As the new football season kicks off, research by BDO reveals just three out of 10 finance directors (FDs) rate their club's financial situation as 'very healthy' while a fifth of clubs' tax payments were late during the year, although most had agreed the delay with HMRC.
The firm's 2013 Annual Survey of Football Club Finance Directors is based on interviews with FDs at 66 teams from across the English Premier League (EPL), Football League Championship (FLC), Football Leagues One and Two, and the Scottish Premiership (SPL).
The findings show that almost half (48%) say that their financial situation 'could be better but is not bad'; while 17% of respondents' finances 'need attention' and 5% describe their finances as 'a cause for grave concern'.
Almost two thirds of FDs (64%) do not expect to make a profit before player trading and amortisation in their next accounting period. The two premier leagues are the most confident, with 92% of EPL and 60% of SPL respondents anticipating a profit. More than half the clubs reported reduced sales of match tickets, merchandising and corporate entertaining over the past year .
The proportion of respondents who say they are dependent on the principal shareholder(s) to finance annual revenue shortfalls or operating losses now stands at 65%, up from 58% the previous year.
BDO's survey found 20% of clubs reported late tax payments during the year but most of these had formally agreed the delay with HMRC. Half the FDs (52%) said that HMRC was contacting them earlier and more frequently to chase payment of the tax due.
Almost a quarter (23%) of clubs are concerned about increased challenges by HMRC to complex salary structures, which could lead to large PAYE bills, which are identified as a particular issue in the EPL (41%) and FLC (39%).
A new concern for EPL and FLC FDs is the challenge of complying with the financial fair play (FFP) regulations, which will apply across all the English professional divisions for the first time this season.
BDO's research suggest that these are having an impact, with 42% of clubs saying their decision not to increase the cost of the first team payroll has been partly or largely driven by this and 22% saying that FFP rules have affected their decision to not to increase their transfer budget.
Trevor Birch, partner at BDO and a former chief executive at Chelsea and Everton, said: 'There may be cause for optimism as we see the implementation of the fair play regulations starting to have a stabilising effect on operations going forward. Stakeholders are crying out for a sustainable business model and it can only be hoped that the regulations are embraced not just in letter but in spirit.'
