Begbies Traynor Red Flag Alert Football Financial Distress ReportScottish Football League – May 2020

Football Financial Distress Report

Scottish football clubs pushed to ‘brink of insolvency’ by coronavirus crisis despite good management and prior health

However the impact of the coronavirus pandemic and the social distancing regulations that have caused all games to be suspended since mid-March look set to have far-reaching financial consequences, according to Ken Pattullo, who heads Begbies Traynor in Scotland.

Without much needed matchday revenues, or Government support in the event that the isolation measures are extended into the 2020/2021 season, it is believed that the majority of clubs in Scotland could face financial peril.

“There are real concerns that cash-strapped clubs may be pushed to the brink of insolvency,” said Mr Pattullo. “Finances are already stretched and every match that isn’t played means income from matchday ticket sales and hospitality is lost. With several matches that were still left to play across all Scottish leagues, that represents hundreds of thousands of pounds of lost income, which clubs operating on small budgets can ill afford to lose.”

He added: “Some clarity from the Scottish Government would be helpful now because, while in England the Premier League is in discussions about Project Restart, to resume playing televised matches behind closed doors, Scotland’s top-tier clubs seem to be nowhere near having a road map towards the resumption of any form of play, and meanwhile they remain in financially-corrosive limbo.”

02Scottish Football League – May 2020

Scottish football club finances had gained unprecedented stability by the end of March this year, with none of the 42 professional clubs in Scotland showing symptoms of severe financial distress for the second year running, according to the eighth annual Football Distress Report, produced by corporate insolvency specialist Begbies Traynor.

“It’s the mid-size clubs without wealthy backers or lucrative television or sponsorship deals that are in the most perilous position. Unfortunately, the double whammy of significant wage bills and sizeable fan bases that make them heavily reliant on match-day gate receipts could prove fatal in this unprecedented situation.”

Mr Pattullo concluded: “While I don’t believe we are looking at a doomsday scenario and most Scottish clubs will survive, I’m afraid that some insolvencies are probably inevitable among the hardest hit clubs.”

Scotland’s First Minster, Nicola Sturgeon, has said that coronavirus restrictions meant that Scottish football should not expect to be playing matches in front of fans “any time soon” and that games held behind closed doors would need to be “very carefully considered”.

Mr Pattullo said: “Our Scottish Premiership clubs are the most reliant on ticket sales of all the top-flight European clubs, which also makes them extremely vulnerable to escalating financial problems, especially if it is decreed that the remainder of the season is to be played, behind closed doors. It also means they lack the financial clout of the English Premier League, and the cost to clubs of completing the outstanding games, when clubs have little or no income, could be devastating.

Average English League Attendances – 2016/2020 Seasons

Average Scottish League Attendances – 2016/2020 Seasons

2016/2017

2016/2017

2017/2018

2017/2018

2019/2020 (March)

2019/2020 (March)

2018/2019

2018/2019

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Source: ESPN

Source: ESPN

PREMIER LEAGUE

PREMIER LEAGUE

CHAMPIONSHIP

CHAMPIONSHIP

DIVISION 1

LEAGUE 1

DIVISION 2

LEAGUE 2

3.04% VARIANCE SINCE LAST SURVEY

-4.08% VARIANCE SINCE LAST SURVEY

-7.68% VARIANCE SINCE LAST SURVEY

-2.20% VARIANCE SINCE LAST SURVEY

1.31% VARIANCE SINCE LAST SURVEY

52.86% VARIANCE SINCE LAST SURVEY

5.89% VARIANCE SINCE LAST SURVEY

-0.61% VARIANCE SINCE LAST SURVEY

35,647 38,148

13,948

38,153

15,865 16,020 15,367

39,312 19,799 20,418

4,349

20,117 18,573

2,881 3,090 3,022

7,749

555

7,754

854

8,643 8,756

751 1,148

4,601

506

4,431 4,400 4,659

498 489 486

18,000

9,000

12,000

15,000

6,000

3,000

0

03

Football Financial Distress Report

Scottish Football League – May 2020

Ken Pattullo Partner

T: 0141 222 2230M: 07786 951511E: ken.pattullo@begbies-traynor.com

Football Club Distress – 2014/2020 Scottish Football League

Football Club Distress – 2014/2020 English Football League

9

4

8

4

6

5

1

210 00

1 1

3

7

8

6

4

4

5

3

3

21

2

1

0 0

Mar

14

Mar

14

Mar

15

Mar

15

Mar

16

Mar

16

Mar

17

Mar

17

Mar

18

Mar

18

Mar

19

Mar

19

Mar

20

Mar

20

Number of clubs in distressNumber of clubs in distress

Source: Red Flag AlertSource: Red Flag Alert

For Further InformationIf you would like to discuss any of the issues raised in this survey or would like further details about the services we provide to help underperforming businesses, please contact:

Alternatively, please contact:

Sarah Hone at Appeal

T: 01423 569999 orE: sarah@appealpr.com

Ref: BTG 5559/05.20

Offices across the UK. www.begbies-traynor.comBegbies Traynor (Central) LLP, a limited liability partnership, registered in England and Wales No: OC306540. Registered Office: 340 Deansgate, Manchester M3 4LYA member of the Begbies Traynor Group: Specialist Professional Services. www.begbies-traynorgroup.com

Football Financial Distress Report