Chester vs Chorley 18th September 2010 (Not Published)
Last Tuesday Ilkeston Town became the latest football club to be liquidated. They join an ever lengthening list of clubs that Her Majesty’s Revenues and Customs have taken to court and declared insolvent. Ilkeston argued they could pay the £47,000 debt to the taxman in £1,000 instalments, saying that the club was up for sale and in talks with potential new owners and that they were also negotiating the sale of a player for £20,000. However, this was not deemed to be enough by court registrar Christine Derrett who wound the club up after a two minute hearing saying, “I’m sorry, the company is plainly insolvent and I therefore make the final compulsory order.” This leaves the Blue Square North division a team short and the supporters of the club left to pick up the pieces and hopefully reform the club for next season.
Clubs running into financial difficulty is nothing new. Just this year there have been court appearances for Portsmouth, Southend and Crystal Palace, all of these teams managed to stay their execution, but Merthyr Tydfil and, of course, Chester City were both wound up. There are many clubs that have disappeared over the years through financial mismanagement; however it is only recently that HMRC have regularly become involved. This is due to the 2002 Enterprise Act where HMRC had the ‘preferred creditor’ status they had previously enjoyed removed.
The preferred creditor status is still in place for all football creditors and means that if a club owes another club money for a transfer, they will receive all of that money in any event of insolvency. In effect football creditors get all of the money they are owed, with all other creditors getting a share of what is left once football creditors have been paid. Before 2002 HMRC also had the preferred creditor status and so would receive all of the money they were owed, however since then they have been losing out whenever a club ran into trouble.
HMRC have already tried to have the football creditors rule declared unlawful in 2004 when they attempted to take Wimbledon to court. If they attempt legal action again in the future they are likely to target the FA instead. HMRC will be hoping that the FA take matters into their own hands however, by beginning to sort out the financial mess that football finds itself in. Since the credit crunch the loans that most clubs could get easily have dried up, and with the huge government deficit needing to be filled, HMRC needs every penny it is owed. This makes it extremely difficult for clubs in trouble to get out of trouble. Tighter regulation of football’s finances should be top of the FA’s agenda otherwise there will be many more cases like Ilkeston Town’s.
On Wednesday night Ilkeston fans began the process of rebuilding the club with a well attended fans meeting. They now have 21 days to inform the FA they wish to reform the club and next season will be placed at least two divisions lower than the Blue Square North. This situation is identical to the one City Fans United found themselves in earlier this year, with the local council, Erewash Borough, holding the lease to the ground and the previous owners being investigated. The supporters are looking to set up a supporter’s organisation with a view to having a community based club, where they are not reliant on various chairmen and directors to provide them with a football club. However, they have a fight on their hands as the liquidator of the club has already said there have been numerous expressions of interest with regard to taking over Ilkeston Town. There is a long road ahead for Ilkeston fans, but hopefully they will once again have a club they can be proud of.
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