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

Archive for January, 2010

HMRC court dates

Posted by John Beech on January 28, 2010

With all the adjournments yesterday, I make the revised schedule of winding-up petitions to be heard as:

  • 3 February – Accrington Stanley
  • 10 February – Cardiff City, Hinckley United, and Portsmouth
  • 17 February – Burscough
  • 24 February – Notts County
  • 10 March – Chester City

plus Crystal Palace, now in Administration, and the joker in the pack, Southend United, where Chairman Ron Martin is disputing the debt and threatening counter-action.

That’s a total of nine clubs, one in the Premier League, five in the Football League and three from lower in the pyramid. Watch this space…

[Correction: That should be ten, with six in the Football League.  Scroll down for Plymouth Argyle on 3 February]

Posted in HMRC, Insolvency | Tagged: , | 9 Comments »

The chronic case of Crystal Palace

Posted by John Beech on January 27, 2010

Chronic, that is, in the medical sense – meaning an illness over a long period of time.

The fact that they were forced into Administration yesterday (1) is certainly an outcome of recent pressures, but the club had been under financial pressure for, well, since the nineties and the Ron Noades era.  Next ‘benefactor’ was Mark Goldberg, who borrowed money from Noades to make the purchase in 1998, but Noades retained ownership of the stadium.  Noades moved on to Brentford, where the club debt steadily rose.

By March 1999, the club was in Administration.  Goldberg, who made some naive decisions and had been unable to deliver the funding he said he had available, departed and the following summer Jerry Lim bought the club, before almost immediately selling the club to current owner Simon Jordan.  The fresh capital was matched by a decline in performance on the pitch however.

In October 2006 Jordan managed to wrest the stadium from Ron Noades through a secret purchase, although it rapidly emerged that the new owner was not in fact Jordan, but a company with a maze of ownership issues.

Jordan has always been his own man, never one to fail to take issue with whoever he saw as being in the wrong, whether the establishment or the media.  Dwindling crowds, on the decline since a peak in 2004/05 have increasingly caused cashflow problems.  Recently the club has had to cope with a transfer embargo, and players wages have been paid late.

With the club due in court today to face, who else, HMRC, Agilo, an investment company thought to have invested £5m in the club (2), moved to have the club faced in Administration before the HMRC winding-up petition could be heard.

Things don’t look too good – no stadium, large debts, a buyer’s market, a reluctance to invest in the football sector, or anywhere for that matter, none of this is going to make life easy for the surprisingly optimistic  Administrators.  The club is a ‘brand’ but not a major one.  It’s a time for the Supporters Trust (3) to try and rise to the occasion – the last thing the club needs is another ‘benefactor’.

Posted in Benefactors, Debts, Insolvency | Tagged: , , | Leave a Comment »

Chester City and Notts County

Posted by John Beech on January 27, 2010

It was adjournments all round for the two clubs who faced winding-up petitions from HMRC in court today.

Notts County, supposedly about to receive £5m investement from an as yet unnamed source, got a 28 day extension (1).  HMRC agreed to this, but subject to the fact that in 28 days the hearing will be considered final; if the club has not got the money, it will mean liquidation (2).  This does at least allow the mystery investor to complete due diligence, but the future of the club hangs on that being successful.

Notts County owe HMRC almost £325,000, and were also faced in court by Marston’s, the brewers, who are owed £95,000.  Marston’s were against an adjournment, dismissing the talk of new investment as ‘rumour’.  A close shave then.

Chester City owe £26,000 to HMRC and managed to get a 42 days adjournment until 10th March (3).  In spite of all the talk by Morrell Maison, I fear that a new owner may not be forthcoming, and that the inevitable is just being put off.

Next up in court against HMRC is Accrington Stanley on 3rd February.

Posted in Debts, HMRC, Insolvency | Tagged: , , | 5 Comments »

Coming up in court, with HMRC

Posted by John Beech on January 23, 2010

The current HMRC surge of legal action (see HMRC on the warpath big time) hits the courts in the coming few weeks.

