Collaboration instead of Liquidation

By J L Romanillos, MA TEP

Not that long ago this year I was personally involved in the attempted financial rescue of a football club. All very sudden and very stressful…

It started with a WhatsApp message one sunny June morning from a Madrid-based contact who was representing a Spanish second division football club.

"Hi, José Luis. Please call me. Urgent! Jaime." read the message.

I called Jaime back immediately, curious to know what the matter was.

"We have a big problem, José Luis," said Jaime. "The Club has a really serious problem. We have 30 days to find an initial €1.5 Million or the club will be f...d. Spanish Federation Fees, licences and player salaries all to pay, plus fines - the club just hasn't got the funds. Can you help us find an investor? A Financial Angel to save us?"

After a series of further conversations and emails, I ascertained what the principal issues were, the requirements and the assets that could be used as collateral. And my potential fee. At this stage I did stress that this would be a tough call. Probably "mission impossible". And I then set about my network to try and find a solution.

Curiously, the history of football clubs getting into financial difficulties and eventual liquidation is a long one, with numerous examples in Europe, and two very recent ones now in the UK:

Accrington FC - EFL Members 1888-1893

One of the 12 founding clubs of English football had to resign through crippling financial losses. The club that later emerged from the ashes, Accrington Stanley, also suffered a similar fate in 1966.

Third Lanark - Scottish Football League

One of Scotland's most successful football clubs declared bankruptcy in 1967 and was liquidated.

Clydebank FC - Scottish Football League, 1966-2002

Financial troubles resulted in a buy-out by Airdrie FC, who in turn were liquidated.

Valencia CF - Spanish League, 1999 Technical Bankruptcy

Only a last minute deal with Bancaja saved the Spanish club from liquidation.

RCD Mallorca - Spanish League, 2010 Bankruptcy

First Spanish club to have its UEFA licence removed because of financial troubles.

Bury FC - EFL, August 2019

134-year-old club is expelled from the EFL after failing to resolve its financial difficulties.

Bolton Wanderers FC - EFL, August/September 2019

Historic football institution given until 12 September 2019 by the EFL to complete the sale of the club or prove it has sufficient funds to get to the end of the season.

The last example is a live case and knowing personally some of the former players I sincerely hope that a solution can be found. Praying hard.

The reasons for these difficulties are invariably the same:

  1. Stadium costs - purchase and maintenance
  1. Player & staff salaries
  1. Licence fees
  1. Insufficient revenues from the turnstile
  1. Debt servicing

I have heard a number of potential solutions aired, that include i) a greater share of the riches gained in the Premier Leagues from TV rights, ii) more governmental/federation support (football is the "gladiatorial games" of our time) and iii) a capping of player salaries. My favoured strategy, however, is a more proactive and collaborative model, which I believe is currently being explored by numerous European Football Clubs, particularly those in the second and third tiers of their leagues. Why not actually work together, not just against each other?

A conglomerate or association of football clubs in a similar situation or division could enter into a co-operative model. Or why not even a cross-jurisdictional alliegence? The clubs could share players, stadium, technical staff, expertise, youth and women programmes, costs and even revenues. This could reduce outgoings considerably. And if one of them came under hard times, the others could step in to the rescue, acting as guarantors. There is strength in numbers. We are living, so they tell us, in a globalized world. So why not globalize internally?

I spent a very busy couple of weeks in June trying to find a solution for my Spanish friend and his club. Three private banks I work with looked at the case very carefully, as well as two significant Madrid law practices. They all came back with the same answer. We could help, and we have interested investor clients, but we need more time...and we would need full "drill down" due diligence on the club, including forensic analysis of the financial statements. That will take months, not weeks.

It was, as I feared, the final outcome. I reverted with a heavy heart to give the fruitless result of my search. No finance available. And equally importantly, no commission for my company and no recompense for my time. Yet I felt I had done my little bit to try and save an institution that meant so much not just to the club but to the wider community at large. Football is the modern-day religion, whether we like it or not. We must try to ensure that these "temples" remain there for those that wish and need to "worship".



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