Trouble at t’top (and bottom)
Posted by John Beech on December 5, 2009
While most of the clubs facing financial difficulty are to be found in the lower two levels of the Football League and the two levels of the Conference, the propensity to generate concern spreads out in both directions.
In the Premier League the club with most cause for concern currently is Portsmouth. As I noted in November, the club was plagued with an abysmal level of internal communication (1), and their woes were compounded by a staggering level of disloyalty to a loyal staff member (2), the sacking of Paul Hart. It now emerges that not only is Ali Al Faraj an entirely absentee owner, but, in spite of his new ownership, the club has had to take out a further loan to pay overdue wages (3). Chief Executive Peter Storrie nevertheless says “The refinancing they have been putting together is actually going very well. They want a bit of understanding from fans because they have had a lot of debt to deal with and they have put a lot of money in. It is a difficult market in the financial world at the moment. They took the club over with little or no due diligence because of the situation with Sulaiman. The new refinancing is very close now. They have put a considerable amount of money in.” I have to say that I find very hard to have sympathy for a new owner who took over with ‘little or no due diligence’ whatever the circumstances.” New manager Avram Grant remins confident that new funds will be in place for the transfer window (4), but there is the small matter of getting a transfer embargo, in place since October, lifted. All in all, what has emerged is a picture of a ‘benefactor’ taking on a ‘trophy’ club with no idea of the mess it is in.
Birmingham City is another club of course where lack of due diligence has proved troublesome (5). Not that outgoing owner David Gold was exactly sympathetic (6), but his comment “It’s a bit like me buying a house, failing to conduct a survey and then moaning when the damn thing collapses” will not have reassured incoming owner Carlson Yeung much. No doubt Her Majesty’s Constabulary will be helping Yeung with his enquiries (7).
Meanwhile, in the Championship, there are other transfer embargoes in place, at Crystal Palace for example (8 and 9). At Palace too there have been problems with paying wages (10). Palace’s problems are in part historic – the fact that they no longer own Selhurst park and thus have to pay rent – but currently they seem to be facing a breakdown of benefaction from increasingly beleaguered Simon Jordan (see 11).
Watford too are finding that a benefactor model can prove unsustainable. They can name two apparent benefactors in Lord Ashcroft and Elton John. To what extent muti-millionaire Ashcroft is actually a benefactor as opposed to a straightforward investor is unclear, and John has fallen out with the club’s previous board in the past (12). Having fallen close to Administration in 2002, as recently as July 2008 the club was denying reports of approaching Administration (13). In the last month, the club’s finances have been reported as in deep trouble – ‘£6.5m needed to keep going’ (14), ‘auditors qualify accounts’ (15), and ‘£1m loan will keep club going until 22 December only’ (16).
QPR have their unique problem with Flavio Briatori, whose appeal against his suspension from F1, which would place him in difficulties as a Fit & Proper Person, will not be adjudicated on until 5 January (17).
Further down the pyramid, Chester City‘s madness continues. The ever-brazen Stephen Vaughan has loaned his son, now apparently the club’s owner, the money to settle the debts with football creditors, thus saving the club from expulson from the Conference. Why this didn’t happen before he failed the Fit & Proper Persons test is unclear, as are the terms of the loan – just how ‘soft’ is it?
At King’s Lynn, there is talk of a new takeover (20), but it may well prove too late, as the players have understandably left in droves (21). The 7 day period to appeal their winding-up expired yesterday. All credit to manager Carl Heggs though for clinging on as the club disintegrates around him.
And finally… way down in the Hellenic League, it looks as if Bicester Town may have escaped extinction over a debt of just £9,000 (22). Suggested benchmarks for comparison with this figure are the height of the Premier League clubs’ Debt Mountain, the fees paid by the Premier League clubs to agents and the wages of Premier League players.