There will be plenty more Burys unless the EFL take closer look at club finances

WEEKLY COLUMN
James Olley28 August 2019

Bury FC was formed in 1885 after meetings held between two local church teams in nearby pubs. It ends as an asset-stripped shell, crippled by debt and mortgaged off to a company based in Malta via several others in the Virgin Islands.

This sad journey encapsulates the corrosive slide from community to capitalism as the driving force in modern football, a shift to which the game’s authorities acquiesced by allowing the clubs to call the shots.

The Premier League are guilty of this, too, but the billions poured in from TV companies increases the margin for error, only enhancing the feel of a promised land EFL sides aspire to join.

Some harbour genuine, well-structured ambition. Some overspend with good intentions. And some, such as Bury and Bolton, are placed in jeopardy by reckless financial mismanagement and a disgusting desire to profit personally from long-standing localised loyalty.

Bury’s collapse comes in the midst of internal paralysis within the EFL over changes to the “fit and proper person” owners and directors test. Alterations to expand beyond an entry-level criminal convictions check were agreed in principle last summer but, surprise surprise, the clubs cannot agree on exactly what the new rules will look like.

They should not be allowed to. The EFL insist that good governance is the norm within the 72 clubs under their banner but if anything can be gleaned from Bury’s demise, it is that there is sufficient malpractice to conclude the current extent of self-regulation does not work.

It would go too far to suggest the EFL should micromanage the finances of each club but a more robust proof of funds test would be a logical starting point. How can it be permitted for a loan to be taken out, secured against a club’s assets, with an annual interest rate of 138 per cent? How can a mortgage be taken out on a stadium with 40 per cent of the money raised going to unnamed third parties, only accounted for as “introduction fees?”

Under Bury owners past and present — Stewart Day and now Steve Dale — staff have not been paid in full. The town is bereft of a source of pride that lasted 134 years.

There is a temptation in some quarters to link the situation to Brexit. Day invested money from his property companies he turned into shares and when those companies went into insolvency, the expanded wage bill became unsustainable.

The widespread market uncertainty relating to Brexit no doubt impacted on Day’s portfolio but the EFL regulation insisting clubs spend within their means on wages is flawed precisely because it allows extra money to be invested in this way. Owners spending their cash is one thing. Owners borrowing against businesses unrelated to football is something else entirely.

The integrity of sporting competition is challenged by football’s relationship with business, whether it is the cash-rich approach of Abu Dhabi money at Manchester City or the relative lack of resources Manchester United and Arsenal have had under American ownership.

But the big clubs are invariably too big to fail. Financial data firm Vysyble claimed that during the 2017-18 season, the average percentage of wages as revenue in League One was 94 per cent, the highest ever figure. In League Two it was 78 per cent. In the Premier League, the figure for the Big Six was 52 per cent and the rest of the top flight 67 per cent.

Owners must be responsible enough to safeguard a club’s long-term future as a condition of entry. Otherwise Bury’s fate awaits many more.

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