As you know, Neil Warnock enjoys a rant. Many football supporters would, however, agree with the content of his recent tirade against Leicester City in the Sheffield United programme when the clubs’ met recently. “I find it quite immoral that they have been allowed to do what they have done off the field.” Warnock’s complaint was that Leicester could write off 90 per cent of their £50 million debt after calling in the administrators last October. Warnock called for punitive action, adding: “Otherwise, everyone who has huge debts will do exactly the same and it leaves clubs like ourselves – who run a tight financial ship – at a huge disadvantage.”
He got his wish. At a meeting of the 72 Nationwide League clubs at the end of April, coincidentally at Leicester’s Walkers Stadium, the hosts were the only club to vote against the suggestion that clubs who go into administration should have points deducted or be relegated. Other measures agreed there provoked adverse reaction: the PFA are implacably opposed to the introduction of a trial salary cap in the Third Division from next season; Forest chief executive Mark Arthur was among those to condemn as “ludicrous” the decision to extend the play-offs from four clubs to six. It is not yet certain those proposals will be ratified at the League’s June EGM, but the over-whelming support for sanctions against clubs who declare insolvency – Leicester were one of eight to have done so this season – suggest they will be in place by the target date of the 2004-05 season.
Leicester fans won’t have been the only ones to have cheered the news that the club’s change of ownership meant they could not be obliged to pay the £2m claimed by Dennis Wise, who is appealing against his contract termination. But clearly the feeling among chairmen was that Leicester had an unfair advantage over their rivals this season, some of whom were themselves struggling to stay afloat.
Coventry avoided administration and halved their debt to £25m, but are to release 15 players, while Ipswich were forced into the cut-price sales of Darren Ambrose and Hermann Hreidarsson, moves which may have crucially affected their play-off chances. Leicester, however, were able to turn down offers for players such as Muzzy Izzet while the Gary Lineker-fronted consortium which finally took over the club in February were assembling their takeover package.
But City were an attractive proposition to new investors despite their debts precisely because they had a chance of going up. If stringent punishments for insolvency had been in place, Leicester might not have had to contemplate staying put in the First or even dropping further down, because they wouldn’t still be in existence. This fate might already have befallen established top-flight clubs such as Middlesbrough and Charlton, who were close to going under in the 1980s.
Given that directors of any business face court action if they continue to trade while insolvent, football clubs who go into administration ought to do so out of a legal duty. Nonetheless, it is surely the case that clubs will be less willing to confess to swelling debts in the future if the outcome is points deduction at the very least. Instead, they are likely to continue trading in the probably vain hope that something or someone will come to their rescue, while the unpaid bills continue to rack up.
If losses build to the point where they have become completely unmanageable, everyone involved will be worse off – the creditors will receive even less in whatever final settlement is reached and the club will be punished either by relegation or the loss of points that helps to make it happen, which will also have the effect of worsening their financial plight. Also, how motivated would players be if they know by mid-season that their club will be relegated, and what effect will this in turn have on other promotion and relegation issues?
What is needed is prevention rather than cure. For example, an FA financial audit of every club – as is the case in Italy and Germany – rather than just the current statutory one, with a penalty of a transfer ban on clubs operating beneath safe financial norms. This should stop desperate chairmen trying to spend their way out of trouble to reach a higher division, thereby reducing the chances of clubs getting into serious diff-iculties.
In due course, perhaps, bump up the penalties, but don’t throw entire divisions into chaos, especially at present with so many problems made critical by the one-off ITV Digital disaster. For once Neil Warnock has a solid grievance to get his teeth into. But that doesn’t mean lynch law is a sensible way to proceed.
From WSC 196 June 2003. What was happening this month