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MORE football clubs could go out of business in the coming weeks unless an agreement on a bailout package for the Football League is agreed quickly, a parliamentary committee has heard.
Last month English Football League (EFL) clubs reached an agreement in principle to accept an offer from the Premier League of a £50 million bailout for those in League One and League Two, but Championship clubs have only been offered the chance to apply for hardship funds on a case-by-case basis.
The protracted negotiations have led to fears that clubs could follow Bury and Macclesfield in going to the wall — a warning repeated by football finance expert Kieran Maguire as he appeared before the digital, culture, media and sport committee today.
“The Premier League and the EFL seem to be talking but very slowly and every time we do this it increases the risk of a club potentially going out of business,” Maguire said.
“We’ve seen Bury, we’ve seen Macclesfield Town. We’ve managed apparently to get through to the November pay packets and those have been paid.
“Are clubs now going to have the resources to pay wages in December and January unless the EFL and Premier League come together? No, they’re not.”
Maguire agreed with the assessment of Dr Rob Wilson of Sheffield Hallam University, who told the committee that governing bodies across sports should use the crisis created by the pandemic as an opportunity to reform.
“I think it’s a failure at individual club level but it’s also a governance issue,” he said.
“Clubs in League One and League Two, the vast majority were losing money pre-Covid so were at a very high risk of any kind of financial shock.
“Clearly Covid is looking like the greatest financial shock since the second world war.
“There is a systemic problem in English football in that we have three governing bodies, each of whom is now pointing the finger at each other.”
Asked by Clive Efford MP if it was right for the Premier League to only offer Championship clubs loans, Maguire said the Championship’s financial landscape made the top flight’s response understandable, particularly given its own loss of around £1 billion in revenue.
“The collective wealth of owners [in the Championship] is estimated to be in the region of £30bn,” Maguire said.
“There’s no reason they should have to go and bail out their own clubs but you can see it from the perspective of Premier League owners.
“‘Why should I be bailing out or providing financial assistance for a club that is potentially going to be taking my place in the Premier League over the next few years when that owner happens to be richer than myself?’
“If you take a look at the finances in the Championship, at the worst clubs are paying £226 in wages for every £100 in revenue and individual players are on salaries of £5m a year, it’s very difficult to have sympathy.”
EFL chairman Rick Parry has been looking for £250m to cover the shortfall in finances, which Wilson suggested could be achieved by redistributing the widely unpopular parachute payments made to clubs relegated from the Premier League.
“It’s very simple,” Wilson said. “Stop paying parachute payments because we know they distort the competitive balance and are ruining life in the Championship anyway, and hand that same £270m to all those clubs.”
Maguire also criticised the “glacial” pace of reform at the FA, and said Greg Clarke had been right to resign after using unacceptable language while giving his own evidence to the same committee last month.
Asked if they could suggest possible successors to Clarke, Wilson recommended former Club England managing director Adrian Bevington, while Maguire suggested Tranmere vice-chairman Nicola Palios.
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