Sports club and facilities insolvencies fall post-Olympics
UK sports clubs benefitting from post-Olympic boost?
The number of sports clubs and facilities entering formal insolvency procedures has fallen 33% in the year since the 2012 Olympic summer, from 123 in 2011-12 to 82 in 2012-13*, according to research by R3, the insolvency trade body.
The drop in the number of failing sporting companies coincides with a remarkable year of sporting success for British athletes and teams that included London hosting the Olympics from 27 July 2012.
By comparison, the total number of UK corporate insolvencies fell just 12% over a similar period**.
R3 president Liz Bingham says: "Regular British sporting success, as well as the feel-good glow of the Olympics, may well have encouraged both children and adults to try new sports, join local teams, or keep on going with their gym membership. Extra interest – and income – will always be a welcome boost for sports clubs and facilities throughout the country."
"The 'legacy' of London 2012 has attracted a lot of attention. It would certainly be a positive Olympic legacy if any burst of grassroots interest in sport were to be sustained and translated into financially healthier sports clubs and facilities."
The research, compiled by R3 using Bureau van Dijk's 'Fame' database of company information, also shows that sports-related insolvencies are now 42% lower than they were five years ago when the UK entered recession.
R3 adds that despite the fall in sporting corporate failures, many sports clubs and facilities are still financially hard-pushed.
Liz Bingham explains: "Since the recession, many people will have cut back on discretionary spending like club memberships or trips to the gym. Sports facilities, gyms, and clubs are also vulnerable to seasonal changes in weather or lengthy gaps between playing seasons, which can make cash flow tricky to manage. Expensive space requirements, high insurance costs, and finance requirements for new equipment quickly add up too."
"On top of this, early periods of economic recovery, as we are experiencing now, can be dangerous for businesses on the edge. Corporate insolvencies have historically increased in this situation. Businesses that cut back on investment to survive the recession may find they are unable to cope with the stresses of expansion and increased demand that economic recovery brings."
Liz Bingham adds: "In this context, any boost that clubs have received from the Olympics is particularly welcome."
Corporate failures uncovered by the research include those of multiple Football League and Premier League clubs, local football clubs, golf clubs, snooker halls, local stables, motor-racing clubs, tennis clubs, and gyms.
Number of sports clubs, facilities, and related businesses entering insolvency procedures
Notable UK sporting successes 1 July 2012–30 June 2013
London 2012 Olympics and Paralympics
Team GB took 65 medals, including 29 gold medals, to seal 3rd place in the medal table and record the UK’s biggest Olympic medal haul since 1908.
Touring Australia (1 June 2013 - 6 July 2013), the British & Irish Lions recorded their fourth-ever series win, their first since 1997.
Rory McIlroy (PGA Championship 9-12 August 2012) and Justin Rose’s (US Open 13-16 June 2012) Major wins mean 2 of the 4 golf Majors are in British hands.
Andy Murray became the first British male in 76 years to win a tennis Major by winning the US Open (27 August 2012 - 10 September 2012) following his Olympic gold medal in August 2012.
In the 2012 Tour de France (30 June 2012 – 22 July 2013), Sir Bradley Wiggins became the first British man to win the biggest stage-race in cycling.
*Year end 30 June (latest available data)
**Year end 31 March (latest available data)
- Businesses included in research included those classified by the Office of National Statistics under their Standard Industrial Classification as involved in: The operation of sports facilities (9311); the activities of sports clubs (9312); fitness facilities (9313).
- Formal insolvency procedures (as reported to Companies House) include: the appointment of a liquidator; receivership appointments; the appointment of an administrator; entering a Voluntary Arrangement.
- Where a company enters an insolvency procedure directly from an earlier insolvency procedure, just the entrance into the original insolvency procedure has been counted.
- R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners.
- R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
- R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals. Website www.r3.org.uk
About Bureau van Dijk
- Bureau van Dijk is a leading provider of company information
- Bureau van Dijk’s Fame database has coverage of all UK & Irish companies, and is used extensively by insolvency professionals to give them a competitive advantage
- Fame combines data from various sources including Companies House, London Gazette advertisements and the Companies Registration Office in Ireland.