‘Insolvencies probably inevitable’ at football clubs

Insolvencies “are probably inevitable” at some Scottish football clubs as a result of the coronavirus pandemic, according to the eighth annual Football Distress Report produced by corporate insolvency specialist Begbies Traynor.

Ken Pattullo, who heads Begbies Traynor in Scotland, concluded: “While I don’t believe we are looking at a doomsday scenario and most Scottish clubs will survive, I’m afraid that some insolvencies are probably inevitable among the hardest hit clubs.”

The report said Scottish football club finances had gained “unprecedented stability” by the end of March this year, with none of the 42 professional clubs in Scotland showing symptoms of severe financial distress for the second year running.

However the impact of the coronavirus pandemic and the social distancing regulations that have caused all games to be suspended since mid-March look set to have far-reaching financial consequences, according to Pattullo.

The report said that without much-needed matchday revenues, or Government support in the event that the isolation measures are extended into the 2020-2021 season, it is believed that the majority of clubs in Scotland could face financial peril.

“There are real concerns that cash-strapped clubs may be pushed to the brink of insolvency,” said Pattullo.

“Finances are already stretched and every match that isn’t played means income from matchday ticket sales and hospitality is lost.

“With several matches that were still left to play across all Scottish leagues, that represents hundreds of thousands of pounds of lost income, which clubs operating on small budgets can ill afford to lose.”

He added: “Some clarity from the Scottish Government would be helpful now because, while in England the Premier League is in discussions about Project Restart, to resume playing televised matches behind closed doors, Scotland’s top-tier clubs seem to be nowhere near having a road map towards the resumption of any form of play, and meanwhile they remain in financially-corrosive limbo.”

First Minster Nicola Sturgeon has said that coronavirus restrictions mean that Scottish football should not expect to be playing matches in front of fans “any time soon” and that games held behind closed doors would need to be “very carefully considered.”

Pattullo said: “Our Scottish Premiership clubs are the most reliant on ticket sales of all the top-flight European clubs, which also makes them extremely vulnerable to escalating financial problems, especially if it is decreed that the remainder of the season is to be played, behind closed doors.

“It also means they lack the financial clout of the English Premier League, and the cost to clubs of completing the outstanding games, when they have little or no income, could be devastating.

“It’s the mid-size clubs without wealthy backers or lucrative television or sponsorship deals that are in the most perilous position.

“Unfortunately, the double whammy of significant wage bills and sizeable fan bases that make them heavily reliant on match-day gate receipts could prove fatal in this unprecedented situation.”