Football insolvencies and the ‘Football Creditors Rule’

Football insolvencies

In January 2014, R3 launched a campaign calling for more to be done to protect and improve the position of unsecured creditors when a football club is insolvent. R3’s key recommendation was to introduce a minimum dividend for unsecured creditors to ensure they receive some of what they are owed. Following an 18 month campaign, R3 was delighted to see the Football League announce in June 2015 that the purchaser of an insolvent football club would be required to pay creditors a minimum of 35 pence in the pound over three years (or 25 pence on transfer of share), or face a further 15 point deduction at the start of the season following the insolvency.

Background

 Since 1992 approximately 46% of clubs in the Football and Premier Leagues have been through a formal insolvency procedure, many on more than one occasion. In League insolvencies, the ‘Football Creditors Rule’ means that ‘football creditors’ are paid all that they are owed, at the expense of ‘unsecured creditors’ e.g. HMRC, small local businesses, local schools and the St. John’s Ambulance Service. As an example of this process, in the 2010 Crystal Palace administration, the football creditors were paid in full, whilst the unsecured creditors received 1.95p in the pound. In the 2011 Plymouth Argyle administration, the football creditors were paid in full while the unsecured creditors received a dividend of 0.77p in the pound.

R3 recognised that the ‘Football Creditor Rule’ is considered an important part of maintaining a competitive league but believed that the football authorities should be doing more to protect and improve the position of unsecured creditors. 

Policy campaign

 R3 launched its proposals for reform of football finance in its January 2014 paper ‘Level Playing Field: SMEs, taxpayers, and the Football Creditors Rule’.

The reforms were discussed with cross-party parliamentarians, including members of the All-Party Parliamentary Group (APPG) on Football. R3 hosted a roundtable in parliament with the APPG at the end of 2014 on its proposals for reform. The event was well attended, welcoming more than ten leading cross party parliamentarians on the issue of football finance, as well as the CEO of the Football League, and representatives from other football organisations, HMRC and the Insolvency Service.

R3 also met with senior representatives from the Football League to discuss the proposals in more detail.

The Football League made its announcement on the minimum dividend for creditors on 5th June 2015.

More information can be found in R3’s policy paper on the issue here.

Contacts

R3’s policy and research team can be contacted using the details below:

Georgina Waite
Head of Public Affairs
T: 020 7566 4214
M: 07900 932 529
F: 020 7566 4224
E: 
James Jeffreys
Public Affairs & Policy Officer
T: 020 7566 4220
F: 020 7566 4224
E: