Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

Bournemouth’s predicament

Posted by John Beech on October 11, 2009

Bournemouth is a club which is, in the words of Ron Pickering, ‘really quite remarkable’ (1).

Last season they manged a remarkable run, avoiding relegation in spite of starting with a 17 points penalty.  Without that penalty, they would have been nudging the play-off positions.  As I write, they are sitting at the top of the table, in spite of a transfer embargo and injury problems – a fortnight ago they were down to a 14 man squad, and given special dispensation for an emergency loan (2).  In short, players and manager are doing an amazing job.

Off the pitch, things are not so bright.  The club has had ongoing financial problems for over a decade.  In January 1997, following a period of rather too light a touch management, they went into Administration with debts of £4m, including a debt to Lloyds Bank of £2.3m.  They managed to repay these debts while in a CVA, but it can be argued that this financial burden is still being felt today.

By 2003 the club was having to borrow from the PFA in order to pay wages (3).  Serious attempts were made to sort out the club’s financial position (e.g. [4]), but in February 2008 the club was back in Administration, with debts of £5.8m, including £1m to HMRC.  It is worth recalling that a High Court judge at the time of the 1997 problems said, in adjourning a winding-up order brought by the Inland Revenue, “The Inland Revenue have waited long enough for their money,and this has to be the last chance” (The Guardian, 21 March 1997).  It had already been forced into a sell-and-lease-back deal on the stadium (5) in late 2005.

Ownership of the club has been a story in itself.  Jeff Mostyn and Steve Sly took over in March 2007 (6) from a supporters-based group, but by December that year were considering the need to put the club into Administration (7), and two months later they did (8).  One Eddie Mitchell lined up a bid for the club (9), but in April the Administrators accepted a bid from Marc Jackson over one from Jeff Mostyn (10).  The bid however collapsed (11).  Two new bids were announced, but by the end of April Mostyn was announced as the preferred bidder (12).  In July another bidder appeared – Alan Pither (13) – but the club was sold to Sport-6, a consortium involving Jeff Mostyn, Steve Sly, Paul Baker, and Alastair Saverimutto (14), who promised a seven-figue investment.  Baker provided the Bournemouth Echo with an interesting interview (15).

As the players began the battle to overcome the 17 points deduction, events off the pitch accelerated at an unnerving pace.  Mostyn resigned in October (16), Baker became Chairman and Adam Murry joined the board (17), and Saverimutto was interviewed by the Bournemouth Echo (18), asserting that Baker had put “billions” into the club, or at another point in the interview “not far off that seven figure sum [Well, which?  One million is a seven figure sum! JB], which was rather surprising as on the same day a notice that liquidators had been appointed appeared in the London Gazette (19)!

In November Pither re-emerged as a wannabe owner (20), then Saverimutto insisted the club was not for sale (21) and again tried, with perhaps a hint of desparation, to set the record straight in the Bournemouth Echo (22).

At the end of December, Baker announced that he had sold his shares (50%) to a Murry-led consortium (23 and 24), but at the beginning of February it emerged that the consortium had not materialised (25).  Meantime the creditors were circling (26) and the club had to defer rent payments on the stadium (27).

Later in the month Pither tabled a £1 bid for the club (28), shortly followed by Saverimutto announcing that a Middle East consortium was negotiating to buy the club (29) (could it have been Munto?), and then the sale would be to a Murry-led consortium which includes Mostyn and Sly(30).  Saverimutto then departs (31), stating “For the record, both the HMRC / VAT and the Football League both received direct contact from the Middle East consortium’s UK-authorised representative, detailing and confirming their principal intent to invest several million pounds of liquid cash into the club in April, and an immediate intent to re-purchase the stadium“.

By the end of March the creditors are again circling (32 and 33).  Bidders come and go, and only on 20 June is it finally announced that the Murry consortium has actually bought the club (34).  Now included in the consortium is Eddie Mitchell (see postings passim), who is appointed Chairman.  Almost four months on, the club is still under a transfer embargo and still fighting off an HMRC winding-up order.

