Sport & Bankruptcy

Think of your favourite sports person or the club you have followed through promotion and relegation. Could they ever go bankrupt? There is always a chance, but isn’t that what sport thrives off? No matter how high a pedestal your team is placed on, it has debtors and creditors. When creditors don’t get paid, they turn to a debt collection agency such as Advocate. Debt recovery cases involving sports teams have increased since 2020 as clubs great and small struggle to balance the books. Sporting allegiances aside, the goal of any debt collection agency is to get paid as quickly and amicably as possible. Creditor and debtor survival can rest on the mantle of coordinating payment.

What If?

In life and sport, the ‘what if’ scenario creates hypothetical glories and regrets. What if Harry Stafford’s dog Major hadn’t run off from a fundraiser for Newton Heath FC? What if wealthy businessman John H Davies hadn’t taken Major off the streets? What if Stafford hadn’t agreed to give Davies the dog in return for investment in the club? In short, the red and white that is now Manchester United would have gone bankrupt in 1902 for £2,670. No Busby, Ferguson, Beckham or Rashford. The point is that many a club has achieved great things from humble beginnings and those history-defining decisions. Talent and money are no guarantee for success or longevity, as we shall now explore.

Football

After 146 years, Macclesfield Town FC fell victim to the hostile financial environment of league football, amassing debts of £780K. The path to a winding-up petition started a year before the club’s demise in 2020. The original petition was launched by six players for overdue wages and was later taken over by HMRC. With relegation from League Two courtesy of a points deduction under EFL misconduct rules for unpaid wages, the club collapsed. A local businessman has since bought MTFC’s assets from liquidation and resurrected it under the name Macclesfield Football Club. MFC gives hope to fans of Bury FC wanting to have a similar phoenix club. In 2002 the collapse of ITV Digital first nudged Bury FC into administration, where they came out the other side thanks to a Creditors Voluntary Arrangement (CVA). The club was no stranger to obtaining a promotion the season after relegation. Nor were they strangers to the financial pressures of fielding a competitive team. With creditors coming forward and wages being paid late, the EFL expelled Bury FC from League One in 2019. In 2020 the club entered administration again with £12.4M of creditors. Unless creditors accept another CVA, the final whistle that is liquidation seems inevitable. Fans are still hoping to separate the name from the debt, so Bury FC can be reborn like their MFC counterparts. The most recent club to battle insolvency is, of course, Derby County FC.

Rugby

Founder member of the Rugby Football League, Bradford Bulls succumbed to the fate of liquidation in 2017. Having endured administration twice previously and carrying over £2M on the books, the business was no longer viable. Two New Zealand businessmen relaunched the club, which currently plays in the RFL Championship. Rugby Union hasn’t escaped the insolvency arena either. In 2009 Coventry RFC faced a winding-up petition for unpaid tax. The club’s assets and identity were sold to a newly created company to ensure the team’s survival. Like football, professional rugby is not a pauper’s playground. Unable to stave off a second HMRC winding-up petition in 2016, London Welsh RFC entered liquidation. Shortly after, the club were disbanded, having been unable to meet the RFU financial regulations.

Formula 1

The likes of a billion-dollar private investment group, a certain Mr Ecclestone, and eight-figure driver contracts have done little to show the harsh financial reality of F1. In 2002 after 24 years of modest success, Arrows Grand Prix International faced a winding-up petition from a former unpaid driver. Theirs was a story of comparatively small budgets, insufficient sponsorship revenue, and a £2.1M debt to HMRC. In 2010 Virgin Racing joined the championship. Their time at the pinnacle of motorsport lasted six seasons and would see them take the name Marussia F1 before falling into administration and then liquidation. Alongside Marussia, in 2010, new entrants Hispania Racing Team and Lotus Racing joined the grid only to suffer a similar demise. Marussia was not the first F1 team to cease trading, and they are unlikely to be the last.

Cycling

The name Bradley Wiggins is synonymous with professional cycling. The Vélo d’Or winner had a glittering career before retiring in 2016 when racing for his own self-titled team run by New Team Cycling. Despite Wiggins investing heavily in the team, it struggled to attract the big money sponsors. In 2020 and with creditors of £587K, the company was placed into creditors voluntary liquidation (CVL). Liquidators deemed Wiggins not personally responsible or liable for the business failure as he was not involved in its day-to-day running and management. It’s not just cycling teams who can run out of the road. Zeus Sports, better known for being the organisers of the 2019 Women’s Tour of Scotland, entered a CVL in 2021. Amongst the unsecured creditors of nearly £700K were those owed prize money and expenses for the Scottish tour. Being unable to obtain sufficient public and private sponsorship to finance the tour is said to have hastened the firm’s demise.

Sporting Icons

Tennis icon and six-time grand slam winner Boris Becker was made bankrupt in 2017 over a circa. $14M debt owed to a London-based private bank. In 2022 Becker was given a custodial sentence for not complying with the terms of his bankruptcy – namely, hiding assets to the detriment of creditors. Heavyweight boxer and sporting royalty Mike Tyson filed for bankruptcy in 2003 with an estimated debt of $18M, having torn through a reported $300M since turning professional. The best boxers don’t stay down, and Tyson is no different. Since getting back up, Tyson has rebuilt his multi-million-dollar empire. Middleweight boxer and all-around eccentric English gentleman Chris Eubank was declared bankrupt in 2009 with tax debts of £1.3M a decade after retiring. Eubank’s pattern of spending and questionable financial advice at the height of his success ultimately laid the path for bankruptcy. Humbled by the experience, Eubank’s brutal honesty has been key in keeping his brand relevant and adding value to charitable causes. One of the first celebrity football players, Northern Ireland and Manchester United legend George Best was declared bankrupt in 1982 for an unpaid tax bill whilst playing overseas in Hong Kong. His £22K debt would be approximately £63K in today’s money. Central defender and respected TV pundit Neil Ruddock was declared bankrupt in 2011. The hardman of football on the pitch has proven to have a softer side since hanging up his boots in 2003. Argentine and Napoli footballing demi-god Diego Maradona was declared bankrupt in 2009 for $54M by the Italian Tax Authority. Up to that point, Maradona had enjoyed a financially prosperous career. Despite his financial and personal misdemeanours, the golden boy of football has an admirable legacy.

A League of Our Own

The legacy of any club, team or sporting icon can easily be tainted by the climax of debt recovery action. When the court winds up a high-profile team or individual, there is no trophy cabinet to reshuffle or victory lap to run. Behind every insolvency are creditors stuck holding the debt, scratching round to cover the loss or working out which suppliers can be paid late. In bankruptcy, creditors receive justice in lieu of payment. At Advocate our number one priority is to recover full payment, and if that is not possible, justice can be sought.

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