Football Adminstration, can someone explain?
Discussion
Can somebody, with some knowledge explain to me how 'football administration' works. How can the Premier League/FA decree that 'Footballing debts' have to be payed before other debts, particularly those to HMRC, small businesses etc. Is this enshrined in law somewhere, or is it an edict that comes down from FIFA, via UEFA, and if the government didn't go along with it then bye bye World Cup etc.
I have to say the quasi-governmental nature of international sports administration has always baffled me rather, FIA, IOC, FIFA etc, but this 'law' does seem rather odd.
I know it's a bit of a specialist area, but thought this was the best place to ask.
I have to say the quasi-governmental nature of international sports administration has always baffled me rather, FIA, IOC, FIFA etc, but this 'law' does seem rather odd.
I know it's a bit of a specialist area, but thought this was the best place to ask.
The requirement to pay footballing debts is a requirement of the FA's rules. Failure to do that means that you can't be a member, so can't compete in any FA or Premier League Competitions. It isn't enshrined in law at all (to my knowledge), but is an undeniable fact that a football club that cannot compete in any competitions is unlikely to make even the slightest bit of money so as to provide a return to creditors (of which HMRC is usually the biggest one).
HMRC are understandably miffed about this preference and it is an ongoing battle between the FA and HMRC which has resulted in HMRC putting the boot into quite a few clubs in recent years. My club was a victim of this (although mainly due to the then-manager and owners being crooks and fiddling the tax man out of his money).
Rumour has it that things will be changing in the not too distant future as HMRC and the FA try to resolve their differences to prevent more clubs going into administration. Quite how it will be resolved is anyone's guess.
HMRC are understandably miffed about this preference and it is an ongoing battle between the FA and HMRC which has resulted in HMRC putting the boot into quite a few clubs in recent years. My club was a victim of this (although mainly due to the then-manager and owners being crooks and fiddling the tax man out of his money).
Rumour has it that things will be changing in the not too distant future as HMRC and the FA try to resolve their differences to prevent more clubs going into administration. Quite how it will be resolved is anyone's guess.
HMRC are not a ranking creditor any more so they have to join the line of unpaid creditors along with everyone else.
As has been said, the requirement to settle FA debts first is not set out in statute law but is part of the contract the club has with the FA which the FA would enforce through the courts if it was not complied with by the club.
As has been said, the requirement to settle FA debts first is not set out in statute law but is part of the contract the club has with the FA which the FA would enforce through the courts if it was not complied with by the club.
Cheers for the replies. I will have to read that article again to fully get my head round it, but as I understand it, it's not that football creditors have preferential status per se, but that the way the industry is structured means that to pay these 'footballing' debts releases significantly more funds from the league to pay creditors, that wouldn't otherwise be available. Have I got that right?
Magog said:
Cheers for the replies. I will have to read that article again to fully get my head round it, but as I understand it, it's not that football creditors have preferential status per se, but that the way the industry is structured means that to pay these 'footballing' debts releases significantly more funds from the league to pay creditors, that wouldn't otherwise be available. Have I got that right?
Kind of. Essentially the rules are there to try to ensure that other clubs pay their transfer fees, and don't get around the issue by pre-packs. The real benefits to HMRC are the transfer embargoes, which prevent a club getting even more into a mess until it has resolved its PAYE position. And because it is harder for a club to go into administration and avoid paying creditors, more of them work to remain a viable concern than perhaps is the case in other industries. Overall this helps HMRC because it keeps the flow of money (and therefore VAT) going between the clubs. Without the protection of being a footballing creditor, all selling clubs would (or should) demand cash up front.
Unfortunately I can think of two situations where the rule has been used "unfairly" whereby a certain non-league manager allegedly awarded himself (his mother-in-law and other cohorts were owners of the first club, and father-in-law owner of the second) lucrative 3 year contracts whenever the taxman came knocking. The fact that this particular rotund individual had previously been convicted for tax fraud just antagonised the taxman, but he could safely hide behind the football creditor rule - even the FA were helpless to prevent this, and I imagine they tried hard given the individual concerned.
There's only one answer to this, the Revenue has got to get tougher and not let clubs get into arrears. Surely, the Revenue could write its own rules to deny clubs any flexibility with payment.
As a tax payer I think it is an absolute disgrace that clubs like Portsmouth can build up debts of over £10 million to the exchequer. Perhaps they should class the players as self employed, pay them gross and then get them through the self assessment regime.
As a tax payer I think it is an absolute disgrace that clubs like Portsmouth can build up debts of over £10 million to the exchequer. Perhaps they should class the players as self employed, pay them gross and then get them through the self assessment regime.
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