Date Published: 21st December 2022
Almost half of EFL clubs now in financial distress, with surge in new US and Middle Eastern ownership expected
The October 2022 Football Distress Survey, conducted for more than a decade by business recovery specialist Begbies Traynor, has indicated that despite a 3% fall in financially distressed clubs since May this year, 31 clubs in the English Football League (EFL) , 43% of the total, remain in financial distress.
In the Premier League, distress has risen by 75% since March and is now affecting seven of the 20 top-flight clubs.
But hardest hit is League Two of the EFL, where 13 of the 24 clubs (54%) are showing symptoms of financial problems.
“Clubs in the EFL are coming under financial pressure like never before as the financial effects of Covid continue to be felt and are now being exacerbated by the cost of living crisis,” said Julie Palmer, partner at Begbies Traynor.
“While clubs are having to look at virtually every area to make saving as running costs rise and the threat of falling ticket sales looks inevitable, players’ wages, by far clubs’ largest outgoing, are a cost burden that remains untouchable.
“Spiralling energy costs are prompting many smaller clubs to think about scheduling earlier kick-off times to reduce the need for floodlights. Meanwhile cancelling improvements to grounds and reducing budgets for non-playing staff are measures many clubs are considering or have already put in place, triggering concerns that some grounds could fall into disrepair without financial input from the Government and the Premier League.“
Gerald Krasner, consultant at Begbies Traynor, said: “The escalating financial problems of running a football club have seen many club owners run out of steam to the extent that, behind the scenes, more clubs are in fact up for sale than we have seen for decades.
“The weak pound, combined with a growth in interest in football from the US and Middle East, are likely to trigger an increase in overseas ownership of English clubs from these two parts of the world.
“Meanwhile many clubs are staggering on and I expect to see at least one or two clubs enter into an insolvency process during 2023”
The full report can be found here.
Julie is a law graduate who qualified with Price Waterhouse in 1994. Julie joined Smith & Williamson in 1997 and became a partner in 2001. With Mike Stevenson, Julie set up Middleton Partners offices in Salisbury and Southampton, both of which are now part of Begbies Traynor.
Julie is a member of the Insolvency Practitioners Association and is a Fellow of The Association of Business Recovery Professionals. Julie deals with all aspects of Corporate Recovery and turnaround work and takes all form of personal insolvency appointments.