First up, on Wednesday 27th January, are Notts County, with a tax bill of £600,000 and total debts of £1.5 million (1) and Chester City.  In the case of Notts County it all depends on whether the various investors which Peter Trembling and Sven-Goran Eriksson have been courting while happily clocking the Air Miles actually materialise.  Personally I wouldn’t be too optimistic – do they really have an attractive offer to pitch?  Chester City are, in my opinion, the most vulnerable of the clubs currently facing HMRC.  Stephen Vaughan has brought the club to a situation which is worse than unsustainable, and it is hard to see how they will avoid Administration just before the court appearance.  There is talk of a Morell Maison fronted consortium taking over and the possible involvement of Frank Warren (2), but it is hard to imagine how he would see buying the existing company as a sensible investment.  As for Morell Maison exercising his option to purchase the Vaughan family’s shareholding of the football club, well, ask any Halesowen Town fan if this is the way to go (see postings passim) .  Before the court hearing the club must meet with the Conference to explain their current financial position – I’d love to be a fly on the wall (3)!

On 3rd February it’s the turn of Accrington Stanley.  The situation at Stanley is confusing – the debt of £308,000 was supposedly accounted for in the drama of Stanley’s last court appearance, is reported as paid (4), but a second petition has been served over a debt of around £70,000 (5).  Certainly the club is in a healthier financial position following their cup run (sadly now finished), and the chances are that the club will settle the bill before the court date (although time is running out fast).

Last up it’s Cardiff City and Portsmouth on 10th February.  With his usual spin, Peter Ridsdale purred assurance on 9th January that this is merely a backstop date, saying “We have every confidence that all monies owing to HMRC will have been repaid by the end of January” (6).  So far there has been no announcement that the money has been paid though, although business moguls from all over the globe are of course queueing up to invest.  Hasn’t this ever been so though?  As for Portsmouth, well….  This is just one of their many woes of course, and the proceeds of a cup run are just a drop in the ocean.  Some debts have been paid off, but they are still deep in trouble.  Let’s say I’m cautiously pessimistic.

There is also a familiar name in the frame – Southend United.  Having cleared their major debt with HMRC, a further winding-up petition was served over a debt of £205,000, which the club is disputing (7).  The two parties are due to meet this week, and “Mr Martin hopes to resolve the issue without the need to go to court“.  Well, he would wouldn’t he.  We shall see.

[Because of a hardware failure, I don't currently have access to my 'Winding Up' file, and have compiled this from memory - apologies if I have omitted any club.  I should be able to check, and amend if necessary, on Monday.]

Posted in Debts, HMRC, Insolvency | Tagged: , , | 15 Comments »

The West Ham ‘takeover’

Posted by John Beech on January 20, 2010

Barely was the ink dry on the agreement for David Sullivan and David Gold to ‘take over’ (I’ll come back to the reason for single quotes in a minute) than the messiness which had characterised the build up to the event started to re-emerge.

CB Holding, owners through the collapse of the Icelandic bank Straumur, had long made clear that, on the one hand, they were looking to sell, but, on the other, they would not be rushed into a fire sale.  In spite of the general lack of appetite for the purchase of fellow Premier League clubs such as Portsmouth and Hull, a number of wannabe owners did appear.

First out of the blocks was one Ali Al Faraj (1).  Rapidly however he was off to under-invest in another club, the said Portsmouth.

By early October Eggert Magnusson was said to be ‘plotting his return’ (I’m not making that up – click through here if you don’t believe me!); also interested were investors from the USA (who turned out to be Intermarket) and from Asia (who turned out to be Malaysian Tony Fernandes, of Lotus F1 fame).  Definitely not interested at this time was David Sullivan after selling his shares in Birmingham City.

A week later however it was reported elsewhere that a bid from David Sullivan had been firmly rejected (2), only for him to team up with David Gold in a new bid.

By 18 November no formal bid had actually materialised (3), and the club “still envisage the sale will be a medium to long-term initiative.”  Media reports continued to suggest there were a number of potential purchasers, but on 23 December the club insisted “Our shareholder CB Holding has made it clear it would like to find new owners for the club in the next three years and that is still the case. In recent months we have had a number of approaches from parties interested in investing in West Ham United. The club have held a number of discussions with those parties and the talks are ongoing. CB Holding is not under pressure to conclude an agreement in the immediate future, but the club will keep supporters informed of any developments when appropriate.” (4).

