A Third of Owners at Championship & League One Clubs Considering Selling Club Despite FFP

August 13, 2013

A new report has indicated that a third of owners at Championship and League One football clubs are considering selling the club despite Financial Fair Play (FFP) coming into effect.

FFP comes into full effect this season and is designed to ensure clubs break even over three-years.

Despite this, prostate a survey which was commissioned by BDO LLP, shows that there is a dependency on owners to bankroll football clubs, which may explain why a third want to sell in the next 12 to 18 months.

Trevor Birch (pictured left) of BDO LLP said: “Intense competition for promotion places has pushed the majority of Championship and League One clubs into the red.

“(This has) created a dependency on principal shareholders bankrolling trading shortfalls.”

The survey spoke to 66 clubs from across the Premier League, the Football League and the Scottish Premiership, with the majority saying they would meet the FFP regulations this season.

The survey also highlights that only 30% of finance directors would describe their club finances as ‘very healthy.’

Birch added: “The initial signs suggest that clubs are taking the new requirements seriously and beginning to adapt their behaviour in the way the football authorities intended, which is encouraging.

“Though many would prefer the sport to find its own sustainable financial equilibrium, the pressure on clubs and their owners for success has not allowed this to happen.

“This is why it is important for the FFP regulations to be embraced, not just in letter, but in spirit.”

FFP regulations vary from league to league, but the Premier League guidelines allow clubs to make losses of £37.5m ($58m) over a three-year period.

Daniel Geey, lawyer at Field Fisher Waterhouse and football law expert told iSportconnect: “Clubs are usually categorised as win maximisers rather than profit maximisers, their incentive is not (usually) to make profits for their owners but to achieve on field sporting success.

“Thus normal market forces have specific negative externalities in the sporting setting. This is because bankruptcy and subsequent administration (or worse liquidation) has significant detrimental effects for a club at the centre of its community and as a valuable social institution, such as Portsmouth and especially Coventry City now.

“If over-indebtedness and continued loss-making leave the possibility of bankruptcy for clubs, then UEFA, the PL and FL would argue that they have a responsibility to ensure clubs become more self-sustaining which in turn promotes better financial management which secures the long term futures of clubs who may otherwise continue to live beyond their means.”

BDO LLP oversaw the administration and sale of Portsmouth and is working with Hearts and Dunfermline in Scotland.