INSOLVENCY EXPERTS have warned it is only a matter of time before football clubs start going out of business if they do not live within their means.
Portsmouth yesterday won a seven-day stay of execution at the High Court as HM Revenue and Customs sought payment of tax debts amounting to €13 million.
Whether or not Pompey are able to drag themselves back from the brink of disaster remains to be seen but Richard Curtin, an insolvency solicitor with law firm Faegre and Benson, believes their specific problems are symptomatic of a general malaise in the game, which also saw Cardiff and Southend win temporary reprieves yesterday.
He said: “Most football clubs are insolvent. We will have football clubs going under in the next year or two. I wouldn’t say top clubs but certainly anything below the Premier League could be vulnerable.
“In football, the added difficulty is trying to make rational business decisions when there is so much emotion involved. Common sense goes out of the window when the heart comes into it. They are treated almost as a sacred cow.
“The bottom line is that football has been living beyond its means.”
Portsmouth revealed in court they are in talks with prospective buyers over yet another sale of the club and, while Curtin is predicting they will survive the current threat, he is warning clubs in general they cannot continue to operate outside normal business guidelines.
Asked what his message to clubs would be, he said: “Don’t stick your head in the sand. Seek professional advice and address your problems as soon as possible.”
Curtin’s view was backed by restructuring expert Danny Davis, of law firm Mishcon de Reya. He said: “I’m surprised it has taken so long for football clubs to see the writing on the wall. Now is the time for them to take their financing seriously and do some serious restructuring to avoid going out of business.
“There is no other industry or market that has had the luxury of overspending like UK football clubs; administrations have simply been a band-aid to buy time before another cheque book came along.
“Those days are over. Now is the time for every football club to start acting like a business.”
