The emerging trend of a community interest company (CIC) structure is key to the future stability of weaker football clubs, according to a recent report.
The Begbies Traynor Red Flag Alert Football Distress Report monitors the financial distress in football clubs every six months. The latest figures showed that a total of six clubs (one in twelve) in the English Championship and Leagues One and Two were facing ‘critical’ financial pressure at the end of October 2013.
Football finance expert and Begbies Traynor partner Gerald Krasner said: “The weaker clubs that are just staggering through the season are now locked into an inevitable downward spiral, and most clubs won’t attract a foreign billionaire to bankroll them out of their financial mess.
“Darlington, Eastbourne and Stenhousemuir in Scotland have all looked towards a CIC format to put down a stable, long-term ownership and funding structure. The best example of fan-owned clubs is [Spanish La Liga giant] Barcelona, which has proved that a more mutual approach can still bring big spending and success. There is no doubt that the trickle of clubs that have become majority owned by the fans here in England will become a steady flow over the coming few seasons.
“Aside from finding an overseas benefactor, community ownership is the only viable long-term solution for many clubs that want to press the ‘reset’ button and put finances in order, and we are seeing more and more interest in these structures that have some support at present with government and HMRC incentives.”