Debt, Debt, Debt

I wonder what sort of odds you could get on at least one Championship club entering administration before the end of the season? Grim though it may be to speculate, you’d be pretty confident of a return if the current headlines are anything to go by. Only Southampton succumbed last time around, but a cloud of fiscal angst lingers threateningly over a few of our number at the minute. Palace and Watford have both been in the news in the past week, and each club’s fans will be hoping that their cheerless defeats against Doncaster and Newcastle last weekend are not directly related to the media’s ominous chatter. The two clubs, whose potential plight is covered in a decent post on general football blog twohundredpercent, have a bit of breathing space after commendable starts to the season each, but pessimists among their support will no doubt be looking ten points down the table.

Talk of financial unquiet go back further than a week at both clubs. This Independent piece implies that owner Simon Jordan reconsidered his priorities after the paltry payout from Spurs for John Bostock in 2008, and that, even if he could afford to, Jordan no longer wants to bankroll his team. The club has been up for sale for a while now, and all the signs are negative. Failure to pay instalments for Alan Lee and Nick Carle, signed in the summer of 2008, has resulted in two separate transfer embargoes, and former players are making noise about unpaid wages. All these parties will have to form an orderly queue since the current crop are, as has been well-documented, still waiting for November’s pay package. Various sources have suggested that the Eagles are in for a long, drawn-out struggle, which would likely see assets being stripped in the next transfer window. Seeing as they don’t own Selhurst Park, attention will turn to the playing side of the club. Ben Watson has already departed, and Victor Moses, Sean Scannell and Nathaniel Clyne, teenagers all, will attract interest in January.

The process of administration will be avoided at all costs and, as this WSC commentator remarks, Palace are already trying to develop ways to raise funds and stave the A word off. While they do, of course, have to try whatever they can, attempting to flog cheap season tickets to a diminished fanbase is an unlikely cure to their problems, and it seems that something serious, like welcoming David Gold on board, will need to happen if they’re to clear this mess. Manager Neil Warnock is doing his bit for the club’s PR by lightening the mood with a joke or two and he has vowed to stand by Jordan. Love him or loathe him, there are few other managers that you’d prefer in his place if your club were in Palace’s predicament.

I haven’t seen any figures mentioned in relation to Palace but, being a public-owned company, Watford’s debts are available to fans to agonize over. The holding company has had to move money around to tide things over, and a bill of £4.88m, secured against Vicarage Road, is now outstanding. A jaw-dropping £5.5m is further required to see them through to June 2010, which leaves you wondering how they are going to raise that sort of cash in just six months, particularly when you consider what slender pickings are available transfer-wise. That rapacious Tory peer, Lord Michael Ashcroft, may not be so popular in Belize these days, but one alternative may be to go cap in hand to him, their main shareholder, and opt for that ubiquitous action for overstretched PLCs: a rights issue.

Just because these two are in the news, it doesn’t mean that they are the most vulnerable in the Championship. Cardiff City has, next to Leeds, perhaps been the most cross-referenced club in recent finance-football discussion and was close to the edge before Risdale & Co secured Eastern investment last month. Their sizeable debt remains, though, and fans would be naive to think that their new investor(s) will simply wave the magic wand and clear it without demanding recompense somewhere down the line, especially if Premiership status is not realised any time soon. Elsewhere, each of Bristol City, Reading and Preston are reported to have suffered heavily of late, with the latter club posting an alarming pre-tax loss of £9.17m in November. Davids Nugent and Healy, Danny Pugh, and Sean St Ledger are just some of the players that have been sold to stem the flow in past seasons, and Chairman Derek Shaw spoke candidly about the scant alternatives on offer to the club earlier in the season.

All these clubs are hoping to emulate Burnley in successfully gambling on future earnings, but with the gulf between Premiership and Championship looking vast, there will inevitably be more losers than there are winners. Newcastle and West Brom, not even half of the way through their parachute jump, are on course to get back into the top flight straight away, and their likely ascension would leave the remaining teams scrapping for just one PL Passport. While David Conn’s exposure of the state of financial play in the Premiership makes our humble debts look modest, potential income is much reduced a league down, so there is less flexibility for extending loans, twiddling interest rates and, maybe most importantly, wooing new investment. I’m no economist, but I for one won’t be surprised to see an asterisk or two in the league table come May.

is co-editor of The Two Unfortunates. He’s 28, supports Plymouth Argyle and takes a particular interest in the fortunes of those Football League clubs west of Bristol.

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5 Comments on "Debt, Debt, Debt"

  1. The plight of Watford cannot be helped by the failure of Portsmouth to shell out properly for Tommy Smith and Mike Williamson. I was also interested to see that Bostock has already scored twice on loan for Brentford, having joined the Bees recently. I am not a fan of Simon Jordan but on this issue, he was right be outraged with Spurs.

  2. Ben says:

    Agreed – can't stand Jordan, but the Bostock deal was a joke. (And, what's more, Jordan's been proved right about the amount of game-time Bostock's had at Spurs.)

    The Watford/Portsmouth point is a very interesting one – the latter still look hugely unstable, and may be in trouble even if they don't get relegated. It'd be extremely unfortunate if Pompey's financial mismanagement dragged Watford into trouble too.

  3. Matt R says:

    We're currently up to date as far as payments from Pompey are concerned, if only because the Premier League diverted the first instalment for Smith from their TV money rather than sending it to Pompey. I would tend to agree that Portsmouth wouldn't be my first choice of creditor at the moment.

  4. Jack Mayflower says:

    Well, it looks like Paul Sturrock's spending spree has landed Argyle in dep water too.
    When Paul Mariner arrived as head coach under Sturrock, he let slip the fact that zero money was available tfor transfers in January.
    Now we know why.
    The scrutiny involved for trying to gain a place on the England 2018 Word Cup punt has resulted in the transfer embargo on Argyle hitting the public gaze…. it's been in force for some time, although one of their directors, Keith Todd, has stated it is only “historic”, whatever that means…. something to do with Franny Drake perhaps ?
    Fans are really not happy at this news of embargo as Plymouth have hitherto been regarded as one of the more prudently run clubs in the Championship. It will probably all unravel by the end of the year, with the possible jackpot winners being announced shortly, and a make or break Board meeting just three days before Christmas day.

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