Despite the popularity of football in England and the huge sums the sport generates, several well established clubs are facing liquidation just days before the 2010/2011 season is due to commence.
The reason Portsmouth FC, Cardiff City and Southend United are all on the verge of bankruptcy is simple: these clubs’ expenses exceed their income.
The basics of business is about housekeeping and it all comes down to expenses. A football club’s income comes from sponsorship and gate receipts. If they are low you will be trading insolvently, especially for non-premiership clubs.
Non-premiership clubs don’t really get much income compared to premiership clubs and most of their expenses comprise player’s footballer’s wages.
Few clubs enjoy huge amounts of much revenue, but still tend to spend money on players in the chase for promotion: they buy expensive players in hope of getting promoted to the Premiership.
Football is an expensive man’s sport and not a business where you return a profit early on. Even some of the Premier League clubs are not making a profit.
Most owners are extremely wealthy individuals who seek to take over club for love or ego, rather than commercial reasons.
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