(WFI) Football League chairman Greg Clarke says “unsustainable” levels of debt means that the 72 members of his league are “heading towards the precipice” and government intervention is inevitable if they do not get their house in order.
Addressing MPs at an inquiry into football governance yesterday, Clarke said that debt was by far the biggest problem facing the league and that the impossibly difficult market made clubs “not a compelling asset to own”.
“Debt’s the biggest problem. If I had to list the 10 things about football that keep me awake at night, it would be debt one to 10,” Clarke said.
“The level of debt is absolutely unsustainable. We are heading for the precipice and we will get there quicker than people think.”
Clarke, who came to the Football League from a board level career in telecommunications, said there was no business case for the Football League as it stood.
“Football League clubs carry about one third of a billion pounds in debt but overall make no profit and have to service that with no positive cash flow. If we were a commercial organisation we would be out of business,” he said.
Asked about the controversial football creditors’ rule, which gives players and other clubs preference over other creditors in the event of a financial administration, Clarke said that he came into the job last year viewing it as an “outrage”.
Nine months into the job, however, he thought of it as the “least worst” option and that its removal may bring the domestic transfer market to a standstill.
The football creditors’ rule is of particular interest to the MPs on the panel, because the exchequer is estimated to have lost tens of millions in written off tax from the 53 instances of administration over the past 19 years.
“I can’t construct an argument that allows me to defend the morality of the football creditors rule,” he admitted.
“We are looking for a more palatable alternative.”
Clarke admitted that he was hopeful that UEFA’s Financial Fair Play rules would filter down and help steer the Football League towards greater stability. He said that he was against a maximum wage, but suggested that the regulations would be a “soft way” of introducing a salary cap.
The Football League introduced a cap of 60 per cent of a League Two club’s turnover to be spent on wages in 2005. Its chief operating officer Andy Williamson told MPs that it had been a success and bred restraint amongst those in the league’s bottom tier, with just one case of administration since the rules were brought in.
By INSIDER’s James Corbett
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