Southampton become the first of many?

The other day I asked if doomsday was approaching for English football. It does seem to be heading that way and I fear for the number of clubs that are going to hit trouble over the coming weeks and months.

Casualty

The latest casualty is Championship club Southampton. Just four years ago Southampton were a Premier League side with a fantastic new stadium and a bright future. Now, due to mismanagement and the dire financial situation they are a Championship club who stare relegation to League One in the face and worse than that, the prospect of going out of business altogether.

Southampton Leisure Holdings is the parent company that runs Southampton football club. On Wednesday the company announced that with debts of £27.5million they needed extra money if they were to have a future. With that announcement share trading in the company was suspended and then on Thursday, the company was placed into administration.

Resigned

Chief Executive Rupert Lowe resigned from the company along with chairman Michael Wilde and director Andrew Cowen.

A statement from Southampton Leisure Holdings said that the football club was “unaffected by these insolvency proceedings”. It is very hard to see how that can be the case.

The football league will meet next Tuesday and a decision will be made as to whether Southampton will be given a ten point deduction. It is possible that putting the parent company rather than the club into administration could save the club from that penalty, but that is highly unlikely.

Deduction

If Southampton do manage to avoid a points deduction one can only try to imagine the reaction of the likes of Leeds, Luton, Rotherham, Bournemouth and Darlington, who have all been punished in this way for the same thing.

Of course, as the administration has come after the football league’s deadline, if they decide to deduct ten points it will be timed to cause the maximum damage to the club.

Drop zone

They currently sit second from bottom in the table, three points from safety. If they manage to get enough points from their last seven games to escape the drop zone, the league will then take ten points off them, causing them to be relegated anyway. If they do not manage to escape the drop zone, they will start next season in League One with a ten point deficit.

Southampton have never really financially recovered from the building of their St Mary’s Stadium which cost around £30 million. They moved to the ground in 2001 but four years later lost their Premier League status which was crucial to stay on top of the finances.

Extinction

The club have introduced a number of money saving, cost cutting schemes over the past few weeks and months. They have sold most of their better players and loaned out their big earners. Despite all of that, the club remains on the verge of extinction.

In a statement, joint-administrator Mark Fry said,

“Southampton Football Club has a long history in English football and could be an extremely attractive investment for the right buyer. We are working hard to preserve the value of the football club and produce a positive outcome for all stakeholders, and I ask that fans continue to show their support for the team for the remainder of the season as we seek to show the best face possible to potential investors.”

Whilst the administrator is absolutely right to sound a positive and encouraging note, the reality is that in this day and age, football clubs do not look like a sensible investment for any investors. The club seriously faces the prospect of liquidation and could drop out of the Football League, if Southampton Leisure Holdings fails to attract new investment by the end of the summer.

Tragedy

That would be a terrible tragedy for English football. Does anyone feel uneasy about the fact that Southampton could be going out of business with a debt of £27.5million whilst Manchester City were prepared to spend four times that amount to buy just one player?