Football League clubs heading for precipice, says chairman Greg Clarke

Posted Wednesday, February 16, 2011 by theguardian.com

• 'We will get there quicker than people think'
• The level of debt is unsustainable, he added

Football League clubs heading for precipice, says chairman Greg Clarke
Gordon Taylor the PFA chief executive, told the inquiry two thirds of the 92 clubs have had financial difficulties.

The chairman of the Football League, Greg Clarke, has said government intervention may be inevitable if the sport "doesn't get its house in order", also warning that the level of debt carried by clubs is "unsustainable".

Appearing before a parliamentary select committee on football governance, Clarke warned that clubs are heading for "a precipice". More than 30 Football League clubs have been in administration during the past decade and Clarke has repeatedly warned that more will follow unless urgent changes are made.

"Debt's the biggest problem. If I had to list the 10 things about football that keep me awake at night, it would be debt one to 10. The level of debt is absolutely unsustainable," he said. "We are heading for the precipice and we will get there quicker than people think."

The Football League has set up working parties to investigate all three of its divisions and will publish a five-year plan aimed at improving the finances and running of its 72 clubs. Clarke said: "We will hope to catalyse change. We will share it with our chairmen and say: 'This is where you are going unless you change now.'"

Clarke, who succeeded Lord Mawhinney as chairman last year, said that as part of the review process the League would also look again at the football creditors' rule that means debts to other clubs and players receive priority when a club has financial difficulties.

"I came in to this job thinking the football creditors' rule was an outrage," Clarke said, but he added that he now believes it to be the "least worst" option. But under further questioning from MPs on the culture, media and sport select committee, he said: "I can't construct an argument that allows me to defend the morality of football creditors. We are looking for a more palatable alternative."

Clarke also backed calls for independent directors to be added to the FA's board, saying it was a move he believed that the recently appointed FA chairman, David Bernstein, would back.

"I would be amazed if he doesn't drive hard for independent directors – he comes from a background where it's normal to have independent directors," Clarke said. "And he will have our support."

Bernstein said on his appointment that he would back "sensible, progressive reform". Clarke said the Football League had been "very forceful with our opinion that they need independent directors". He added: "I have sat down with the chairman of the FA and pledged our support for independent directors."

Clarke repeated fears that Premier League plans to overhaul the youth development system – which would see clubs compensated according to current Fifa rates rather than by a tribunal – would also have a potentially catastrophic effect for Football League clubs.

"It could seriously prejudice the finances of smaller clubs. Should they become less and less profitable, they won't be able to afford youth development," he said.

Gordon Taylor, the chief executive of the Professional Footballers' Association, told the inquiry that two thirds of the 92 league clubs had been in financial difficulties. "The game has never had more income but on the other hand has never had more debt," he said.