Think football, not financial

by Dexy Longshot

Tuesday, November 25th, 2008
 

Do they really deserve their write-offs?

Recently, I left my job and with it the long, 40-mile each-way journey that went with it. The preserve paradox of signing on in the current financial climate is that I’m actually better off now there’s no more need for the constant daily refilling of my car. It’s quite nice to keep it to myself, but staying at home for a while was a shelter from the obscene panic now gripping everyone from merchant bankers to minimum wage staff across the land. Meanwhile, we just sit back and watch Manchester City lining up their next bid for a world class footballer that may seem audacious to them, but ludicrous and a waste of time to the rest of us.

It’s already been well documented that the Credit Crunch will hit the lower leagues hardest, but a recent report out has declared that a total of £28m of debt will be cancelled between clubs that have overspent and do not have the wherewithal to pay any of it back. The majority of these clubs, through series of poor teams and sackable managers, have dropped down a division and have fallen on hard times, and their debt is a small fraction of the aforementioned £28m. There are other notable additions to the list, however. Leeds and Leicester have failed spectacularly in modern times, and these teams debts were at around £7m apiece. Both of them will pay just 10% of this total. The only Championship side to feature in the list is Ipswich Town, whose accountants will need to settle up just £391,000 with the taxman, after falling £5m into the red.

Is it just me that thinks this decision to cancel such debts as rotten and unjust? While teams that go beyond broke and are forced to call in the administrators, clubs that hang on long enough to their debts without going under can get away with a freebie from the taxman. What makes it truly grating to accept is that the decision to give Leeds, Leicester and Ipswich this break was made on financial prospective, not footballing. If the taxman had taken one look at the table, he would see that Leeds and Ipswich are in serious contention for the playoffs. These teams are well overdue a promotion, and if our man from the Inland Revenue is a gambling man (and I very much doubt he is), I’d strongly recommend an accy on these two. Leicester are the worst of a bunch, though. They are well on their way to making a return to the Championship already, topping the League One table and making their bounce back following relegation a dead certainty even before Christmas.

So now these teams may well get promoted and not have to worry about their debts, thanks to the windfall a high tier can bring. Not only that, but these clubs’ respective success means that their gate receipts should be more than healthy now that the win factor is much stronger. Why should these teams get the unfair advantage of a healthy bank balance to match their fellow teams who have had the good sense and decency to be prudent with their money and resist the temptation to drool every time the transfer window re-opens. Chairman of the Football League, Lord Mawhinney, has already “looking at regulations which will try to prevent clubs getting into this situation.” It had better be mighty soon.

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  • tef1on

    So they get a clean slate while Luton got a 20 odd point deduction? Does this make any sense to anyone else?

  • Stevie

    its not fair is it. How about if I don’t pay my mortgage for a year, will I get let off?

  • James Farrier

    Exactly, it’s the total opposite of Luton’s plight; these teams are pretty much being rewarded.

    Strangely, I heard that even if you have personal debt and you continually ignore the threatening letters from bank, then legally after 4 years the debt is erased in a similar way. Probably not in any way recommended though!

  • http://www.ukfootballfinder.co.uk Darren

    isn’t there the small matter of being sued then filing for bankruptcy? Once that happens you have bad credit for life I’m sure

  • Dan Church

    If your made bankrupt then you have bad credit for 9 months, then your back to square one, used to be a yeah but 9 months now, although in the worst case scenario you pretty much lose all your worldly possessions so it will mean moving back to mums with nothing but the shirt on your back and starting again.

  • http://www.ukfootballfinder.co.uk Darren

    is that all you get? I got 6 years as my tennants were throwing away my post, I had top go to court to clear my name.

  • James Farrier

    27th November, BBC Website, Football, ‘My Club’ section, Leeds United:

    “Leeds hit net with healthy profit

    Leeds United is looking to draw a line under its financial difficulties after the club announced a £4.5m profit.

    In the 14-month period to July 2008, the books show before player trading the club made an operating profit of £902,000 from a turnover of £23m.”

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