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Relegation for administration: The Conference gets tough

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Desperate times, they say, call for desperate measures. The Conference (Blue Square Premier) hasn’t quite reached desperation yet but, given the amount of clubs in the league who are struggling financially, their latest proposal is certainly one of the most radical to be suggested by football bosses in a long time.

Any Conference club who currently enters into administration at the moment can expect to be hit with an automatic 10 point penalty, which makes the season a struggle, although doesn’t immediately mean relegation. Northwich are one side who’ve beaten a points deduction (although were subsequently automatically demoted for other reasons).

But with the economic downturn, Conference bosses have drawn up a drastic solution to encourage clubs to live within their means. Now, if the plans go through at the AGM in June, any club who enters administration will automatically be relegated the following season.

“Clubs should live within their means”

If the Conference succeeds in getting approval for the proposals, all 68 Blue Square clubs – Premier, North and South – would be subject to these financial rules for next season.

The Conference’s chairman Brian Lee hopes the new rules will shock some of its members into sorting out their finances. Speaking at their EGM in Burton, Lee said: “”We are trying to modify our rules and regulations so any club who enters into any kind of insolvency procedure during the season — administration, liquidation or even a CVA — will be relegated.

“My argument is that clubs should live within their means. It was discussed on Thursday — it has to be fine-tuned and needs the agreement of the football authorities, then it will then be presented to the clubs at the AGM in the summer.

“We do not like the deduction of (ten) points, as it currently stands. I think it is a negative and offers an escape route. I think if a club is relegated, it sends out a stronger message.”

As well as the threat of relegation for financial mismanagement, the new rules would include the return of the Approved Player Budget (APB) or, in plain English, a salary cap. The APB was removed last season in favour of a broader solvency test, but the Conference wants the rule brought back.

Although financial crises are nothing new at non-league level, it’s telling that this season a number of Blue Square clubs have sailed close to the wind. Weymouth may still fold, while Lewes have come close to administration along with, if rumours are to be believed, Oxford United.

Many other teams try to run full-sized squads without having the finances to back up the team. Northwich, Grays, Salisbury, Ebbsfleet, Mansfield and York have all faced financial problems this season, while Cambridge and Crawley have had well-documented problems in past seasons.

Dropping down to Conferences North and South, Burscough, Fisher Athletic, Bognor Regis Town, Stafford Rangers and Dorchester Town are all struggling financially, with the latter shedding players like they’re going out of fashion after asking the team to take a 30% pay cut.

It’s worth noting that, for some of these clubs, the current regimes aren’t to blame for their current cash problems, but it’s still a significant percentage that are suffering financially and the Conference has clearly had enough.

The reaction

The proposals have drawn a largely positive response from non-league teams. Alex Rowe, the chairman of Torquay United, who worked under an APB in their first season in the Conference, gave a cautious welcome but warned it would only work if all clubs agreed to abide by the rules.

“If everybody plays by the rules, it’s fine,” said Rowe. “What is not acceptable is people who will throw money at players and then can’t pay the person who drives the team coach. That’s not acceptable, and it’s not fair.

“Having a salary cap concentrates the mind on your business plan and making sure you generate the biggest turnover possible.

“We certainly found it inhibiting at times last season, but I’m not against it in principle and we would hope to manage it better next time.”

Slightly less enthusiastic has been Boston United’s chairman, David Newton, who has more reason than most to worry about the rules. Boston have suffered twice at the hands of the Conference. First they suffered a double demotion because of their finances when they were relegated from the league in 2007.

Then last season, when the Pilgrims were weeks away from exiting their CVA, they were demoted from the Blue Square North to the Unibond Premier because they were still in a CVA.

Writing in the Non-League Paper, Newton agrees that overspending clubs need to be punished, but warns that a one size fits all approach could hurt as many clubs as it helps.

“The punishment needs to fit the crime,” says Newton, “and I certainly don’t think the majority of clubs who go into administration or CVA deserve that.”

Nonetheless, Newton seems very much in the minority when it comes to the Conference’s plans and it seems the Football League is thinking in much the same way. At this end of this season, it’s possible chairmen of the 72 league clubs could be asked to vote in favour of a salary cap from the Championship downwards.

The cap for each division could be based on average gate receipts for the respective leagues in the hope that curbing the spending of clubs would reduce the chance of teams going into financial meltdown. At the very least, it’s hoped a cap would avoid a repeat this season’s points deduction scenario, where Luton, Rotherham and Bournemouth all started the season on minus points.

The salary cap will not be popular with all clubs, but with financial experts warning that the recession is likely to be long, deep and painful, it suggests the authorities are looking for ways to head off potential financial crises that could kill a handful of clubs in the coming years.

The rules are the rules

Indeed, when it comes to financial dealings, the Conference has already shown it isn’t afraid to implement tough financial rules. They have been judicious in regularly auditing club finances, have been ahead of the League when it comes to a salary cap and haven’t been afraid to issue transfer embargoes.

The results of this due diligence is starting to be seen across football. Many of the clubs promoted from the Conference have adjusted to life quite comfortably in League Two with Exeter, Dagenham, Morecambe and Aldershot all coping well.

Meanwhile, eight non-league terms made the third round of the FA Cup with two progressing to the next stage, while those teams relegated to the Conference can’t expect an easy ride back to a League place.

The deal with Setanta has also given non-league clubs plenty of television exposure (it’s easier to catch a Blue Square Premier game on the TV than it is a League Two fixture) and has allowed clubs access to another pot of money they would normally have had access to (although there is still an issue around the late and inconvenient nature of the scheduling of non-league Setanta games).

The Conference has not always had the best of press for off-the-field, and the multiple points deductions for four clubs fielding ineligible players hasn’t helped. And you have to go back to 2004 to find the last year that all the clubs who finished in the relegation spots went down, rather than earning reprieves after less well run clubs were demoted.

But the Conference has been striving to make itself more professional and the stronger regulations send out a message to high-spending clubs that they mean business. If it forces more teams to reassess their finances in a bid to stop them going to the wall, then this can only be another step in the right direction.

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Comments (4)

  1. I dont know whether this is a good or a bad thing to be honest with you!!!

  2. the premier league and fa need to introduce this as well. within the next few seasons, a big club will go bust. the transfer market is subject to massive inflation, most clubs are priced out the market for decent players. legislation will certainly have to be introduced regarding wage structures and spending capabilities, no doubt linked to the clubs income.

    without this, we will see the end of top football clubs such as the top 4, “top” clubs like city and spurs, and even aspiring clubs.

    the survivors of the carnage will be those that balance their books. incidentally, the reason they cant is because of debt financing, which is the way man united and liverpool fc were purchased. the buyers borrow a loan, secured against the club, and the profits from the club pay back the loan. on the balance sheet, this means the club pays for itself to be taken over.

    as such, id be surprised if legislation wasnt drawn up about that either.

  3. Bring this rule in asap. you will see plenty of clubs relegated! some of the financial situations at clubs in the conference are a joke. too many abramoskis about who run out of money half way through a season! when they decide to leg it they leave a mess the clubs never recover from.

    oh and does this mean chester will get kicked out a la boston. (who deserve everythin they get btw!)

  4. Could someone explain the current rules regarding relegation now that Chester have been expelled please.