ICSM Sports Insolvency News: As Sheffield Wednesday enter administration Ian Carrotte warns suppliers over giving generous credit to clubs as 'they are run on hope and ego'
By Harry Mottram: You can count the number football clubs have gone bust and are then liquidated on one hand as although they are insolvent they always survive administration as they are not normal businesses. The latest to fall into administration is Sheffield Wednesday which effectively ends Dejphon Chansiri's decade-long ownership of the club with the Sheffield Wednesday Supporters Trust confirming their boycott of matches is over after their campaign to see the back of Thai national.
It means a 12 point deduction suggesting relegation and a further loss of revenue and status is possible. Talking of revenue due to the boycott by many supporters the era of fans forsaking buying merchandise is ended with record sales last matchday which will have helped the administrators in finding a buyer for the club founded back in 1867.
Ian Carrotte of ICSM said many of the suppliers to the club have been placed in a difficult situation as they will be hoping that new owners will honour invoices long unpaid before the insolvency. Administrators Begbies Traynor were reported to have issued this statement: "The joint administrators have taken over the running of the club with immediate effect to protect the interests of creditors, and to ensure Sheffield Wednesday can continue operating while we seek a new owner as swiftly as possible. Like many football clubs, it has been trading at a significant loss for many years, with those losses historically funded by the owner. Mr Chansiri is no longer willing to provide that financial support.”
The ICSM CEO said he understood the club’s fixtures would continue to be played despite the difficult situation with the team at the bottom of the Championship. He said: “Many football clubs have gone bust but continued to function even recruiting players from neighbouring local leagues allowing the administrators to reorganise the finances. As long as the club can continue to play then the fans will effectively keep Wednesday going ready for a new owner to inject new money.”
In Scotland Caledonian Thistle have only just survived a period of insolvency but historically there is a long list of administrations as clubs are more often run on hope and ego rather than as a business. Those with long memories will recall how Accrington Stanley folded in the 1960s – although the club was eventually reborn. These are some of the clubs in England and Wales that have gone bust in the past and then returned after being reconstructed:
Bradford City in 1983, Charlton Athletic in 1984, Middlesborough in 1986, Tranmere Rovers in 1987 and Newport County in 1989. In the 1990s Walsall, Northampton Town, Kettering, Aldershot, Maidstone, Hartlepool, Barnet, Exeter, Gillingham Doncaster, Millwall, Bournemouth, Crystal Palace, Chester and Portsmouth all entered administration or applied for a CVA to survive – in this century Hull, QPR, Bury, Halifax, Bradford, Notts County, Barnsley, Leicester, Port Vale, York, Derby County, Ipswich, Wimbledon, Oldham, Darlington, Bradford City (again), Wrexham, Cambridge, Rotherham, Crawley, Boston, Leeds, Luton, Bournemouth, Rotherham, Halifax, Darlington, Southampton, Stockport, Chester, Northwich Victoria, Farsley Celtic, Salisbury, Weymouth, Crystal Palace (again), Portsmouth, Plymouth, Rushden and Diamonds, Darlington(again), Portsmouth (again), Port Vale (again), Aldershot (again), Bolton, Bury, Rhyl, Wigan, Bury (again) and Derby County (again).
In Scotland the same situation saw these clubs also hit the rocks in this century: Queen’s Park, Greenock, Clydebank, Airdrieonians, Motherwell, Dundee, Livingston, Gretna, Livingston (again), Dundee (again), Rangers, Dunfermline and Hearts.
Glasgow Rangers hit the rocks in 2012 when the club went into administration when debts hit £168.9 million pounds. More than half of the debt was to the taxman – but the list of unsecured creditors included the corner shop by the Ibrox ground (£567.45), a face painter called Susan Thomson (£40), the police £51,882 and the ambulance service £8,438. And they also owed other football clubs a total of £3.3 million pounds – a shocking list of creditors.
Ian Carrotte again stressed suppliers to be especially cautious when granting credit to sports clubs as they so often trade off the notion they can never go bust. The opposite is true when you look at the list of insolvencies.
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