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 the ‘Insolvency’ Category

Moving on from ‘SISU OUT’

Posted by John Beech on August 15, 2014

It was a difficult choice of topic after so many months, but Coventry City is probably the obvious choice for me – I live about a mile from the old Highfield Road ground and could hear the roar on matchdays.

By chance, I was turning out last week and came across a copy of the Coventry Observer from 20 December 2007. My reason for keeping it was apparent on page 3 – two stories which began thus:

  • Last minute deal secures football club’s future
    Coventry City were just half an hour away from going into administration when pen was finally put to paper on a long-awaited takeover deal.
    with the clock ticking towards Friday’s 4pm deadline for a deal to be struck, the Sky Blues confirmed shortly before 3.30pm, the takeover by SISU Capital was going ahead – securing the club’s future and banishing the threat of administration…

  • Arena pledges support for club’s future
    Ricoh Arena chiefs have pledged to support SISU Capital’s efforts to return Coventry City to the Premier League…

Clearly much has changed since December 2007. The club had been through a disastrous period in the years immediately before. Debts had been reported as running as high as £38 million; year after year the club made operating losses; and investing in the new £60m stadium had proved a step too far. Indeed, the stadium, the brainchild of the club’s then Chairman, Bryan Robinson, had only become reality by the club passing the stadium project over to Arena Coventry Ltd (ACL), a joint venture company consisting of Coventry City Council (50%) and the Alan Edward Higgs Charity (50%), a trust set up to help deprived children from Coventry.

The then owners of the club – the major shareholders, owning 90%, were Craigavon (City MP Geoffrey Robinson’s family trust, and Sir Derek Higgs, son of Alan Edward Higgs) – announced their intention of placing the club into Administration. Apart from Sisu, the only potential buyer was ‘Greek billionaire businessman Alki David’, who rapidly backed off when he realised the scale of the debts he would inherit.

The club thus stood, to borrow the recent words of David Conn (or a Guardian sub-editor perhaps) on the edge of an abyss.

Coming in then as saviours of a club in distinct danger of liquidation, how then did we reach today’s situation of repeated legal confrontation and the club’s exile?

Sisu were by their own admission new to the football business. They brought in football business experts such as Ray Ranson and Ken Dulieu. Their judgement proved questionable and both departed. As the performance on the pitch deteriorated and the club suffered a further relegation to League 1, the fans became severely disenchanted, a situation compounded by Sisu’s almost non-existent transparency or engagement with the fans.

Opposition to Sisu became public and organised, and we drifted into phases of protest characterised by a series of slogans.

The first of these was the unequivocal SISU OUT. Understandable though this was, in my eyes it always seemed at best only half a strategy – and what next? The further Sisu sank funds into the club, the less likely it was that anyone else would want to buy the club. In the six and a half years of Sisu’s ownership only the brief appearance of Preston Haskell IV presented any viable alternative to Sisu. It became abundantly clear that a presumption of the SISU OUT slogan – that Sisu were willing to sell – was ill-founded, and even wishful-thinking.

The straw that broke the back of many fans was the decision of Sisu, in an attempt to force ACL’s hand in the increasingly bitter disputes over rent and matchday revenues, to take the club into exile at Northampton. We then entered a phase where the slogan of choice was BRING CITY HOME. A perfectly simple proposition on the face of it, but one which begged the intractable questions of how and under what conditions.

The most recent phase has seen protests with banners saying LET DOWN, which begs the question of by whom. Moz Baker of the Sky Blue Trust when interviewed on local television earlier this week cited Sisu and the Football League, and it’s not hard build an argument for either nomination. I would add to this list ACL and its joint owners, Coventry City Council and the Alan Edward Higgs Trust. I would also add to the list the previous owners of the club, for it was they who precipitated the current situation by deciding to move away from the old stadium at Highfield Road, which resulted in the separation of ownership of the club and its stadium.

