66% of clubs were expecting not to make a profit before player trading and amortisation in their next accounting period, compared with 42% in last year’s survey. The contrast between the top flight and the rest of English football was illustrated by the fact that 89% of Premier League clubs expect to make a profit, compared to just 12% of Championship teams.
The importance of securing a Premier League slot increased in June as the Premier League secured a huge 70% rise in the value of its domestic live broadcast rights, with BSkyB and BT splashing out a combined £3.018 billion in an agreement spanning three seasons from 2013-14 to 2015-16. Charles Barnett, head of PKF’s Football Industry Group, has warned of the dangers of Championship clubs overstretching themselves in a bid to win promotion. “With match day revenues continuing to decline, operating costs still rising and a growing reliance on the generosity of major shareholders, many clubs outside of the Premier League elite are balanced precariously on the knife edge between survival and insolvency,” he said. “This tension is particularly evident in the Championship, where many clubs gamble with their very survival for a shot at entry to the promised land of the Premier League. The dilemma is there for all to see – find a generous benefactor, spend more than you earn, gain promotion and pay the fines; or play by the rules and settle for mediocrity. The benefactor model can seem appealing because it has delivered instant success on the pitch in some high-profile cases, but it is inherently unstable – you only need to look at recent history to see what can happen when such a set-up comes crashing down.”
PKF has experience of dealing with the consequences of a failed football club, with administrators from the firm operating debt-laden League One club Portsmouth, which won the FA Cup as a Premier League team in 2008, since February. The Football League has adopted rules based on UEFA’s Financial Fair Play (FFP) model and the report added that 85% of clubs surveyed said they expected to comply with domestic or European financial rules in the current 2012-13 season. Barnett said it is essential that clubs honour this commitment. “Clubs are making the right noises but I suspect that many will need to urgently review their five-year-plans with a strong dose of realism if the industry is going to make it through the next few years without any further insolvency cases,” he added
www.soccerex.com/industry-news/report-warns-of-dangers-of-chasing-premier-league-dream/