Southampton on the brink

Championship club Southampton are on the brink of becoming English football’s first major casualty of the credit crunch after missing an end-of-March deadline to secure new financing.

Trading in the shares of the club’s parent company, Southampton Leisure Holdings, were suspended on Wednesday, a day after the expiry of the deadline for securing new funds.

The company warned that it would not be viable without fresh funds, which are likely to prove difficult to find in the current economic climate.

“The company is currently in discussions with a number of parties concerning the injection of additional finance into its business,” Southampton Leisure Holdings said in a statement.

“Unless this funding is secured, the company will be unable to continue as a viable business for the forthcoming 12 months and is therefore unable to publish half-yearly report to December 31 2008 by March 31 2009 which it is required to do under the AIM (stock market) rules.”

If a last-minute solution cannot be found, the company will have to be placed in adminstration, a move that, under Football League rules, would normally lead to a deduction of ten points.

In Southampton’s case that would mean almost certain relegation to League One, the third tier of English football. The club is currently second from bottom of the Championship, three points adrift of safety with only seven matches left.

Southampton’s financial plight is largely the consequence of the club’s decision to build a new 30,000-seat stadium, St Mary’s, four years ago. The move from the club’s historic home, the Dell, has left it saddled with debt of 27.5 million pounds which has proved increasingly difficult to service because of the economic climate and the team’s dwindling fortunes.