A Sociological Study Into the Financial Crisis at Notrhampton Town Football Club

Introduction

There have been a number of recent high profile cases in which elite football clubs in the English Premier League have revealed large-scale debts and faced the prospect of administration and bankruptcy. The extent and type of media coverage of these instances highlights public concern over their demise. Since clubs are closely integrated into the local communities, they cannot be seen as a conventional business. Indeed it is precisely the ambivalent relationship of football and commerce that has inspired several important analyses of the sport’s economic structures (Szymanski and Kypers (1999), Morrow (2003)).

Nature of the Problem

This paper explores the recent troubled financial history of Northampton Town FC, using the football club as a case study to shed light on wider sporting and social issues. In particular, we wish to demonstrate how the very specific circumstances affecting the club prove the need for similar applied studies focussing on the day to day running of football clubs in order to inform macro-level debates. Secondly how lower division clubs are more dependent on local benefactors for their survival than are the larger, elite clubs in European Leagues.

Significance of the Study

Football finances during the 1990’s indicated that many clubs particularly lower division clubs were on the edge of bankruptcy (Szymanski and Kypers, (1999). By 1992 Northampton Town FC were also facing serious financial problems: with a turnover of less than £0.5m, the management had allowed debts to increase to £1.5m moreover, in the wake of the Taylor Report it was increasingly obvious that the club required a new stadium; that would eventually cost £5.5m when it was built in 1995. In terms of local circumstances, this depended on two key partnerships: the first with the local council who identified a new site for the stadium and provided the majority of the finances. The second was with the ordinary creditors and local businesses, who following the restructuring of the club agreed to accept the meagre 10% offer made by the administrator on the outstanding debts. A significant partner in resolving the crisis was the recently formed Supporters Trust whose involvement not only demonstrated the interconnection between the local community and the football club but also led to their full representation on the Board of Directors. This study also hopes to demonstrate that the running of a football club despite being subject to the same regulatory environment does not operate as a conventional business. This is largely due to the highly prized nature of the institution being regarded as a public good that forms an important part of the identity formation of the local community.

Methods

Using Elias’s figurational theoretical framework, the data for this study was gathered through the use of two principle methods. Firstly, traditional sources, newspapers, legal documents, business journals company records and recent books concerning football were accessed. This facilitated an understanding of some of the broader issues facing those responsible for lower league football clubs at the time. Secondly, semi-structured interviews were conducted with four ex chairman, three football directors, the administrator, a member of parliament, a borough councillor, the chief executive of the county cricket club and a sports reporter from the local newspaper. The interviews were taped, transcribed, analysed and where necessary triangulated with documentary evidence, which for the most part replicated the claims made by the interviewee.

Results

There are a number of key managerial issues that make the survival of Northampton town a fascinating study. The internal processes of decision-making prior to the club being placed into administration were characterised by personality struggles rather than rational strategy. This resulted in dramatic and unexpected developments occurring, which suggests that had it been a more conventional business rather than a football business might well have resulted in bankruptcy and liquidation. The external political environment of local council politics further demonstrated the self-interest of political parties by the use of soccer as a way of furthering political interests at the local elections. In general terms, the decisions that were made and the uncertainties that characterised this process both on and off the field can best be understood as power struggles between people and groups within a dynamic and continually changing network of interdependences.

Discussion / Conclusion

These complex social processes mean that theories of classical management change are insufficient tools for understanding the recent history of the club, and in a wider sense the relationship of sport commerce and politics. The complexities of the developments are best summed up by Elias who wrote in this regard of ‘blind’ or ‘unplanned’ long-term processes derived from the interweaving of aggregate acts. Each of these acts involving a measure of intentionally but the collective outcome being outside the control of any one individual or group (Elias, 1978 cited in Dunning 1999).