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Accrington Stanley's chairman on gambling with debt

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Interesting twitter thread from Andy Holt the Accrington Stanley chairman on the dilemma faced by clubs when it comes to risky spending and debt.

 
Quote

 

So..

Insolvency.ECT7JPZW4AAWlS3.jpg
THE TRAP II
An insolvency event is a lack of financial liquidity to pay debts when they fall due.

This is the red flag.

Clubs are encouraged to overspend because it increases their chance of success. 

Vice versa not overspending increases a clubs failure odds.

Against @SunderlandAFC...
...last Tuesday they brought on a sub of fabulous quality that is paid virtually the same as our entire squad.

And they’re losing massive amounts of cash despite having this largest income in the league.

I’m not having a go at the mackems, they’re operating within the rules.
I wish we could have Aiden McGeady.

He’s a great player.

Anyhow, the only way we could afford the increased level of player spending is by loans to the club by me to our club.

Putting the club in debt.

Or 

Selling assets like the stadium.
Now then we know failure to pay bills is an insolvency event.

Often, it’s a self inflicted insolvency event. 

Created by and owners desire not only to progress, but also to survive.

Failure on the park threaten the survival of clubs as much as overspending.

They both..
...lead to an increase of debt and risk.

No matter which way I go as an owner, our club is at risk.

If I overspend and build debt our survival is threatened.

If I manage within our means and the club is relegated, I MUST make good and lost cash as a result. 

If a club..
...is going to be put in debt if it’s relegated, due to a sudden loss of funds, an owner might as well spend the cash early to ensure has a much better chance of not being relegated.

And so it begins....

Even if an owner doesn’t want to gamble, it makes rational business...
...sense. 

If we were in the lower reaches of @SkyBetLeagueOne in January, facing the potential of relegation and the loss of £750,000 a year, EVERY YEAR, surely it makes sense to risk £750,000 once to stay up?

So the rules of the game creates gamblers.

Gambling creates..
...debt.

Debt creates failure.

The minute a club fails to pay wages action should be taken to address the situation.

The appalling action by @EFL and @PFA has been to loan to clubs that overspent via players, maintaining their status and continuing the advantage the..
..overspending club has.

How about a failure to pay wages cost you 3 points?

It’s not my fault that clubs have got themselves into a position where they’re insolvent.

Why should the authorities subsidise failure.

They’ve done so @OfficialBWFC and @buryfcofficial but...
...have spectacularly failed to resolve the issues.

Now @EFL are running round like headless chickens trying to protect their competitions.

The fact is that the only hope of protecting their competitions is to sort themselves out.

Their operational rules and distribution...
...model causes the failure in the first place.

The owner is blamed for getting into debt.

The owner is blamed for relegation, especially without resisting it by overspending.

The fact is this situation is caused by @premierleague @EFL and @FA failure to run the..
...game properly in this country.

They created the trap for owners.

They are the failure.

Owner failure is a symptom of a bankrupt model.

 

 

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It isn't an original point but finances in football are so fundamentally broken but the bubble doesn't seem likely to burst at the top end of the spectrum for a while. 

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The situations some of these clubs find themselves in is in danger of undermining the EFL.

Bolton and Bury started the season on -12 points and Bury have had all their games postponed so far. How long will that be allowed to go on for?

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12 minutes ago, Chelm Canary said:

The situations some of these clubs find themselves in is in danger of undermining the EFL.

Bolton and Bury started the season on -12 points and Bury have had all their games postponed so far. How long will that be allowed to go on for?

As harsh as it sounds the League needs to start letting these clubs fail and go out of business, otherwise they just lurch from crisis to crisis.

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