Football Clubs That Could Be The Next To Go Under

Football is like any other business. And, yes, it is a business. Balance sheets and P&L forecasts notwithstanding, the principles are the same. Arguably, football is one of the most difficult businesses in global industry – it is multi-faceted, there are many elements to it.

From an outsider’s, perhaps, slightly less educated perspective, there is more to it than meets the eye. Variables outside of shareholders’ control. The reliance on talent, skill and in rare cases, ‘gift’ in one of the most competitive sports in the world – and it ultimately starts, pitting initially, 11 humans against another 11, combining physicality, mental fortitude, physiology, tactics and intelligence, with that just being the base levels.

In turn, these contribute towards what other echelons of the business are able to do, due to the products’ (players) results on the field, where even outside variables can play a part.

However, to what extent is the argument that a football club needs the best off-field team or the best on-field team to become financially successful, or is this a healthy balance of both? Can one exist without the other?

Below, in light of a number of cases of football clubs going into administration, or indeed, ceasing to exist over the last few years, with Scunthorpe, being a most recent example, we explore other possible football clubs from different levels that may be in similar situations for a number of diverse reasons, in addition to possible contributory factors from a general perspective.

What Factors Lead To Ceasing Operations?

From a generic perspective, there are many. Each one may or may not have a knock-on effect. The age-old argument is, whether it begins on the field or in the boardroom. Putting it in more corporate business terms, is it the product or the route to market and the operations that surround this?

If a football club has a great team, but not a great brand, due to a weakness in marketing deficiency, it will soon lose its on-field assets, which is arguably more detrimental in this case, than the other way around.

There are of course arguments, based on past examples that perhaps conflict with this. Leeds United in the early 2000s, were a prime case of boardroom mismanagement and outright gambling, that led to a possible championship-winning team from being dismantled, due to the risks that were taken, based on an over-reliance of immediate return-on-investment. It led to the club nearly ceasing to exist, being relegated to the second tier of English football and stripped of their biggest assets to the highest bidder for a ‘bargain basement’ fee.

Then, of course, this also works in reverse. A quality product (football team), with a mediocre or poor operations department that is not able to leverage the club’s success on the field, to build it into a big enough brand, so that it is able to retain its players. These are what have become known commonly as ‘feeder clubs’ or ‘selling clubs’.

In the early-to-mid 2000s, it could be argued that Blackburn Rovers had (on paper at least), one of the strongest teams in the Premier League – perhaps with enough business acumen in the boardroom, they could have acquired enough knowledge, or investment to be able to market them sufficiently enough so that they could keep hold of their prime assets. For a number of years, the club were teetering on the precipice, which raises the argument, if they had a strong enough boardroom, they may have been able to keep hold of their prime assets and challenge. Ultimately they were eventually relegated.

Portsmouth were another club that, under manager Harry Redknapp, boasted a talented team, though, perhaps not the most savviest executive committee. At one point, having qualified for the then UEFA Cup (Europa League), they could have gone on to challenge for a top-four place in the Premier League, if they had the right infrastructure, and, ultimately, operations expertise in place. The years that followed, witnessed them almost go into administration as they plummeted two tiers.

Which Football Clubs Have Reasons To Be Fearful?

Over the last couple of years, or indeed a few months, it could be argued that there are a handful of clubs that might have a right to be worried. Particularly in the SPFL (Scottish Professional Football League), a recent report indicated that there could be up to nine clubs that are flirting with disaster over Covid-related payment delays.

The introduction of Covid-relief payments to clubs in the SPFL, to help mitigate the loss of revenue from the global pandemic, has seen these delayed and as such, has put a number of clubs under stress, when considering expenses like soaring fuel prices.

Below, we take a look at specific examples of clubs that may have a reason to worry.

Should Clubs Anticipate Potential Financial Upheaval?

While it is likely that many clubs do everything they can to mitigate risks, there perhaps needs to be more communication between the boardroom and those in charge of the playing staff, regarding realistic on-field expectations. Many owners that invest in players, often expect quick results and as a result, do not anticipate potential issues that can go wrong – especially things like injuries or a run of bad results.

As a result, this can lead to clubs that had expected financial returns via league positions, from investment in playing squads to find themself in difficulty. The aforementioned Leeds United are a classic example of a club that over-extended themselves, with chairman Peter Ridsdale making a gamble that didn’t pay off and nearly plunged the club into near-extinction.

For a football club to survive and even flourish, every element has to be taken into account and contingency plans put in place to account for unmitigated events. The recent global pandemic being one, albeit, extreme example.