Portsmouth manager Danny Cowley believes several Championship sides will be in financial turmoil over the next few months after seeing Derby County enter administration, as he spoke on the Pompey Talk Podcast.
The second-tier outfit in the most dire situation at this moment in time is the Rams, who went into administration last month and are now in a race against the clock to find a new owner after effectively running out of money.
20 employees at Pride Park have already been made redundant to cut costs, with money still owed to HMRC and Arsenal being forced to defer the payment of a £1.4m transfer fee instalment for Krystian Bielik until new ownership is found.
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Thankfully for the East Midlands club, they seem to have a number of parties potentially interested in taking over at the club and are likely to be saved from the jaws of liquidation – a victory for the whole of football after seeing the Rams exist for over a century.
However, there are other clubs whose financial situation is currently looking poor, including Reading who have lost over £90m in their last three sets of accounts and Hull City who were forced to take out a loan in July to keep the ‘core’ of their squad together after their promotion.
Portsmouth boss Danny Cowley, who currently plies his trade with the south-coast side in League One, believes this is just the start of many second-tier clubs being embroiled in financial turmoil.
Speaking on the Pompey Talk Podcast, he said: “You see so many owners just investing in the team and, yeah, that can create short-term success – but it can create long-term problems as we are witnessing and observing in the Championship.
“You look at a number of clubs in the Championship at the moment who are in dire straits financially.
“And I think there’ll be more clubs at that level that will join them in the coming months.”
The situation with the three Championship clubs mentioned is a real source of concern, but there is hope for all three.
As previously mentioned, there seems to be quite a lot of interest in Derby County so regardless of whether they can stay up against the odds or are consigned to relegation, they look likely to be in existence beyond the end of the calendar year.
For Reading, they have made cutbacks in recent years and have gone a long way in reducing their wage bill, so their losses in future sets of financial accounts are likely to be a lot less as they look to recover from years of heavy spending.
And with Hull City, there will always be murmurings of a takeover so this could change things for the Tigers. Regardless of whether the Allam family remain in charge or not though, the EFL seem to be relaxed about their interest-free loan and both parties will be hoping this is just a one-off.
More administrations could easily come out of the blue with heavy investment from some teams before the pandemic and the major effects of Covid-19 on revenue coming into play – and with the latter – you fear especially for smaller teams in the fourth tier.
We can only keep our fingers crossed that the financial health of all 72 teams is as best as it possibly can be for the long term.