Administration (British football)

In the United Kingdom, football clubs sometimes choose to enter administration when they are unable to pay off outstanding debts. Under the Insolvency Act 1986, a business will face a winding-up order bringing them to court and if it is shown that a business cannot pay debts as they fall due or cannot repay outstanding debts then the company will be classified as insolvent.Administration puts accountants "in charge of pretty much everything apart from coaching the players and picking the team". For a football club in administration, the "football creditors rule" requires football-related debts such as wages owed to players and staff, and transfer fees owed to other clubs to be paid first.

In 2000, ITV Digital bought the broadcasting rights to Football League and League Cup matches in a three-year, £315m deal. In March 2002, the company went bankrupt owing the League £180 million which it said it "cannot afford to pay". As a result of this many Football League clubs had financial problems and entered administration.

Before the implementation of a points deduction it was perceived that clubs had "manipulated and abused [administration] as a way of shedding debts then restructuring, and borrowing again once the hapless creditors had been fobbed off with their 8p in the pound". In September 2003, it was proposed that clubs entering administration would be docked 10 points. A 'fit and proper persons' test was also introduced in an attempt to prevent fraudulent activities. If a person was previously director at a club which was in "administration twice during a five-year period" or at "two different clubs that have each gone into administration in a five-year period" then they would be prevented from becoming the controlling shareholder of a Football League club. A 'fit and proper persons' test was also introduced for directors of Premier League clubs. In November 2009, Stephen Vaughan, Sr. became the first director to fail the 'fit and proper persons' test.

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