Administration could be a factor in relegation battle

PUBLISHED: 10:08 17 March 2009 | UPDATED: 16:07 10 September 2010

Michael Bailey

While those in the corridors of power at Carrow Road seem unperturbed by the threat of administration, it could yet play a part in how the remaining weeks of Norwich City's Championship survival campaign pan out.

While those in the corridors of power at Carrow Road seem unperturbed by the threat of administration, it could yet play a part in how the remaining weeks of Norwich City's Championship survival campaign pan out.

Thursday, March 26 is the Football League's deadline for clubs to go into administration and avoid any penalties being applied next season, be that under the dawn of a new era in a division below or their current standing.

Administration brings with it a 10-point deduction, something League Two Darlington were the latest club to experience after being forced to take the hit at the end of last month.

The Quakers' position, plus the current financial climate, brought with it speculation at the weekend that as many as nine other Football League clubs could join them in administration before the end of the season.

“I've had contact from people, not just in this division, but the division above,” said Darlington manager, Dave Penney. “There's a cut-off date and I know a lot of clubs that are close to administration. From talking to people, we might be the first but we won't be the last. I'd say five will go this year.”

While a number just shy of double figures could yet prove to be hyperbole, the Championship - where the stakes are so high - is unlikely to be immune from such financial ills.

That said, should Norwich fans harbour hopes their relegation rivals' accounts will ease City's remaining relegation concerns, there is a warning from the division's struggling clubs - no one expects to be on the receiving end of a 10-point deduction any time soon.

Leeds United helped bring about the Football League's administration deadline with their attempts to render the points penalty meaningless during their Championship relegation in 2007.

With League One football a virtual certainty, owner Ken Bates took his club into administration before their final game, with the hope their 10-point penalty would do little but confirm the inevitable.

The Football League decided that was unfair and, after increasing United's penalty to 15 points, applied it to their first season in League One instead. The annual deadline sees the League's clubs given a stark choice - a battle for survival or the offer of a fresh start.

Any club whose cause looks lost by next Thursday could take the 10-point hit now and start to rebuild for the future, but for those where the future is muddied, there will be important decisions to be made.

Should a club go into administration after next Thursday's deadline, the Football League can decide whether the 10-point deduction is applied this season - for example if the club still picks up enough points to avoid relegation.

Or if the club still went down, the League could apply the penalty to their start in a lower division next season.

The deadline may yet prove immaterial, that is the expectation.

However, such things can change very quickly and what next Thursday does do is ask the question - and those Championship clubs with a heavy burden of debt, including Norwich, have to think long and hard about the answer.

But the message remains, if you look after the points then the pounds will take care of themselves.

CHAMPIONSHIP STRUGGLERS: HOW THEY COMPARE FINANCIALLY

t Charlton: Safety looks a long way away and many believe Charlton will take the opportunity for administration to ease their £21m debt. However, £16m of that figure is owed to the club's directors, who it is believed wouldn't ask for it back anyway.

t Southampton: There has been a lot of speculation in recent days Southampton are the club most likely to flinch ahead of next Thursday's deadline. Although reliant on them, the banks would be unlikely to get their money back by forcing administration. That, coupled with the certain uproar from fans at their club being virtually relegated by a 10-point penalty, seems to back sources on the south coast, who do not expect the club to choose administration as a way of easing its financial situation.

t Watford: New chairman Jimmy Russo and his vice-chair Vincent, have bought loans to help ease the Hornets' previously difficult financial situation and, while things are still a long way from being easy, the threat of administration is a long way down the list as Watford enjoy an atmosphere of optimism.

t Nottingham Forest: Like Watford, Forest have a generous chairman in lifelong fan Nigel Doherty. The club owes most of its debt to him, and administration would be unlikely to make any sense.

t Barnsley: Went into administration after the collapse of ITV Digital in 2002 but have few financial worries at present thanks to owner Patrick Cryne. What is causing more concern is their run of just four wins in 17 league matches.

t Plymouth: Argyle reported a £1.1m profit last season and although they are not expecting to repeat that figure this season, the club is on a secure financial footing.

t Blackpool: The club is being run prudently and last year's accounts show the club in the black - to the annoyance of some fans at Bloomfield Road, who would love to see a few risks taken with a view to improving the club's league position.

t Norwich City: “Administration? No,” said City chief executive Neil Doncaster recently. “Administration only arises when you can't pay your bills. The situation is stable, it remains manageable and we are better placed than many of our competitors to withstand the troubles that the economic climate throws at us, even despite the relative wealth gap in ownership terms.”

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