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

Administrations review

Posted by John Beech on October 25, 2009

With several court appearances due to consider various aspects of insolvency at different clubs, now seemed a good time to take a broad look at clubs that have been in trouble recently:

  • Bournemouth
    Bournemouth has been well covered in postings passim. £150,000 is due to HMRC but the club’s bank account remains frozen.  Eddie Mitchell is adamant that the funds are available however (1).  This impasse will need to be resolved, as the winding-up order heard on 5 October resulted in six-week stay of execution.  The club remains seriously affected by a transfer embargo, yet still manages to be top of League 2.
  • Chester City
    Again, this has been covered in postings passim.  The club faces expulsion from the Conference as it “has not complied with the terms of the compromise agreement set by the Football Conference to allow the club to participate in the competition at the commencement of the current season” and football creditors Wrexham and Vauxhall Motors remain unpaid  The deadline to comply is 17:30 tomorrow, 26th. October (2).  The club also remains under a transfer embargo.
  • Darlington
    The club came out of Administration in August, under the control of new owner Raj Singh (3).
  • Halesowen Town
    See postings passim.  Two offers have been made to the Administrators, one from the Ingram brothers, who have stated that they have no intention of involving Morell Maison with the club in the future, and the other from Robert McNaughton.  Creditors are to decide on 11th. November which bid to accept, both having been cleared by the FA (4).  In the meantime, investigations contnue regarding alleged fraud (which relates to the club) by previous owner/manager Morell Maison (5). In an unrelated case former Halesowen Town chief executive Guy Simpon has appeared in court charged with evasion of customs duty after counterfeit cigarettes with a retail value of around £5.3m were imported into the UK (6). [Did someone mention Fit and Proper Person tests? ;-)]
  • Merthyr Tydfil
    The Supporters Trust are now running the club under licence from the Administrator (7) and new sponsorship has been secured (8). Annis Abraham has recently reappeared as a potential buyer of the club however (9).
  • Northwich Victoria
    A debt of £450,000 to HMRC remains a hurdle to moving into an agreed CVA (10). As is all too often the case with clubs in deep debt, dreams are being refloated of buying the stadium back (11) – dreams are fine, but perhaps clearing the HMRC debt should be a tad higher as a priority.
  • Ringmer
    At the end of July (the club has been in Administration since last November) the club announced that coming out of Administration was going to happen in ‘the very near future’ (12).  I’ve not managed to find any more recent news, but have not been helped by the fact that my browser seems to take a strong dislike to the club’s website!
  • Salisbury
    One offer for the club had been received by the Administrator’s deadline of 1st. October, but negotiations with HMRC and the club’s debt of £200,000 appear to remain ongoing barriers to progress (13).  Would-be purchaser is a consortium consisting of William Harrison-Allan (chief executive of the Country Gentlemen’s Association), Jeff Hooper (wholesale florist), and Chris Bramall (managing director of Wilton Carpet Factory) (14).  [Honestly, I'm not making that last bit up - click through if you don't believe me.]
  • Stockport County
    The club went into Administration back in April. A much mooted takeover by a consortium headed by Jim Melrose has not materialised, although a CVA was agreed in July, with debts written off at 1p in the pound.  A recent announcement by the Administrator spoke of ‘around 10 enquiries from potential buyers‘ (14), but the Edgeley Park ground remains a contentious issue.

Two other clubs, who have not been in Administration, are due in court over debts shortly:

  • Accrington Stanley
    Deadline for clearing the debt of £308,000 owed to HMRC is next Wedenesday, 28th. October.  As I write, the Save Our Stanley Fund barometer stands at a smidgeon below £120,000 (15), to which other revenues from charity matches etc. need to be added.  Even if the full £308,000 is raised, there are no indications that the current Chairman, Dave O’Neill, will be able to manage a positive cashflow in the future.  It is a pity for the club’s sake that he could not have come to an agreement with Ilyas Khan who had wanted to buy the club and give significant control to fans.
  • Southend United
    An unusual case which seems to have attracted little attention outside Southend.  The club is due back in court this week over £660,000 due to HMRC; owner Ron Martin cooed to BBC Essex “There’s not a financial crisis, we are in a transitional stage moving Southend United from Roots Hall” (16), in a near-repeat performance of a confrontation with HMRC a year ago.  Maybe Martin is just using HMRC as a handy overdraft facility, but the overall fortunes of the club are on a downward swing, with a move from an annual profit of £1.34m to a loss of £2.4m reported this June (17).
    Martin’s use of the word ‘transitional’ with respect to the stadium move is curious. The stadium saga dates from 1998 when the current Roots Hall stadium was sold to clear debts and a rent-back agreement reached.  Plans for the new Fossetts Farm stadium have grown ever more elaborate, and now include Southend’s fourth casino as well as flats, retail units and a 22,000 seater stadium (Southend’s gates are good by League One standards but this season have been averaging around 8,000).
    Let me put it this way – if I were a Southend fan, I’d be beginning to wonder whether Martin’s high-risk high-return strategy wasn’t beginning to smell more of ‘risk’ than of ‘return’ (probably a bit rich, you might well counter, coming from a Pompey fan, and I’d have to concede that!)

Weymouth too will face a legal crisis point this week (see postings passim). The latest announcemnt on the club’s future, and how they will deal with Malcolm Curtis’s ultimatum that the club settle its overdraft with Barclays (18), is scheduled for Wednesday. Administration or new owners look the only likely possibilities, although they are not of course mutually exclusive, and the former followed by the latter is probably the favourite here.

And finally, Hyde United.  At the beginning of October, the club managed to fight off a winding-up order brought by HMRC.  The club is not yet in the clear, however, as it still has debts of £50,000 (19).

