Crunch time for the have-nots

While top-flight teams remain relatively immune to the recession, up to 10 Football League clubs are in danger of following Darlington into administration. Nick Harris reports

(GETTY IMAGES)

The shocking descent of Darlington into administration this week came about so suddenly that not even the Football League's best-run clubs can feel safe as the credit crunch starts to bite.

At elite level, the Premier League's newly-signed, record £1.78bn domestic television deal should mean their clubs will be able, by and large, to weather the worst effects of the recession.

But the 72 sides in the Football League have no such buffer, and Darlington are unlikely to be the last club to crash. "Darlington's administration came out of absolutely nowhere," said the league's spokesman, John Nagle. "We had no prior indication or suggestion of serious problems there at all."

Low crowds contributed to the League Two club entering administration, a move the outgoing chairman, George Houghton, said "was a result of a combination of circumstances compounded by the current economic recession".

Their gates are running at a pitiful 11.1 per cent of capacity, attracting 2,995 fans on average per game to a stadium built for 27,000. And that is far from the only bad crowd statistic this season. Twenty of the League Two grounds are less than half full, as are 13 grounds in League One. No club in the Premier League is less than 72 per cent full, with most well above 90 per cent.

Whispers persist that up to 10 Football League clubs are in serious trouble. Southampton are thought to have "a 50-50 chance" of entering administration within a fortnight, and Charlton Athletic acknowledge rumours of their own demise while saying things are not that bad... yet. From Cheltenham to Chester to Stockport, clubs are finding life tough.

The effects of the downturn are, for some, as caustic as the language of Accrington Stanley's refreshingly frank chairman, Eric Whalley, when asked about the credit crunch.

He cites a variety of "pricks", "tossers" and "shithouses" who he says have contributed to Accrington's troubles, and uses the f-word so often that when I joke that his complaints would only be half as long if he cut out of the swearing, he deadpans: "That's bloody good, that."

Whalley says income is "dropping across the board". He talks about the hardships of being stuck geographically between the more glamorous Blackburn and Burnley, and of the "crazy" need to have 2,000 seats instead of 1,200 to meet league requirements, by May, at a cost of £100,000.

"Tell me why we need more seats with no bums to sit on them," he says. "We're the poorest side financially in the league with the poorest gates and poorest facilities. This is another problem we don't need right now."

The financial climate has forced one major Accrington backer – a local coach firm, Fraser Eagle – to stop sponsoring the club's academy and shirts. The five-year naming rights deal on the ground also looks shaky.

Whalley, a local businessman, picks up the tab for Stanley's losses, which were £62,000 on a turnover of around £1.5m last year. "Not too bad," he says. "But 2009 will be much worse. People aren't spending, and we're one of their cheapest options."

One division up, in League One, John Bowler – the chairman of Crewe, long known for financial prudence – says he has not seen "a dramatic effect" so far. "But none of us are under any illusions. The crunch could really hit at the end of the season, when we're trying to tie up commercial deals for next year," he adds.

Up another division and Birmingham's chairman, David Gold, says that many clubs have been caught out because budgets for 2008-09, set in May last year, have been battered by the unexpected swiftness of the decline.

"I'd be stunned if there is a single club outside the Premiership that hasn't been affected already," he says. "What goes wrong? Corporate income goes down, walk-up attendances go down, dad doesn't bring two sons but one, or neither, the away fans are down, functions are down.

"In any other business, you cut costs. I know from experience this can be done quite quickly. In other businesses. Not in football. The largest single outlay is players' wages and that cannot be addressed until the next season.

"So clubs are suffering shortfalls. They go to a bank, maybe £1m down on budget, or £3m, or in the lower divisions it might be £100,000 that causes trouble, and they ask for an extension on their loan. For 125 years banks have said 'OK'. But now it's not just 'we won't extend' but 'we're actually going to reduce your loans'. And this hasn't reached a low point yet."

The chief executive of Norwich City, Neil Doncaster, says: "Traditionally there is a lag in football, and maybe we won't feel the worst of it until next season. Most clubs in the Championship rely on wealthy benefactors for large wage bills that would otherwise be unsustainable. When a lot of these benefactors have other businesses that are also being hit in the economic situation, it remains to be seen how long some of them continue with their subsidies."

Sources at both Charlton and Southampton say that the after-effects of relegation from the Premier League continue to be much more damaging than the recession as such. Southampton's last annual report showed debts totalling £27.5m and losses of £4.9m despite player sell-offs.

The chairman of the Football League, Sir Brian Mawhinney, warned his clubs back in August to "tighten their belts". The league argues it encourages sensible budgeting through governance measures such a points reductions for administration, and transparency on agents' fees. There is also a salary cap in League Two, of 60 per cent of turnover on wages. "Bloody good idea, that," says Whalley.

The league also hopes that a huge hike in its TV deals – which will rise from £35m per season now to £88m with Sky and the BBC in August – can alleviate some pressure. But to paraphrase Whalley: for now, it's effin tough out there.

Three's a crowd? Falling gates this season

*CHAMPIONSHIP

The five worst performers by percentage of capacity:

Av gate Cap % full

Barnsley 12,973 23,186 55.9

Coventry 17,648 32,500 54.3

C Palace 14,134 26,309 53.7

Sheff Wed 20,632 39,814 51.8

So'ton 16,552 32,689. 50.6

*LEAGUE ONE

Thirteen of 24 clubs below 50 per cent capacity, and these nine below 45 per cent:

Av gate ......... Cap ......... % full

Peterboro......... 6,861......... 15,314......... 44.8

MK Dons......... 9,716......... 22,000......... 44.1

Walsall......... 4,790......... 11,300......... 42.3

Oldham......... 5,616......... 13,559......... 41.4

Millwall......... 8,201......... 20,146......... 40.7

Carlisle......... 6,525......... 16,651......... 39.1

Hereford......... 3,422......... 8,843......... 38.6

Crewe......... 3,900......... 10,118......... 38.5

Tranmere......... 6,257......... 16,587......... 37.7

*LEAGUE TWO

Twenty of 24 clubs are below 50 per cent capacity, with the following nine clubs operating at below one-third of capacity:

Av gate ......... Cap ......... % full

Dagenham......... 1,945......... 6,000......... 32.4

Morecambe......... 1,972......... 6,400......... 30.8

Port Vale......... 5,725......... 18,900......... 30.2

Rochdale......... 3,038......... 10,249......... 29.6

Accrington......... 1,486......... 5,057 ......... 29.3

Macclesfield.........1,815......... 6,335 ......... 28.6

Bury......... 2,845......... 11,669......... 24.3

Notts Co......... 4,563......... 20,300......... 22.4

Darlington......... 2,995......... 27,000......... 11.1

Note: The lowest occupancy rate in the Premier League is at Wigan, operating at 72.2 per cent capacity with an average gate of 18,170 per game in a stadium that can hold 25,138. A majority of Premier League clubs are above 90 per cent, with several, notably Arsenal, with big waiting lists.