A late entrant in the form of Massimo Cellino joined the race (5).  Cellino had been convicted of deceiving the EU and the Italian Ministry for Agriculture out of £7.5m in 1996, and in 2001 had been given a 15-month suspended sentence for false accounting at Cagliari, the Serie A club he controls.

Although Fernades and Sullivan were seen as the two front runners, it actually emerged that only two formal bids were tabled, a Sullivan and Gold offer for 50% of the club at £50m, and a mischievous bid by a Hammers fan for £351 (6).  CB Holding’s choice was unsurprising.

What was surprising, and what led me to use single quotes, was the notion that buying 50% constituted a takeover – it’s oxymoronic in my book.  In one report (7) they will “have operational and commercial control of the club with immediate effect“; according to another, they will have “the final say on all matters at the club” (8); a third has that Sullivan “cannot make any significant financial investments without the approval of Straumur” (9).  There is certainly ambiguity there, which, given that neither Sullivan nor Gold might expect to win any prizes for diplomacy, will only lead to confrontation.

Apart from these potential problems, there is the immediate problem of the club’s debts.  A number of recent reports ‘reveal’ that the debts can be £110 million, and, according to a City insider, ‘spiralling’ (10).  The figure would come as no surprise to any one who had read the East London Advertiser last September (11).  Surely it could not be that Sullivan and Gold had failed to conduct due diligence properly – after all, they had been so scathing about Carlson Yeung.  Sullivan had said shortly after his departure from Birmingham, with Yeung deeply angry with what he had found since taking over, “It’s a bit like me buying a house and failing to conduct a survey and then moaning when the damn thing collapses. The bottom line is that he’s a former hairdresser from Hong Kong who seems to think that he can buy favour with the supporters by consistently having digs at the former board” (12).  If it were, ‘hairdresser from Hong Kong’ would have to be changed to ‘local pornographic magazine publisher’.  It’s surprising how apt it would be to throw the quote back to them as Sullivan has said in a press conference when referring to Eggert Magnusson, West Ham’s former Chairman, “Clearly Mr Eggbertson, I can’t remember what his name is, Magnusson, Egghead, clearly Mr Egghead thought the owner would subsidise it and he was wrong.” (13)

The last part of this quote suggests that, notwithstanding all the publicity he has generated as being ‘West Ham till I die’ etc., Sullivan is against the benefactor model.  Yet he has brought Karren Brady in as Vice Chairman with himself and Gold paying her salary for the next year (14).

So that’s clear – benefactor when it suits, but tough love when that suits.

If their approach is confusing, they have at least set out a clearer business strategy.  According to one report (15) they have pledged to:

  • Cut West Ham’s crippling £110m debt
  • Back boss Gianfranco Zola
  • Not sell the club’s star players
  • Keep the Hammers in the Premier League
  • Open the door for other investors to join their Upton Park revolution
  • Target a move into London’s brand-new Olympic Stadium after 2012
  • Set a seven-year goal to qualify for the Champions League
  • Stay with the club until “they die”

Open the door to other investors?  How thoughtful and democratic. Or it is just essential?

It seems to me that they are not a million miles from the underlying business model of the very same Ali Al Faraj who transferred his not-enough backing from West Ham to Portsmouth back in September.  If I were a Hammers fan, I think I would be just a tad worried that it will lead to the same situation.

Mind you, Messrs Sullivan and Gold have of course a trump card that Al Faraj hasn’t – the backing of Boris Johnson for a move into the 2012 Olympic stadium.  I wonder just what they have in mind for Upton Park…  It’s just that there doesn’t seem to have been any mention of the disposal of the club’s major asset.

Posted in Assets, Benefactors, Ownership, Stadium | Tagged: , , , | 2 Comments »

Kettering Town and the enigmatic Imraan Ladak

Posted by John Beech on January 18, 2010

Trying to find the single adjective to describe someone in a headline is often difficult, but in the case of Kettering Town’s Imraan Ladak ‘enigmatic’ readily springs to mind.

