Administration

[TheChipPrince]

Bournemouth are the latest club to go into it, but can someone with more business nouse than me explain it in simple terms what it means for the club (or any business for that matter)??

What are the advantages and disadvantages?

[AndrewT]

As I understand it, it essentially means the business behind the football club is bankrupt.

Administration for a club used to be fantastic as it meant debts were wiped out and the club could start again anew. However, after clubs like Leicester abused it to rip off their creditors the League introduced the ten-point penalty, so that the team saw negative consequences.

[TheChipPrince]

So what would happen to the £4 million debt?  Literally just wiped clean?

[Jon MW]

So what would happen to the £4 million debt?  Literally just wiped clean?

The administrators who come in to run it will negotiate ways to repay the debt and protect it from its creditors, a lot of it would probably be written off - then they'll try and sell the business to recover as much of the debt as possible. If they can't sell it they have to close it down. But that would be the company that owns the football club - not the club itself.

It gets quite complicated, my only experience of it came when I was working for a company that went into administration. The first thing the administrators did was make about 90% of the workforce redundant - although I don't think they'd be able to manage that with a football club and still keep it going.

One of the slightly quirky parts of Administration is that companys only have to resort to it when they are in financial difficulty but they obviously do have to pay the Administrators - the top Administrator who worked for the company I was at charged £600 p/h for example.

[boldie]

One of the slightly quirky parts of Administration is that companys only have to resort to it when they are in financial difficulty but they obviously do have to pay the Administrators - the top Administrator who worked for the company I was at charged £600 p/h for example.

Also the administrators are the first who get paid. And they very rarely do something good for the club..even actively selling the club is not one of their main skills..even though it should be.

[TightEnd]

As I understand it, it essentially means the business behind the football club is bankrupt.

Administration for a club used to be fantastic as it meant debts were wiped out and the club could start again anew. However, after clubs like Leicester abused it to rip off their creditors the League introduced the ten-point penalty, so that the team saw negative consequences.

this is not strictly true. Denis Wise sued LCFC (post La Manga and his sacking) via agent Eric Hall and the potential liability if we lost would have bust us. The club had to be placed in to admin (legal advice) It is true to say that this device caused a lot of bad fgeeling amongst creditors

It is also true to say that the 10 point penalty was introduced after our case, which was a pre-emptive administration, as a deterrent

[TightEnd]

So what would happen to the £4 million debt?  Literally just wiped clean?

creditors usually enter an agreement with the company via the admin..eg you are owed money, get 10p in the £ back

administrator gets paid

basics to allow co to continue are paid (ie look at Luton, several players sold and a lot of off field staff made redundant, but the bones of a squad to allow team to fulfil fixtures remains)

then creditors

then you start again with debts wiped out but a portion paid

[AndrewT]

As I understand it, it essentially means the business behind the football club is bankrupt.

Administration for a club used to be fantastic as it meant debts were wiped out and the club could start again anew. However, after clubs like Leicester abused it to rip off their creditors the League introduced the ten-point penalty, so that the team saw negative consequences.

this is not strictly true. Denis Wise sued LCFC (post La Manga and his sacking) via agent Eric Hall and the potential liability if we lost would have bust us. The club had to be placed in to admin (legal advice) It is true to say that this device caused a lot of bad fgeeling amongst creditors

It is also true to say that the 10 point penalty was introduced after our case, which was a pre-emptive administration, as a deterrent

Blimey, that's even worse - preemptive administration in case the club had debts in the future.

There was a guy who made custom fridges from who Leicester ordered a load to put in their executive suites. The doors were glass with the club crest engraved on them. Before he was paid, the club went into administration and he never got his money. However, the fridges were still there at the stadium being used (and may still be there for all I know) even though Leicester never paid for them.

[TightEnd]

blame the system. Hundreds of companies in all fields,and individuals for that matter go way OTT on credit cards and then do an IVA to write most of it off, doing it every month

Not saying its right, far from it, but the system allows corporates and individuals to walk away from the responsibilities of their mis-management, failure or excess. In the individuals case this comes at a cost..in terms of credit history and future financing. In a corporate's terms, change of ownership really can wipe everything clean

and LCFC was undoubtedly run by a load of half wits, a complete shambles

[Ironside]

and LCFC was undoubtedly run by a load of half wits, a complete shambles

sorry i cant remember running LCFC