From a business perspective, it is perfectly understandable and indeed reasonable that the club owners would want the matchday revenues, particularly with the restraints that Financial Fair Play protocols now place on spending . Equally understandable and indeed reasonable is that the owners of the stadium would also want the matchday revenues, particularly as the football stadium is the core of the revenue generating potential of the infrastructure.

So, we are in the situation where the entrenched positions of the two main proponents are understandable and reasonable from their own perspectives. The only way out of the impasse would be compromise by one or both parties. At present we have a war of attrition. There are unsubstantiated rumours that talks are taking place between Sisu and ACL. If true, we can only hope that ‘jaw jaw’ will stop ‘war war’. The present situation with the club in exile is patently bad for the owners of the club, for the owners of the stadium, and, above all, for the fans, and indeed for the Council Tax payers in Coventry (of which I must put my hand up as being one). The only gainers are the lawyers.

A return to the Ricoh is a no brainer. There must surely be some way forward through compromise.

 

[A reminder – this is a personal blog which is moderated.  Abusive comments will not be posted; counter-views are not considered inherently abusive.]

 

Posted in Insolvency, Revenues, Governance, Ownership, Assets, Stadium, Debts, Football League, Cashflow, Strategy | 4 Comments »

Pompey – the turning point?

Posted by John Beech on November 20, 2012

I’ve not blogged recently on the Pompey basket case.  Not because there wasn’t much happening, but rather because there has been almost too much happening to stop and take a coherent view.  In fact, the last time I posted was back in March 2011, when I commented “Portsmouth City Football Club Ltd. is dead – long live Portsmouth Football Club (2010) Ltd.!” (1), and it reads today like some historical piece, and at least a tad ironic to boot – the tagline was “Onward and upward at Portsmouth?

The announcement that a conditional sale to the Pompey Supporters Trust has been agreed (2) brings at least some sort of turning point.

That the alternative bid from Balram Chainrai was turned down by the Administrator can only be good news – just how many times can the same person ‘save’ a club?  Trevor Birch’s choice may or may not have been influenced by the blogs of Micah Hall (3), but certainly the lack of response to the questions Micah posed to Tavistock Communications, Portpin’s PR company, spoke volumes.  Micah’s digging deserves an award, and shows how far a fan can go in the bigger picture of financial decision-making.

The fly in the ointment of the sale is, of course, the issue of the value that Chainrai is trying to place on Fratton Park.  Unless he finally decides to bow out gracefully, accepting that he made a very bad business call, the matter will go to court.  With independent valuations at a much lower level, the Trust stands a very good chance of getting the desired result.

There is also the matter of a potential further ten points deduction on coming out of Administration.  Here I am less optimistic.  I fear it will be yet more evidence that the deduction of points is an entirely dysfunctional sanction, but let’s not burn our bridges before we come to them.

All-in-all, there does finally seem to be a light at the end of the tunnel, and this hopefully will prove a turning point in the club’s miserable fortunes.

In the bigger picture, it may well prove to be a turning point in the road to fan ownership of clubs.  It does need to be seen though as one of many turning points, as I’m sure Brentford. Chester, Exeter Wrexham, and Wimbledon fans, and that’s not a definitive list, would be quick to point out.  It’s significance will depend on how well the hybrid model involving High Net Worth Individuals will work in practice.  If it does work, it will doubtless encourage the Supporters Trusts at bigger clubs such as Liverpool, Manchester United and Newcastle.

As a member of the Pompey Supporters Trust, I feel considerably more confident regarding the future than I have for a very long time.  I’ve even put a bottle of bubbly in the fridge, but I’ll not actually open it though until Fratton Park is in the fans’ hands.  The only certainty is the debt of gratitude Pompey fans owe to the PST Board.  Let’s show our gratitude by uniting behind them.