The club has a long history and, for many years, slowly but surely, clawed their way up the pyramid.  In 1974 they applied to the Football league but in the predictable election the four existing clubs were re-elected.  Kettering came fifth, ahead of, among others, Yeovil Town and Wigan Athletic (1).  Their manager from 1971 to 1974 was one Ron Atkinson in his first managerial appointment.

The club certainly had a dynamic approach – in 1976 they were the first club to breach the then ban on sponsored shirts, a defiance which led directly to the lifting of the ban.

On the field they continued to be successful, being runners-up in the Conference on three occasions between 1989 and 1999.  Off the pitch, things were not going so well for them – in 1983 they had been wound up by the Inland Revenue.

In 1992 they were bought by a London property developer, Mark English.  Investment did not materialsie, and by October they were in Administration.  Peter Mallinger then bought them.  The club continued to struggle financially, and in 2005 they were sold, to a consortium backed by 27 year-old Milton Keynes-based businessman Imraan Ladak and including Paul Gascoine.  At this point the club had made a loss for the previous 11 years, although Mallinger had managed to bring the annual loss down from £120,000 to £30,000 a year, having injected £1 million personally (2).  Incumbant Manager Kevin Wilson promptly declines a change to being Director of Football and departed (3).  Gascoine’s role as manager was to last just 39 days, and ended for predictable reasons (4), although these were disputed by Gascoine (5).  Wilson was re-appointed as Manager (6).

Ladak seems to have taken this inglorious start in his stride, and continued to make his mark by sacking Wilson two months later (7), replacing him with someone who would, later in his career, achieve a notoriety which will be familiar to readers of this blog (8), first at Halesowen Town and now at Chester City.

Ladak had bought a club with a ticking time-bomb – the lease on the Rockingham Road stadium was only for another seven years.  By June 2006 his priority was to find a site for a new stadium (9).

Unchastened by his experience with Gascoine, Ladak ‘brought Big Ron home’ in January 2007 (10).  Atkinson had been out of football since his racist remark about Marcel Desailly in 2004.  The diverse mix of Ladak, Maison and Atkinson does not seem to have been one of total harmony.  In April Ladak sacked Maison (11) and then a few days later Atkinson left ‘by mutual consent’ (12). Ladak meanwhile had not lost sight of the need to get the club’s finances balanced, and in May negotiated a stadium naming deal with A-Line (13).  He also recognised the importance of communicating with the fans and gave an encouragingly open interview on the club website in January 2008 (14).

Next month came his first major confrontation with the authorities – he was charged with disrepute (15), a relatively unusual charge to be brought against a Chairman.  His response was, to say the least, unambiguous:

There is a case of looking after your own but we at Kettering will never be part of that club.

“How can it be fair that chairmen with a vested interest should be making all the decisions – it is ludicrous.

“The system lets a club like Burton Albion decide how much money they get and how much they give a team like Nuneaton Borough. I am not the sort of person who will toe the line just to make more money for my football club.

“What they do is not fair or right. Even if we get promoted my argument will be the same and I will be bringing this up at the next AGM.

He had a point.

He is not a man to take the easy way.  Instead of following Villa in sponsoring a local children’s hospice on the team shirts, he chose to sponsor Interpal, a charitable organisation which distributes aid in the Palestinian territories.

He is not a man to fail to speak up when he thinks something is wrong.  A year ago Kettering were on a Cup run, and had drawn Premier League Fulham.  ITV decided not to broadcast the tie (16).  Ladak did not mince his words:

It is unprecedented for a non-league team to be drawn to a Premiership team and it not to be screened on TV.

“We are reeling from the shock of it. It’s unbelievable.

“As a neutral football fan I would always want to watch a non-league team taking on a Premier League side.

“I am disappointed for the manager and the players that they don’t have the chance to have the whole nation watching them.

He even offered, to no avail, to waive the broadcasting fee if ITV would show the match (17).  Could the Kettering shirt sponsorship have influenced ITV to make a ‘safe’ decision?

The game itself was to prove contentious.  An 88th minute penalty against Fulham deserved a red card in Ladak’s opinion.  He is reported as saying “I hate to say it, but if [referee] Mike Riley hadn’t bottled it we wouldn’t have lost the game… I don’t mean to sound negative but everyone knows that’s a penalty and a red card” (18).