As I said, really quite remarkable.  A microcosm of all that is good about players,and much of what is wrong with football management.  The big question is why is Bournemouth apparently so sought after by investors who turn out be unable and/or unwilling to invest significant levels of money in the club?

Particularly worrying to me is the possibility that the club does gain promotion at the end of the season.  The players and the fans would undoubtedly deserve it, but without a sustainable business model and appropriate investment the likelihood is that the club would simply yo-yo back, and enter another downward spiral into Administration.  Just how much can a club suffer?

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10 Responses to “Bournemouth’s predicament”

  1. Paul Pearson said

    Good article. A lot more could be added about the current unhelpfullness and backtracking of the Football League Board.

    As far as I’m aware para 3 is incorrect. There was only one debt of just under £1m to HMRC. The debt of £650K sounds like Jeff Mostyn’s loan part of which should have been in shares to take over the supporters golden share but never was but that’s another story!

    • John Beech said

      Apologies all round, especially to Paul – I’ve now corrected the error, but unfortunately not before the following thread rather tangential thread had taken place.

  2. John Beech said

    Many thanks Paul.

    The £2.3m to Lloyds is quoted in a Times article of 25 January 1997, as is a total debt figure of £4.5m. An Independent article of 30 January 1997 quotes the club as admitting to debts of £4.4m, and gives figures of £2.1m owed to Loyds, and a debt of £450k in unpaid VAT and PAYE.

    The Guardian report of the winding-up proceedings I cite in the fourth paragraph again quotes a total figure of £4.4m.

    What happened next is not so clear to me, but certainly the debt level seems to have been significantly reduced while in the CVA, although it then crept back up again, a figure ‘believed to be ‘ £4m being widely quoted in connection with the second entry into Administration.

    • John Beech said

      Regarding the unhelpfullness of the Football League, it needs to be borne in mind that they are thinking more in terms of Bournemouth the company than Bournemouth the club.

  3. Mark said

    A good article and well researched…

    Think Paul was referring to the:

    “back in Administration, with debts of £5.8m, including £1m to HMRC and £650,000 to HMRC”

    The £650k was to someone else perhaps?

    Thanks for taking the time to write such an interesting piece.

    • John Beech said

      Ah, para 4! I was confused by the reference to Mostyn I must admit.

      My sources for these figures are the excellent Political Economy of Football website run by Wyn Grant at Warwick University (1) where he says “The club went into administration owing £5.8m to a total of 320 creditors. The Inland Revenue is owed £629,122.23 and Customs and Excise £344,295.41. Bournemouth Borough Council is said to be owed £242,204.31 and Dorset Police Authority £59,218.49. The largest portion of the sum owed to the council is £216,853.25, which is the remainder of a £250,000 council loan towards the building of a new stadium“. The £5.8m is also quoted in the Bournemouth Echo (2).

      • John Beech said

        Doh! the ‘£650,000 to HMRC’ shouldn’t be there – now corrected. My figure for HMRC of £1m is the sum of the IR and C&E figures. Apologies all round.

  4. Penny said

    The article – although a good one – does not bring mtters up to date, in that the current owners have paid off a lot of the legacy debt, and have agreed payment schedules with their creditors. They are working extremely hard to get the club back ona firm footing – but it will take time, not least because of the interference of the FL and their pettiness where AFCB is concerned.

    • John Beech said

      I would agree that progress has been made – the club’s debt is now reported to be ‘down to £1.3m in realistic terms’ (1), although I’m not clear what the term ‘in realistic terms’ actually means – it sounds worryingly like spin to me. And £1.3m is still a very high level of debt for a League 2 club.

      Eddie Mitchell sees the situation thus: “Without that debt, we would have broken even and made a small profit so the club is pretty sound“, which is not a logic I would subscribe to.

      With a recent freeze on the club’s bank account (now unfrozen) and an ongoing transfer embargo (I don’t particularly see the Football League as the villains here), it’s difficult to see the club as ‘pretty sound’. With so many suitors over the last couple of years, it’s depressing to see a club which is achieving so much on the pitch still perpetually fire-fighting off the pitch in spite of a series of new and wannabe owners.

  5. [...] Bournemouth’s predicament [...]

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