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Friday, February 27, 2009

Cheltenham not going into administration

Cheltenham Football Club are issued a detailed statement this afternoon which tries to explain their current financial plight and how they hope to continue.

One thing we must make clear is that Cheltenham Town will not be going into administration and the Board are working to re-structure certain aspects of the club in order to ensure that we can field a good, competitive team in either League One or League Two next season.

The statement then sets out three reasons for their difficulties.

Firstly the HM Revenue and Customs whom, they say, are taking a harder line with football clubs including detailed PAYE inspections resulting in additional tax charges on clubs and demanding that tax bills be paid on time and in full.

Secondly the Global Banking Crisis which has meant a tightening up of bank overdrafts.

And thirdly the Robins deficit on football trading

Every year the Board of Cheltenham Town FC sets a budget detailing what it believes will be the likely income for the season. Once these figures are established it is possible to determine how much money can be spent. It is a delicate balancing act and the biggest variables are gate receipts, commercial income and players wages. However, problems can occur when the actual figures that are played out over the season fall short of expectations. This season Cheltenham Town's gate receipts and commercial income are well below budget - partly as a result of poor on-field results and partly due to the national economic downturn. For example, the Board had budged for income of £24,000 from the midweek match against Millwall. However, because the game was postponed and re-arranged to midweek the income was roughly half of that figure. In addition, the Board decided to invest additional funds in the team prior to Christmas in the hope of staving off relegation. This strategy made financial sense as next season's Football League TV deal will result in a much higher payment to League One clubs. However, the strategy has clearly not paid off in terms of results. The one positive is that the new TV deal will also benefit League Two and in the event of relegation the club would not be worse off in terms of central distributions from the Football League.

The statement goes on to say that these three factors have left many football clubs, including Cheltenham, with severe cashflow difficulties. It then details the way the club hopes to survive with cost-cutting measures and hopefully new investment.

The full very detailed statement can be found on the Official Cheltenham Town website and is well worth a read simply to understand the plight they, and possibly some other clubs, find themselves in at present.