This was to set one of two threads in motion for the whole of last year, the other being Ladak’s attempts to resolve the stadium problem.

In June Ladak announced new plans (19) for a stadium at Kettering Business Park. By September however, he reported them as on hold, blaming the Council’s lack of support for the project (20), complaining “Nobody from the council has come out and said ‘this is a great idea, let’s make it happen… Things are a little bit in the balance but what we would really like is some out-and-out support from the council“.  The Council however hold a different view, and in early December were prompted to publish a timeline of events as they saw them (21).  It can be inferred that they thought the problem was the club’s reluctance to supply details of what was proposed, and they complained that Ladak had made ‘inaccurate statements on national TV‘.

Along side this thread, the saga of Ladak’s brush with the football authorities had been unfolding.  On 24 December the FA published the following statement (22):

Commission reach decision on Kettering Town FC Chairman, Imraan Ladak

At a Regulatory Commission earlier this week (22 December) Kettering Town Chairman, Imraan Ladak, was suspended from all football and football activities with immediate effect.

Following previous Regulatory Commission and Appeal Board decisions Imraan Ladak has failed to pay an FA fine and costs of £3,500, and will remain suspended until which time the amount is paid in full.

During the period of the suspension Ladak will be unable to manage, coach, referee, play or undertake administrative duties and he will not be permitted to be in the Director’s Box or hospitality areas.

Failure to comply with this suspension will result in Kettering Town FC, as well as Mr Ladak, himself being in breach of FA rules.

For the full written reasons of The FA Appeal Board please click here.

The full written reasons reveal a saga of  repeated confrontation, and that Ladak had on a number of occasions failed to respond to the FA in writing.

On 8th January Ladak announced that he was to stand down as Chairman of Kettering but would remain as the owner of the club (23).  He also said that “his plans for a new stadium are dead and he feels there is no real future for the club following a meeting with Kettering Council“.  In an interview with the BBC the same day (24) he said “I’m not pulling the plug. But I’m not going to be putting as much money into the playing squad, because it’s illogical to do so.

The remaining (volunteer) directors vowed to fight on (25), as has the Supporters Trust (26).  Let us hope they are successful with the search for a new stadium, and perhaps the fact that the Council will now not presumably be dealing with Ladak will encourage a new impetus.

What next for Ladak?  He has stated that he will not be going to Chester City to join Morell Maison, and he has major developments in his own business to occupy him.  One thing is for sure – the football scene will be less colourful in his absence.  I suspect that it may not be long before he is back in the football headlines.


Posted in Benefactors, Football Association, Governance, Ownership, Stadium | Tagged: , , , , | 6 Comments »

The last League club to fold

Posted by John Beech on January 12, 2010

As things look grim down South (and to a lesser extent to the West), there has been some memory-scratching going on – which was the last League club to fold?

I’ve heard this dubious distinction being awarded to Accrington Stanley with respect to Football League clubs.  Stanley resigned from the old Division 4 in March 1962, finally folding while in the Lancashire Combination in 1966.  The replacement team reappeared in the Lancashire Combination in 1970.

Bradford Park Avenue, who failed in seeking re-election to the Football League in 1970, folded in May 1974 while playing in the Northern Premier League.

Next to go was Gateshead, who folded in August 1977.  Having lost their Football League status in 1960, they were then playing in the Midland League.

In 1988 Newport County were relegated from the Football League to the Conference, and folded shortly afterwards.

Next to go was Aldershot in March 1992, while playing in the old Division 4.

Another notable, and just more recent, casualty was Maidstone United.  They folded in August 1992 while also in the old Division 4.

Thus any claim that ‘Accrington Stanley was the last League club to fold’ is wrong on two counts – they were no longer in the Football League when they finally folded, whereas both Aldershot and Maidstone United were, and folded much more recently.

For a club folding in the top flight, it is much harder to find any precedent, and I’d be pleased to hear from any football historian who can suggest one.

Posted in History, Insolvency | Tagged: , | 3 Comments »

A good news story?

