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Flat-lining attendances and rising costs are being blamed for locking six English league clubs into a cycle of serious financial distress, a report by Begbies Traynor has warned.
The insolvency firm's Red Flag Alert Football Distress Report monitors the financial distress in football clubs every six months.
The latest figures show that a total of six clubs (one in 12) in the Championship and Leagues One and Two are facing "critical" financial pressure at the end of October 2013. The number of clubs in serious trouble represents 8 per cent of the 72 clubs that make up the leagues.
In addition, the report highlights barely rising average attendances and season ticket revenues across the three divisions, which despite increasing consumer and leisure spending are compounding the misery of clubs which are experiencing rising running costs.
The report highlights the emerging trend of the community interest company (CIC) structure as key to the future stability of the weaker clubs.
Gerald Krasner, a partner at Begbies Traynor and an expert in football finance, who has in the past been a joint administrator of both AFC Bournemouth and Port Vale, said: "The relative fortunes of those at the very top and those at the foot of the league are getting further and further apart.
"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 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," he added.
The number of distressed clubs includes Coventry City, following its well-publicised failure in June this year, and is unchanged since the last survey was conducted in March this year.
"However, football club coffers are typically at their healthiest at the start of the season, indicating that there is likely to be more serious problems for more clubs by early next year.
"If these clubs are cash strapped now, then they are likely to be in more trouble after the next transfer window, when the bank balances are at their lowest, unless directors show prudence and continue to curb the spending and manage costs sensibly," said Krasner.
Flat-lining attendances and rising costs are being blamed for locking six English league clubs into a cycle of serious financial distress, a report by Begbies Traynor has warned.
The insolvency firm's Red Flag Alert Football Distress Report monitors the financial distress in football clubs every six months.
The latest figures show that a total of six clubs (one in 12) in the Championship and Leagues One and Two are facing "critical" financial pressure at the end of October 2013. The number of clubs in serious trouble represents 8 per cent of the 72 clubs that make up the leagues.
In addition, the report highlights barely rising average attendances and season ticket revenues across the three divisions, which despite increasing consumer and leisure spending are compounding the misery of clubs which are experiencing rising running costs.
The report highlights the emerging trend of the community interest company (CIC) structure as key to the future stability of the weaker clubs.
Gerald Krasner, a partner at Begbies Traynor and an expert in football finance, who has in the past been a joint administrator of both AFC Bournemouth and Port Vale, said: "The relative fortunes of those at the very top and those at the foot of the league are getting further and further apart.
"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 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," he added.
The number of distressed clubs includes Coventry City, following its well-publicised failure in June this year, and is unchanged since the last survey was conducted in March this year.
"However, football club coffers are typically at their healthiest at the start of the season, indicating that there is likely to be more serious problems for more clubs by early next year.
"If these clubs are cash strapped now, then they are likely to be in more trouble after the next transfer window, when the bank balances are at their lowest, unless directors show prudence and continue to curb the spending and manage costs sensibly," said Krasner.
