Championship side Aston Villa has received a £4.2m tax bill and could face a winding up order from HMRC if it does not make payment within seven days, while the football club has admitted that its failure to win promotion to the Premiership has created financial difficulties
The tax payment was due last week and the club, which was bought in 2016 by billionaire Chinese businessman Dr Tony Xia, is said to be in the process of resolving the issue.
Aston Villa’s 1-0 defeat by Fulham in the end of season playoff has cost the club dear. Analysis by Deloitte’s sport business group ahead of the game estimated that the winner was set to benefit from future additional revenue of at least £160m across the next three seasons, rising to more than £280m if the club survived its first season in the Premier League.
In a statement on the club’s website following the loss to Fulham, Xia highlighted the ‘severe’ Financial Fair Play (FFP) challenges the club faces next season. These limit how large a loss a club can post over a three year period, and Villa has booked losses in every season of Xia’s ownership. It has also come to the end of the 'parachute' payments made to compensate for relegation from the top league.
Xia said: ‘We are all aware that we will face severe FFP challenges next season.
‘We have been heavily investing for the past two seasons. However, the loss means that we need to change a lot of things.
‘No one wanted to see the club have to go through this, but I believe that only changes can help the club to progress towards the positive direction and this requires the joint efforts of everyone associated with this great football club.’
Yesterday Xia also announced the departure of the club’s chief Executive, Keith Wyness, although there is no suggestion this is connected with the tax bill issue.
Sam Boor, consultant at Deloitte’s Sports Business Group, said: ‘In targeting promotion to the Premier League, clubs should be acutely aware of the need for long term financial responsibility. Purely relying on short term investment in playing talent is a risk and may not always be a sustainable answer. Clear business planning, cost control and sensible strategic investment decisions in respect of both on and off pitch areas should be considered essential when targeting promotion to the Premier League.’
Report by Amy Austin