Posted by John Beech on January 11, 2010

I don’t suppose, if I’m honest, that this a blog you would rush to in order to read ‘good news’ stories, packed with fluffy tales of people being, erm, nice.

From Crawley Town, a club which has been through a fairly crazy time financially in the last few years, comes a story which warms the heart.  Manager Steve Evans and assistant Paul Raynor have agreed to take a ‘salary holiday’ for November and December to help the club towards a debt-free future (1).  Evans said “It’s not asked upon, it’s not forced upon…It’s purely a gesture back from the management team to say a big thank you to the people who have sorted the club out… I’ve sat in board meetings over the last three or four months and I’ve seen the unbelievable finances coming in from two very committed directors.  As a gesture I said I’m quite happy to put my salary in the mix for a couple of months. Sitting with a coffee in the office with Paul Raynor, he agreed to do the same. The nice thing from our point of view is that we have owners at the top of the football club who’ve sorted it out in a really dignified, professional way and more importantly opened their chequebooks.

Now we are talking the salaries of a Manager and Assistant in the Conference, not footballers in the Premier League.  Such a gesture shows a committment to their club, all the more suprising in an industry where managers seem to have very little job security.  All credit to them.  How many others would do the same?

Well, there was Carl Heggs in the dying days of King’s Lynn (2).  And the staff at Bournemouth during their lowest ebb this summer (3).  Oh, and likewise at Weymouth (4).  And going back a bit there was Carlton Palmer taking a pay cut of 50% at Stockport County (5).  I’m sure that is certainly far from being a full list.

Come to think of it, as well as undoubtedly being a good news story with respect to the individuals concerned, it’s a pretty shameful story of the football industry as a whole, where being paid your salary is not something you can always bank on.

Posted in Human Resource Management, Organisational culture, Wages | Tagged: , , | 1 Comment »

Is this really ‘financial fair play’ yet?

Posted by John Beech on January 7, 2010

‘Debt-for-equity swap’ seems to be the buzz phrase of the moment.

[Please scroll down to beyond the italics if you are into finance and don't want to rehear some basic stuff.]

What it means in simple terms is that someone who has lent the club money decides to wipe the debt out by accepting shares in the club instead of getting his money back.

For the ‘benefactor’ who lent the money there is little immediate change – instead of an IOU he now has shares.  As the person involved is a ‘benefactor’, he almost certainly isn’t planning to sell the shares immediately to get his hands on cash.

For the club, there is a more obvious benefit.  First of all, the danger of ‘soft debt’ (a debt for which there is little pressure to repay in the shorter term) turning into ‘hard debt’ (“I want my money back and I want it now!”) is removed.  In the club’s accounts, the figure no longer appears under ‘Long-term Liabilities’ (a ‘negative’) on the company’s Balance Sheet; now it will appear as ‘Shareholders’ Funds’ (a ‘positive’), in spite of the fact that no cash has actually changed hands.  This makes sense as the money now belongs to the club and will never have to be repaid.  However, it doesn’t mean there is any new money available.

The overall effect is to make the club seem stronger financially as there is no longer the millstone of debt around its neck.

This has happened recently in a big way at both Manchester City (1) and Chelsea (2).

In one sense, this is very good news.  A Premier League with collective debts of over £3 billion does not suggest that top-flight football in England is in a healthy state financially, as UEFA and specifically Michel Platini, have repeatedly pointed out.  As they also point out, and forgive my paraphrasing, it reduces the beautiful game to a battle of which club has the ‘benefactor’ with the deepest pockets, thus removing the game a long way from any sense of keeping to a sporting ethic.

Now, unnamed financiers (3) have dismissed the swap in the cases of Chelsea and Manachester City as ‘window dressing’ and ‘putting money from your left pocket to your right pocket’.  A little harsh perhaps, but they highlight the point that tax had no bearing since these clubs weren’t paying interest on the loans in any case.  Many others of course are however, and would welcome the removal of hefty interest charges.

Of more concern to me is that Manchester City have broken Chelsea’s 2004/05 record for greatest (financial) losses.