I say ‘finally’, but, with so many cases of insolvency and impending insolvency, it’s increasingly hard keeping up.  If I’ve missed a club, let me know and I’ll provide what news I have. I am off to Greece on Thursday for a conference, back on Sunday, so will do my best to cover events as they unfold this week

19 Responses to “Administrations review”

  1. Social comments and analytics for this post…

    This post was mentioned on Twitter by JohnBeech: Administrations review

    http://bit.ly/10sqbs

  2. John Beech said

    UPDATES
    Since posting this yesterday, Northwich Victoria have been hit with another transfer embargo (1) linked to their failure to agree a CVA, and Southend United have also been hit with a transfer embargo (2) because of the club’s unpaid tax bill.

  3. John Beech said

    CHESTER LATEST
    Chester City have been given an extension until 19 November, and talks between the club, the Conference and the Football League will take place in the meantime (1).

  4. John Beech said

    SOUTHEND LATEST
    A hearing to place the club into Administration has been set for 4 November (1). In his statement, Chairman Ron Martin reveals that roughly £13m has been written off to allow the club to keep going, and that £1.9m has been spent on the stadium which has not been built. However you look at it, the writing had been on the wall for some time that the business model being used was unsustainable. He had said recently in an interview on the Shrimperzone website (2) “I cannot predict what the ultimate future may hold save I am creating a framework to secure the Club’s future and tenure”, a quite staggering view given the scale of the write-offs.

    • John Beech said

      Ron Martin has accused HMRC of being Machiavellian (1) – and why exactly shouldn’t they be, if indeed they are, as this is the second year running they have had to seek the recovery of over £600,000 in unpaid taxes?

      In his statement he makes no comment on the fact that players’ wages have not been paid on time for the fourth month in a row (2).

    • John Beech said

      SOUTHEND LATEST

      Strange announcement from the board:

      On Monday morning the Board received an offer through a local solicitor on behalf of a number of unnamed investors.

      The Board is always prepared to consider proposals that are in the best interests of the Club.

      After an exchange of correspondence it became clear that such a transaction could not be structured in the time available. In any event our information is that the proposed structure would still result in a 10 point deduction. The Board’s advice to its major shareholder was that the resources of the Club continue to be focused 100 per cent on the other alternatives already being pursued.” (1)

      It’s far from clear what other alternatives there are.

    • John Beech said

      MORE ON SOUTHEND

      The mystery consortium, who offered to clear all the club’s debts, but only offered a £1 for the club, are local businessmen who are still interested in acquiring the club (1), and will approach the Administrator if things go that way.

    • John Beech said

      COURT UPDATE

      The club have been given until next Monday to clear the debt to HMRC, and say they will clear it by this Friday (1). They also say they will clear their total debt of £2.1m according to the BBC report (2).

      To me this suggests that either some serious new investment is almost in place, or the fine details of a refinancing package are still being negotiated. Let’s hope it’s the former rather than the latter, which would be only be clearing one debt to replace it with another. A full statement is to be issued by the club shortly, so the situation should be clearer then.

  5. [...] Administrations review [...]

  6. John Beech said

    WEYMOUTH UPDATE
    Weymouth have filed notice of their intention to enter Administration (1). This will protect them from creditors, but is, in effect, a final attempt to find a buyer. A similar situation occurred a few years ago with Coventry City, who were bought half an hour before actually entering Administration.

    • John Beech said

      FURTHER UPDATE
      Former Chairman Martyn Harrison has ruled out rescuing Weymouth (1), saying that he had spent £2.5m on the club, and had left it debt free when he left in June 2007.

  7. John Beech said

    ACCRINGTON UPDATE
    The club have been given a further seven days to pay the outstanding £108,000, having paid off £200,000 of the £308,000 owed to HMRC(1).

    • John Beech said

      However,a later report is that the club had only paid off £96,000, not £200,000 (2).

    • John Beech said

      There is still some confusion, at least in my mind, as to what exactly happened. Chief Executive Rob Heys has offered some not entirely convincing explanations (1), yet Ilyas Khan has leapt to the defence of Heys, if not of Dave O’Neill (2).

      It seems that the board has now (following the latest and final stay of execution) acceptedKhan’s offer to help by paying the outstanding sum without receiveing shares in return, although it must be said that the board have not exactly been gushing in showing their gratitude (3).

      Meanwhile fans are less than happy with O’Neill and the rest of the board (4) and Joint Chairman Marcelle Lazarus has quit, saying “enough is enough” (5. She had been brought in by O’Neill shortly after he took over the club in July ‘in a bid to improve Stanley’s profile and develop their commercial and public relation activities’ (6).

    • John Beech said

      RESULT AT ACCRINGTON
      The full £308,000 has been paid off, Ilyas Khan has become non-executive Chairman, and, in a surprise move, Dave O’Neill becomes managing director and head of operations (1).

  8. John Beech said

    MERTHYR TYDFIL UPDATE
    The Supporters Trust which currently has control of the club is facing difficult decisions. With £40,000 due to the FA, Merthyr Council and the administrator, the trust has decided to cut wages by 50%, beginning in a fortnight’s time (1).

  9. John Beech said

    STOCKPORT COUNTY

    The Administrators have issued a defence of their actions to date (1).

  10. John Beech said

    BOURNEMOUTH UPDATE

    The club is due back in court on Monday, but Chairman Eddie Mitchell says that £80,000 has already paid and the remaining £70,000 will be paid by Friday (1). He says enigmatically “It will be paid through hard work – not through loans or anything else“.

  11. [...] I’ve written on the last forty years of Portsmouth’s plans for a new stadium, now on at least their fifth version (1), and the other day I noted that at Southend £1.9m had spent preparing for a stadium which hasn’t materialised, and where the club is under very serious threat because of a debt of one third of that sum due to HMRC (2). [...]

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