Championship and League football teams are more likely to be pushed into financial hardship following the introduction of the Financial Fair Play (FFP) regulations.
The A New Dawn for Fair Play? survey, conducted by business advisory and accountancy firm BDO LLP, showed only 14% of financial directors at League One teams considered their club’s finances to be “very healthy”.
The survey also reported that outside the Premier League, 22% of respondents’ finances “need attention” or are “a cause for grave concern”. This figure is up from just 13% in 2012, while over a third (36%) of League One respondents admit financial difficulties.
Trevor Birch, business restructuring partner in BDO’s professional sports group, said: “The divisions below the Premier League are crying out for a sustainable business model. Football clubs play a vital role in their local communities, so there is a clear need for greater financial stability and a higher proportion of clubs living within their means.”
Aldershot Town, Dunfermline, Portsmouth and Farnborough all went into administration during 2013, while Coventry City entered liquidation at the start of August. Heart of Midlothian is still seeking a possible Creditors Voluntary Arrangement to exit administration.
Birch said: “Intense competition for a limited number of promotion places has pushed the majority of Championship and League One clubs into the red and created a dependency on principal shareholders bankrolling trading shortfalls.
“In this context, we now see around a third of existing owners seeking a full or partial exit. While a similar proportion of clubs are being approached by new external investors, in reality there is a dwindling number of genuine potential owners outside the Premier League.
“Our recent experiences at Portsmouth, Dunfermline and Hearts demonstrate that football clubs continue to attract huge interest and publicity but, when it comes to the crunch, only a limited number of potential investors have the resources and the appetite to bankroll the cost of their club’s ambitions.”