What has happened is that the worst debt culprits have had their ‘benefactors’ swap debt for equity to comply with UEFA’s Fair Financial Play code.  This has only been possible because the clubs that are the most indebted are so because their ‘benefactors’ have the deepest pockets, and are thus in the best position to be able to afford debt-for-equity swaps.  In other words, the worst culprits are the clubs who can best afford to comply.  No such luck for the Portsmouths or the Hull Citys.

For Fair Financial Play to be effective, another of its elements must come into play: the requirement that clubs balance their books over a period of time.  Clearly neither R A Abramovich’s XI nor Sheikh M Z Al Nahyan’s XI show that much sign of winding their spending in to comply with this, the second being particularly active in the current transfer window.

UEFA intends to introduce their ‘Financial Fair Play’ concept for the 2013/14 season; the delay is to allow a ‘soft landing’, or in other words to give clubs time to make the necessary arrangements.  It will be applied to clubs ‘whose turnover is over a certain threshold‘ (4).  The threshold will undoubtedly be set to include clubs in the Premier League and all the major European Leagues.  Because of the latter, many Championship clubs will have to comply too, given the financial scale at which the Championship operates.  To get them to comply, UEFA will have to come with a sanction a tad more relevant than a ban from European competition, as currently envisaged.

One thing is certain, the further defining of the Financial Fair Play concept will have major implications for English clubs, and they need to be thinking about how to achieve a soft landing sooner rather than later.

Posted in Benefactors, Debts, Governance, UEFA | Tagged: , , , | Leave a Comment »

HMRC on the warpath big time

Posted by John Beech on January 5, 2010

There is increasing evidence that HMRC are adopting a much more aggressive, and thereby less tolerant, policy towards football clubs, which is hardly surprising in the circumstances.

Back in July they served a winding-up petition on King’s Lynn, to add to the serious problems the club was already facing, including enforced demotion (see postings passim and in particular King’s Lynn down a key player as they face HMRC).  This proved the straw that broke the camel’s back, the club folding.

King’s Lynn were not alone in being served winding-up petitions by HMRC.  Other non-league clubs to have had the same treatment in recent months are Harlow Town, Hinckley United and Margate, all with less dire consequences fortunately. (Use the Search function directly above the images in the right-hand column to find earlier postings)

Not that HMRC’s actions have been exclusively against non-league football clubs.  A number of rugby clubs have also been served winding-up petitions, and so have five Football League clubs.

In September HMRC served a winding-up petition on Rochdale (1), seemingly in response to what they saw as the club’s continuing reluctance to pay rather than in a belief that the club was in any way unable to pay.  I have seen no news on this since, so assume the flexing of HMRC muscles had the desired effect.

Accrington Stanley were taken to the brink in November, the action forcing a takeover of the club (see postings passim).  Southend United have had a long battle, having been in court on 29 July 2009, 28 October 2009, 4 November 2009 and 9 November 2009 before finally getting the petition dismiseed (2, and see also postings passim).

HMRC’s latest skirmishes have been with Cardiff City and Notts County.

Cardiff City I have blogged about on a number of occasions previously, noting the need to decode club statements.  The latest round involves stolen documents and angry statements from Peter Ridsdale.  In brief, in mid-December legal confrontation resulted in an agreement being reached over a debt of £1.2 million (3).  However, according to a report in The News of the World (4), Cardiff were once again in trouble with HMRC for failing to meet the first repayment agreed. Ridsdale duly issued a statement in response (5), which, while insisting that the report was out-of-date and protesting that it was based on documents stolen from the club, was noticable in its lack of denial that the club had indeed failed to meet the first payment on time.  He declared “We are happy that Cardiff City Football Club’s relationships with its creditors including HMRC are such that we will not have any financial issues that will affect the ability of the Club to continue to trade as normal in all aspects of its business“.  Certainly Cardiff City Supporters Trust are less than happy with the situation (6), and it seems unlikely that HMRC share Ridsdale’s happiness.

Meanwhile over at deeply troubled Notts County, the club is  experiencing an HMRC double whammy – the serving of a second winding-up petition (7).  An HMRC spokesperson said “We provide time to pay for viable businesses“.  I wonder just how many football clubs receiving HMRC winding-up petitions will find any comfort in that.

