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Rangers FC: why a rebirth is almost certain

Football clubs always seem to be going into administration, but then survive. So how do they do it?

This week Scotland’s most successful football club, Rangers FC, and Portsmouth FC have gone into administration. Does that sound familiar? The number of clubs going into administration is increasing. According to figures compiled by John Beech of Coventry University, only one club from England’s top four divisions underwent an “insolvency event” in the 1960s and 70s and only 13 during the 1980s. In the last decade, 23 of the 92 professional clubs have gone into some form of administration. Of these, eight (including Portsmouth) have gone through the process more than once.

So why are so many clubs making the same mistakes? Most collapses are born of financial mismanagement driven by a desire for sporting success. Who wins on the pitch is largely driven by who spends more on wages, a correlation that drives clubs to overstretch themselves in pursuit of the virtuous circle of promotion, bigger crowds, even higher wages and greater glory. Add in the ego of the self-made men who own football clubs, and in a sport where, by definition, most clubs can’t win anything, it’s easy to see how things go wrong.

And yet, for all the sorry talk about the end of the “Old Firm”– the dominance of Glasgow’s Rangers and Celtic in Scottish football, a rivalry some say is the fiercest in the game – the overwhelming likelihood is that they will line up to play each other as arranged on 25 March. That’s because the fate of clubs that enter administration is usually rebirth of some kind. The company names of some – Fulham Football Club (1987) Limited, Wolverhampton Wanderers FC (1986) Limited) – bear witness to the dates when new legal entities took over failed clubs. The administration process almost always ends with a club continuing in some form, because playing is the best way out of the financial hole (each game at Rangers’ Ibrox ground brings in £1m). And while the football authorities like to claim they act tough on clubs entering administration, the penalty imposed (typically a 10-point deduction) merely wounds the transgressor. The points deducted from Rangers moves them from second place to … second place in the Scottish Premier League.

But their survival will come at a cost. The infamous “football creditors rule” in England, whereby the football authorities will not let a club play until they have fully repaid other clubs and players etc, even at the cost to other suppliers and the taxman, means that the losers are generally the support staff, small suppliers and the public purse.

The ability of professional football clubs to rise, phoenix-like, from financial ruin is hugely positive for the communities of which they are an essential and longstanding part. But the process of rebirth always ends up costing the taxpayer, club employees and suppliers dearly, mostly for a football “dream” of which they didn’t ask to be part.

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