Date Published: 29th June 2022
English ‘zombie clubs’ targeted by US investors while Scottish clubs avoid EFL’s runaway costs
The March 2022 Football Distress Survey, which has been conducted by business recovery specialist Begbies Traynor for a decade, has highlighted that Scottish clubs are keeping a better handle on their finances and more realistic player payroll than their counterparts in the English Football League.
Only six clubs in Scotland (14%) are showing signs of financial distress, two fewer than October last year. In the English Football League, however, 32 of the 72 clubs (44%) are displaying symptoms of financial difficulty, down from 34 in October 2021 but still double pre-pandemic levels.
“Scottish clubs don’t have the same temptation to risk it all on high-value players to secure the lucrative and transformative Premier League jackpot, which naturally drives a boom or bust approach to speculating player wages,” commented Ken Pattullo who leads Begbies Traynor in Scotland.
“The average player wage in the Scottish Premier League (SPL) is under £200,000 and even that is skewed hugely by the two biggest clubs, and by comparison the average Premier League player is earning more than £3m according the PFSA. The benefit of Scottish clubs resisting these out of control player wages is that a far smaller proportion of the revenue is committed to this fixed overhead, and that helps any business to weather the hard times.
“There’s likely to be a reckoning soon as player wages in England are rising so much faster than the rate at which ordinary supporters’ income is climbing. When that threatens the survival of these historic community institutions it’s really the fans that pay the price of relegation and years of on the pitch recovery,” he added.
The combination of financial hardship and a weak pound has also made cash-strapped clubs an attractive investment opportunity for US investors and more English clubs are likely to see North American investment or outright ownership in the next year.
“Next season’s gates and season ticket sales are also likely to be impacted significantly by reduced consumer spending as a result of rampant inflation. Scottish clubs are better placed to weather that storm, at a time when pressure on the big spending EFL clubs, especially those in the Championship tempted to gamble for the golden ticket of promotion to the Premier League, is only increased.” added Pattullo.
Ken joined the Glasgow office of Begbies Traynor in 2003, before overseeing the firm's expansion into further offices in Edinburgh, Dundee, Aberdeen and Belfast. He previously worked at KPMG, Ernst & Young and PricewaterhouseCoopers in Scotland. He has a broad range of experience in Corporate Rescue and Recovery, as well as in turnaround and restructuring, corporate and personal insolvency, investigations and IBRs.
Specialisms: Licensed trade, haulage, property investment/development, construction, agriculture engineering/manufacturing.