Three SPL clubs are technically insolvent according to Equifax
Published: June 22, 2009
Equifax, the financial information supplier, has said that it believes three SPL clubs are technically insolvent. Hearts and Hamilton Academical have been listed as insolvent as they would struggle if all their creditors came at once to demand the money they are owned. Motherwell is a company voluntary arrangement, so automatically given zero points and insolvency rating.
St. Johnstone and St. Mirren are in the best possible financial health according to Equifax as they both scored 100% in their credit rating check.
Equifax is warning that some Scottish clubs could find it hard to source new funding, based on their current credit scores. Despite preparing to splash the cash on new players, many of the top football clubs already owe more than the value of their assets. As such, Equifax External Affairs Director, Neil Munroe, believes this data could provide an important reality check for the clubs.
“Our Equifax ScoreCheck review of the SPL credit ratings certainly rings some warning bells about the Scottish clubs who could be facing financial difficulty for the next season. Not even Premiership football is safe from the recession if investors decide to withdraw funds.
“We have listed 3 clubs as insolvent because they would struggle if everyone came at once to ask for the money they owe. Of course, that is unlikely to happen, but like most other sectors of the UK economy it is likely to be a difficult year ahead for the nation’s favourite sport. Also, with the possibility of Setanta going into administration, the smaller clubs may find it increasingly difficult to make payments and remain solvent.”
St Mirren, narrowly avoiding relegation this season, despite this they achieved full marks (100) in its credit score along with newly promoted St Johnstone. However, although finishing the season third in the SPL, Hearts has a score of zero and is therefore listed as insolvent. Hamilton Academical also fared badly, scoring just two points. In general, the lower the score the more likely a business is to experience difficulty meeting its financial obligations.
When compared with English Premier League clubs, the performance of Clubs in the SPL is, however, quite positive. Just one team scored 100 – Manchester United. And 11 teams had such low scores that they are technically classed as insolvent.
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