Folkestone Invicta on verge of going into administration

Wednesday 24th June 2009

FINANCIAL controller Andy Ingleston says Folkestone Invicta are on the verge of going into administration next Monday morning, writes Stephen McCartney.

A shareholders meeting was held at the troubled Ryman League Division One South club last night and Mr Ingleston stated on behalf of the board that the club have lost their major sponsors as a result of the current economic climate.

And he said that the board must consider administration, unless replacement funding can be found by nine o’clock next Monday morning.

Mr Ingleston confirmed that ongoing debts, which although are £20,000 above the normal manageable level of £50,000, are not the problem.

His worry was that with a season costing the club £150,000, the debt could by the end of this coming season rise to £220,000.

He stated that he is continuing to fight the Section 80 case with the Inland Revenue and still considerers their assessment to be misguided but until this is concluded this must remain a liability, so at the end of next season debts could total £350,000.

When questioned whether this announcement had anything to do with the exclusion of the club from the proposed Polo Ground redevelopment, Mr Ingleston confirmed that the loss of sponsors was known and the meeting date was set long before any peripheral announcements.

Mr Ingleston, informed concerned supporters by posting a message on the fans’ forum at www.folkestoneinvicta.co.uk.

“Personally I would like to thank supporters for listening and express my appreciation of the fact that they seemed to understand that I was finding it hard to take as any supporter,” he said.

“It was the most difficult thing I have ever had to announce and had worried about doing so for several days.”

When asked what administration would mean for the Cheriton Road club, Mr Ingleston admitted he needs clarification.

He said: “I am not an expert in the field but the initial job is to protect the directors. For the club it is the responsibility of the administrator to trim costs and turn the business into a saleable asset.”

He added: “Mention has been made of the proposed development. I said at the meeting that we are the football club and we should concentrate on our own affairs, not those of other clubs.

“I will endeavour to post any news as it becomes available in what are difficult times.”

Meanwhile, Gordon Farquhar, BBC Radio 5 Live sports news correspondent, wrote an article in March 2008 what administration means to Football League clubs.

WHY DO CLUBS GO INTO ADMINISTRATION?

In simple terms it is a miscalculation of the cash flow.

Whatever the underlying causes, administration generally follows the point at which someone, (usually the taxman) says, "you owe us, and we'd like to be paid," and the club's head of finance says, "oops, we haven't got the money".

A check of the balance sheet of the average (Football League) club still shows far too much money as a percentage of turnover goes on wages.

The financial model isn't great, propped up by fans who keep on buying the product no matter how bad it is, but then football is a business full of people making irrational decisions with their money.

Chairmen get seduced by the promises of managers that buying another decent centre-back and a forward will turn the club's playing fortunes around. Yet the reality is, nothing can ever be guaranteed.

IS ADMINISTRATION A GROWING TREND?

Not really. Ever since the leagues introduced a 10-point penalty for going into administration, it has been seen as the last resort before liquidation. Chopping 10 hard-won points off your season is highly unlikely ever to make your business more attractive to a potential buyer, so clubs don't do it lightly.

The ones that have gone into administration this season haven't had a lot of options. In the past it was manipulated and abused as a way of shedding debts then restructuring, and borrowing again once the hapless creditors had been fobbed off with their 8p in the pound. The sporting sanction has changed that.

WHAT IS ADMINISTRATION - AND WHAT DO ADMINISTRATORS DO?

They're accountants whose job is to try and get the best deal for the business and the creditors, by trying to find a buyer, or minimising the losses. Going into administration is a legal move, which carries legal obligations.

Responsibility for running the club goes to the men in grey suits, instead of the sheepskin coats. They look at how to improve revenue streams, often by selling off assets, and using their contacts to try and pull in new investment, and do deals with the creditors.

It's an admission of failure by the club's board, and once the administrator's in, he's in charge of pretty much everything apart from coaching the players and picking the team.

WHO SUFFERS WHEN A CLUB GOES INTO ADMINISTRATION?

Often it's the small local businesses who provide goods and services to the club: the man who supplies the pies or the electrician whose bill hasn't been paid. Those guys aren't exactly millionaires, and the club's failure to pay them can really hurt.

Football League rules state that in terms of paying off the debts, it's the football creditors who get priority, so any outstanding transfer fees and so on have to be paid in full before the rest share what's left.

The biggest hit is usually taken by the Inland Revenue, so that's every single one of us taxpayers who end up a bit worse off.

Meanwhile, like the football clubs that we report on, www.kentishfootball.co.uk , a website run by Tunbridge Wells resident, Stephen McCartney, 32, is searching for people who can assist with running costs.

However, the website WILL be running during the 2009-10 season.

The website has brought you news stories involving Kent football clubs since June 2003 and brings you coverage of at least two football matches per week during a 45-week period.

That, of course, costs money, especially when you take into account the increased train, cab and bus fares to get to and from matches from Tunbridge Wells.

If you’d like to assist with the running costs of this website, please click on the CONTACT US button on www.kentishfootball.co.uk , with the subject heading of “DONATION”.

Please include your name, location, which team(s) you support - and I’ll send you details on where to send your gratefully received donation.

Visit Folkestone Invicta's website: www.folkestoneinvicta.co.uk

Read the BBC Sports article in full here: http://news.bbc.co.uk/sport1/hi/football/7305998.stm