Gerald Krasner of Begbies Traynor and Brendan Guilfoyle of P&A Partnership face tough problems when called in to clean up a soccer club.

by James Fielden

At a time when people in all walks of life are struggling to meet ends meet due to the recession, soccer clubs are now starting to feel the strain. Administrator Gerald Krasner says clubs need to be more transparent with their finances - and the situations some clubs are finding themselves in are "ridiculous".

Krasner cites the lack of club chairmen willing to change the financial rules as one of the reasons behind clubs now finding themselves in treacherous waters.

He says: "I don't blame the Football League; I blame the people who are not voting for new regulation. I think until they change the rules so that the clubs are made more financially responsible clubs will carry on finding themselves in trouble.

"To be fair the clubs have got to get their house in order a bit more, the money scenario is quite ridiculous. The trouble is to change the law you need all chairmen to vote for it which is like getting turkeys to vote for Christmas."
 
Because of the rules not being changed, former Bournemouth administrator Krasner can see numerous clubs having serious financial problems like those of Crystal Palace, Notts County and Portsmouth before the end of the season.

He predicts: "Lots more clubs will be in trouble. I have had phone calls with people at a number of clubs that need advice. There will definitely be more going into administration before the season's end.

Brendan Guilfoyle of P&A Partnership highlighted the fact that all club directors know the consequences of gambling the club's money that could result in financial difficulties in the future.

He says: "The temptation to pay players an otherwise unsustainable level of wages is always there for football club directors. They want to live the dream and strive for success on the football pitch. If that success is not achieved then the consequences are predictable.

With Crystal Palace's demise and entrance into administration Krasner says it is not as straightforward as it seems for the administrators to get a club in order again after their appointment. "What happens is the court will make an order to appoint administrators," he explains. "They are then effectively responsible for running the company. Their job will be to find a buyer because there is no way they (the administrators) can run the club on a long term basis."

It then becomes a case of finding the best buyer for a club whilst sticking to the rules.

Krasner adds: "As soon as a football club goes into administration everybody and their mother wants to buy it; but when it comes to paying for it, it becomes a different matter. This is due to the fact that the football creditors have to be paid in full. It is not the buying that is the problem; it is also being able to fund the losses the club will make until you can turn it round into the positive where you are making a profit instead of a loss.

"Clubs in the lower divisions could lose a million a year. You have to satisfy the Football League that the buyers qualify under the fit and proper persons test and have the money to do it."

Furthermore, Guilfoyle admits that people who are seriously looking to invest in football clubs have died down over recent years. "Traditionally administrators have been inundated with interest from potential purchasers of football clubs, but in recent administrations there have only been one or two people that have been seriously looking at purchasing the club. As with all administrations, clear communication and transparency are more important than ever," he says.

"While it is easy to see how running a football club can become addictive, it is important not to let vanity get in the way, to remain detached, to make the difficult decisions decisively and get new owners into the club."