Of course it would be remiss of me to forget to include Portsmouth in this list of miscreants.  Here we are promissed ‘a statement will be released later today which will “explain everything”‘ (8).  Everything???  We can expect a lengthy statement then.

Posted in Debts, HMRC, Insolvency | Tagged: , , | 13 Comments »

An Austrian digression…

Posted by John Beech on January 3, 2010

… which I would justify in a blog on English football management on two grounds.  First it makes an interesting contrast with my recent posting on what the future might hold for Portsmouth (see How much more benefaction can Pompey take? and its comments), and secondly it provides supporting evidence for my mantric moan about points deduction being dysfunctional as a sanction (1).

News reaches me from an old friend in Vienna regarding Liebherr Grazer Athletik-Sport Klub (more commonly known as GAK), and familiar to fans of Liverpool, Rangers, and Middlesbrough back in 2004/05.  GAK went into Administration during 2006/07.  A second bankruptcy followed shortly afterwards – as a result GAK were penalised with a 28 points deduction and demoted from the top flight to the third tier in the Austrian pyramid, a bit of a come-down for a club which had done the double as recently as 2004.

Did these sanctions get the club back on the right tracks?  Well, they have just filed for bankruptcy for the third time in three years (2 [in German]).

As my friend wryly commented, ‘Considering how hard it is to achieve consistency in the world of sports these days, that’s quite an accomplishment.

Posted in Insolvency, Points deduction, Sanctions | Tagged: , , | Leave a Comment »

The Southend Stadium Saga continues

Posted by John Beech on January 1, 2010

First of all, a very Happy New Year to all readers, although I would have to point out that to fans of most clubs I wish this more in hope than expectation.

Regular readers will know that Southend has appeared in these postings before (see postings passim) and, in particular, I referred to Chairman Ron’s Little Blue Blog.

Southend United Chairman Ron Martin, following the brinkmanship over an HMRC winding-up petition, had, on 20th November, announced:

…please accept my apologies for not keeping you in the loop which I plan to rectify over the next few days [sic] now that I am able to turn my attention to other Club matters.

I shall, next week, be issuing a series of blogs to cover such subjects as:
• HMRC – how did the position arise
• How was the debt paid
• The “consortium”
• My thoughts about the current squad size
• The future

The first of this series actually appeared on 26th November (1), giving his views on ‘how the position arose’, and making the interesting claim that ‘Some could argue that Southend could easily have escaped the £2m owed to the Revenue but that is not my way…’ Exactly who the ‘some’ are was not made clear, nor was what he meant by the word ‘escape’.

His next ‘blog’ did not appear until 23rd December (2), when he did make some attempt to address the issues he himself had defined.  The debt was paid by “Roots Hall Ltd which was one of my Group companies I set up at the time of acquiring Delancey’s 50% shareholding in March 2006 and is the UK company managing and undertaking the relocation plans“.

A further ‘blog’ appeared on 30th December (3) in which he said “in preparation for the new Stadium and general advancement I have suggested the Trust’s Football Board representation becomes effective at the end of the next financial year“.  Before rushing to accept this offer, the Shrimpers Trust might want to contact the Bedford Eagles Supporters Trust (B.E.S.T.), who earlier this month expressed their concerns about their similar Football Management Committee – a question of responsibility without authority having arisen (4).

As I write, Southend United’s website’s Press Talk (5) has yet to mention an article by John Geoghegan in yesterday’s Echo (6 to see the article), which casts a different light on the payment of the HMRC debt. He reveals that the day before the court hearing Sainsbury’s, who plan to redevelop the club’s current Roots Hall site, made a substantial loan, the security for which is £304,000 worth of shares in the club.  Should the loan not be repaid, there would be the interesting prospect of a supermarket actually owning a substantial slice of a club whose stadium they were actively seeking to redevelop.

Adding further risk to the already thin ice on which one is skating does not strike me a particularly desirable strategy for a club to pursue.

Posted in Assets, Benefactors, Chutzpah, Debts, HMRC, Insolvency, Stadium, Trusts | Tagged: , , , , , , , | Leave a Comment »

 
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