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

The Portsmouth Horror Show

Posted by John Beech on April 24, 2010

It is to the credit of Andrew Andronikou, the Administrator, that with an unexpected transparency that he has published the report (1) to be presented to the creditors at the meeting on 6th May.  That said, there is little more that can be said to deserve the term ‘credit’ in this latest episode of the sorry saga of Pompey’s decline and fall.

The report sets out to the creditors the various options, which are essentially that they agree a Company Voluntary Agreement (CVA) or the club is liquidated in an attempt to pay off the debts.  It is abundantly clear that, while the creditors cannot realistically expect to recover anything like all the monies owed to them (reports have suggested that the crucial figure missing from the report is settling for 23p in the £ [2]), liquidation would be an even less attractive option for the creditors.  Whether the creditors will accept this kind of level of payment remains to be seen, but it is difficult to see why Andronikou is so optimistic that a CVA will be agreed, although the quite what the situation is with prospective new owners, and their willingness or otherwise to contribute to paying off the debt, is, as yet, known only to Andronikou.

Inevitably the richness of financial data in the report provides the entrails to be picked over in order to assign blame for Pompey’s decline and fall.  A good starting point is the fact that wages had risen to the level of 109% of revenues, not exactly a sustainable business model.  It could only be sustainable with a benefactor prepared to keep pouring money into the club – a luxury that Portsmouth has not enjoyed of late.  A major tranche of the club’s debt is to previous owners – £39.2m in the form of unsecured loans and £14.2m secured against the stadium, the better part of half the debts – who are not prepared to write their money off, in effect, as equity in the way that Abramovitch or Gibson have done at Chelsea and Middlesbrough respectively.

Is it as simple then as attributing Pompey’s ills to their involvement with the ‘wrong sort of benefactor’? Well, only at a very simple level.  At the next level down in a hierarchy of causation, there is the issue of how it would have been possible to have avoided the wrong sort of benefactor.  Certainly these benefactors must accept a major part of the blame – after all, they chose to take on the role.

To me the story of Portsmouth since Gaydamak decided to walk away has been a savage indictment of the obvious inadequacies of the benefactor model, offering examples of a benefactor who gave up, a benefactor who simply didn’t have the necessary funding, a benefactor so disinterested that he never visited the club, and a benefactor who ended up in that position by default rather than by plan.

The media have tended to focus more on the mid-size debts, and there are plenty of rich pickings among the entrails here.  The staggering level of debt to agents, for example.  The largest is to Jaques Perais for the sale of Diarra to Real Madrid, a matter of over £2m.  So significant is the debt that Perais is on the Creditors committee (a first perhaps for football Administrations?), other members including two football clubs Stade Rennais and RC Lens (again perhaps a first?).

The small-size debts reveal a particular horror show.  Among is the shameful debt of £2702 to those stalwart supports of the game, St John Ambulance.  Pompey fans have a history of dipping their hands in their pockets – in 1976 SOS Pompey raised £35,000 [which would be of the order of £200,000 today] from fans to save the club (3) – and it is not surprising that fan Tom Purnell established a webpage to raise money to clear the disgraceful debt, something that was achieved in roughly a day (4).  Well done Tom!

Since the publication of the report, it has been suggested that the figure of £119m debts may yet rise further (3).  In particular, there is still some uncertainty over future bonuses and appearance fees for players that will need to be paid.  The Portsmouth Evening News has already uncovered two unlisted debts that are even more shameful (4) – the club owes two cancer charities almost £15,000, money already raised in their names.  The fans have shelled out over St John’s Ambulance, the players have shelled out to keep ground staff in their jobs (5), so isn’t it time that the former owners and/or the former Chief Executive dug deep to stop the club’s name sinking even lower?

I must admit that although I am not often shocked by new stories of appallingly bad management in English football, Andronikou’s report is exceptionally disturbing reading.  Just how many more wake-up calls do we have to have before the game gets itself properly in order? The self-serving Premier League Chief Executive Richard Scudamore is right when he says Pompey’s problems are just that (6), but, unless the process of governance precludes the antics we have seen in the boardroom at Fratton Park of late, English football continues to head remorsely towards a brick wall.

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8 Responses to “The Portsmouth Horror Show”

  1. John Beech said

    PORTSMOUTH UPDATE

    Pompey fans are now paying off the debt to the Harbour Cancer Support Centre (1 where donations can be made).

    • John Beech said

      Crystal Palace fans have stepped into the breach too, raising money towards a bill owed to St John Ambulance (1).

  2. TonyM said

    Is it just me who hopes that the creditors reject the CVA and leave the FA trying to explain why there is no fixture at Wembley on the 15th May? One day people will call paying 109% of income on wages when there are other debts outstanding what it is – cheating. Of course the plus points of finishing the season earlier would be more time to relay the playing surface at Wembley and additional time for Fabio to work with his full squad for the summer so seems a win all round to me

    OK perhaps I am bitter from not having a team to support for half the season, but until the ‘final’ sanction is chosen more often clubs will carry on regardless. As for the fans, they are often willing accomplices, plenty of Pompey fans will be happy to walk up Wembley way for the second time this decade without a thought of who has funded them getting there – HMRC et al!!!

    • John Beech said

      Cheating, to me, implies a breach of rules – not the case here, at least until the UEFA Fair Play Protocol is implemented. Or it might be taken that cheating is a blatant breach of the spirit of the rules. You may well argue that it is the latter in this case, and I would probably find it harder to disagree with that diagnosis. Whether that is cheating, however, is a very subjective matter.
      What has gone wrong is that the rules are inadequate, and to kick Pompey out of the Cup would have no basis in the current rules.
      I must admit that I would also have misgivings about Chelsea being awarded the Cup in these circumstances. They have got where they are courtesy of a benefactor who has recently written off £346m debt by converting it into shares, and this season reported a loss of £47m (a drop from the previous year’s loss of £70m. Not exactly Fair Play Protocol compliant.
      On this basis it would be hard to see who is worthy of being awarded the Cup, which highlights the real cause of the problem, as opposed to the symptoms – if most of the major clubs trade at a loss and are dependent on top-ups from their benefactors, punishing one as an example to the others is at least a tad arbitrary. And there are far worse examples of what is known as financial doping than Portsmouth.
      Would it work as an example to the others? I doubt it. My research on points deduction as a sanction (1) revealed the case of a club who were punished seven times in that way. Time we tried ‘carrot’ rather than ‘stick’ – better rules rather harsher sanctions.
      At the risk of sounding a Pompey apologist, I would also point out that cheating does suggest that an advantage has been gained. The transfer embargo on Portsmouth and the depleted squads which have turned out this season suggest that they have at least some merit in reaching the final. They clearly have gained no advantage in the league as they would be bottom of the table without the nine points deduction.

      • TonyM said

        OK, perhaps cheating was too strong for some, but I would contest your final statement that the club has gained no advantage – if ALL the debts have arisen this season then fair enough, but if they were built up over the past couple of years then there must be an argument that they possibly kept their place in the Premiership through having players they could not afford.

        The point about Chelsea is reasonable other than the fact that the club does not have debts that could lead to other creditors (HMRC et al) not being paid. That is not to say I support the benefactor model (far from it) but a benefactor who ‘gives’ money rather than ‘loans’ it is the lesser of two evils imo.

        As for the carrot and stick, personally I would go for bigger versions of both. To my mind a bigger stick (automatic relegation / blocks on promotions / whatever) would hit the fans but would also force them to wake up and smell the coffee – we no longer live in a world where we can happily walk up Wembley way saying we dont care how we got here then claim to be the victim after the event. We hear a lot about how fans are not just customers, well its about time some responsibility came with the rights that some are claiming

        Sorry, will get down from my soapbox now, blame it on the mix of the general election campaign and a lack of opportunity to ‘assist’ linesmen in their duties over the second half of the season

      • At the risk of sounding a Pompey apologist, I would also point out that cheating does suggest that an advantage has been gained.

        Does winning the FA Cup in 2008 with a squad the club quite clearly could not afford not count as an advantage?

        Does the club whinging on about not being able to sign players (I wonder what Bournemouth made of the situation – with Pompey having players with squad numbers of 47 in their match squad – about feeling hard done by), having the embargo relaxed for loans and freebies for a few days, then signing players on loan (but, pertinently, agreeing to pay fees for them which have since gone unpaid) who were crucial to the club’s run to Wembley not count as an advantage?

        Jamie O’Hara and Quincy Owusu-Abeiye were both signed on loan at the end of January, with loan fees of GBP 500k payable for O’Hara and EUR 500k payable for Quincy. Those two players made the difference in the 5th round, without whose contributions, they’d have lost at St Mary’s. I’m sure Burnley would have loved to have been able to sign a player with O’Hara’s ability, and they could certainly have afforded the loan payment, which Pompey have since (surprise surprise) defaulted on.

        I await the “bitter Scummer” responses – while the FA Cup game rankles for obvious reasons, the media perception of “plucky little Pompey” is the biggest annoyance personally. Seems a bit late for the fans to be asking questions of the club when the damage is done, I don’t remember anyone stopping to think about the pitfalls when it was pointed out that the money was likely coming from Gaydamak Snr’s illegal arms-dealing. While success on the pitch was forthcoming, the fans simply put their fingers in their ears and didn’t want to know, citing “jealousy”.

      • John Beech said

        No quarrels with that Steve. You did miss out the next sentence in which I referred to ‘this season’ though; I should have made that clearer. In 2008 they weren’t being ‘bankrolled’ by benefactors who didn’t actually have the money to bankroll them.

        I’m not convinced that the media perception is entirely of ‘plucky little Pompey’ though. Take the Mirror for example who have gone with ‘Cheating Pompey should be kicked out of the FA Cup’ (1) and ‘Why cheating Portsmouth shouldn’t be allowed to play in the FA Cup final, let alone Europe’2 in the last couple of months.

        As for ‘fans sticking their fingers in their ears’, this seems to be, regrettably, par for the course. How loud are the howls of protest from Chelsea fans, or the media come to that, regarding Abramovich’s alleged ‘crimes and wrongdoings’ (see Wikipedia for an interesting outline)?

        In my book, benefaction amounts to financial doping, and it is destroying any semblance of the sporting ethic in the modern game, be it at Pompey, Chelsea, or recently promoted Notts County.

    • John Beech said

      An interesting report here on how Australia’s National Rugby League has dealt with salary cap breaches by Melbourne Storm. Different code, different continent… and different standards.

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