Posted in Community, Fans, Insolvency, Ownership, Points deduction, Sanctions, Stadium, Trusts | Tagged: , , , , , , , | 3 Comments »

Round-up of Season 2011/12

Posted by John Beech on September 8, 2012

The 2011/12 season has been characterised by long-running sagas.  Normally I find myself in an annual review recounting a series of relatively self-contained accounts of the woes which have beset a number of clubs, but many of those listed below are far from resolved scenarios.

The selection is not systematic – it consists of the clubs who have found themselves on my radar screen; further suggestions are welcomed.

Ashford Town
For a club to have its two co-owners feuding (1) was always likely to lead to tears before bed-time.  Add to this a withdrawal from its league in 2010 (2) and there is a clear downward pattern.  This July HMRC issued a winding-up petition  (3).

Billingham Town
A long dispute with Hartlepool over who should pay for improvements to the Billingham stadium (4) had been resolved in December 2010, but in January this year Billingham sought to wind themselves up (5).  However, HMRC then stepped in with their own winding-up petition (6).  The former of the these two seems to have been granted in April (7), but nonetheless the club is still is playing.  Any insight into what has happened would be much appreciated.

Coventry City
Coventry City have faced financial problems since their relegation from the Premier League in 2001, not least because of the development of the Ricoh Arena, a less ambitious materialisation of what had originally been called Arena 2000, originally designed with a retractable roof and a removable pitch (8).  In 2007, in a moment of financial crisis with the club having announced its intention to go into Administration, it was bought by venture capitalists SISU.  Since then SISU has failed to inject enough money to buy back the Rich from the local council and a local charity.
SISU have struggled to find the right balance between economising and maintaining team performance, thus causing complaints from fans.  The financial struggle led to SISU stopping paying the rent for the stadium in April this year in an attempt to force a lower a rental.  The confrontation was resolved in court last month, but details have not been made public (9).

Croydon Athletic
The imprisonment of owner Mazher Majeed for his part in cricket’s ‘spot-fixing scandal’ last November (10) made the club unsustainable.  It was promptly fined and deducted 10 points (11), adding another straw to an already broken back.  Unable to find a new owner, the club withdrew from the Isthmian League, unable to fulfil its fixtures (12).  A resurrection club, AFC Croydon Athletic, has been formed however (13).

Darlington
A sorry tale of desperation and despair, covered in postings passim and on the TwoHundredPerCent website, but eventually one of hope.  In early May fans group Darlington 1883 finally succeeded in taking over the club (14), but at what a price – the club had been forced into exile (15 and 16), and demoted to the Northern League Division 1 (17).  Onwards and upwards!

Harlow Town
Another sorry tale, this time tied up with the owners’ divorce (18 and 19; note the dates).  The club entered a CVA back in September 2009 (20).  Last November the club faced a winding-up order from HMRC (21), but this was finally dismissed in February.  In the same month, new owners had taken over (22).  Any further insight from local readers would be appreciated.

Kettering Town
Not the ultimate car crash – that comes lower down the posting – but certainly one of the most dragged cases.  See postings passim and on the TwoHundredPerCent website.  The season just finished was yet another traumatic one.
Having started the season by going into exile at the former Rushden & Diamonds stadium in Irthlingborough, less than ten miles away, there seems to have been no synergy in attracting new fans, as is reflected in the appearance of fan-owned AFC Rushden & Diamonds, also in exile, at Wellingborough, ground-sharing with Wellingborough Town, less than five miles from Irthlingborough.
Debts built up, and in June the club had to enter a CVA, with debts reported to be £1.2m (23), and HMRC hot on the club’s heels (24).
Meanwhile, want-away owner Imran Ladak had handed over the reins to ‘acting Chairman’ George Rolls, at least, until he was suspended from football for five years by the FA (25).  Ritchie Jeunne took over as Chairman (26), albeit extremely briefly, and now, in a Chainraiesque twist, Ladak is back (27).  The long-suffering Poppies Trust continue to fight on doggedly (28) notwithstanding demotion and a 10 points penalty (29).

Neath
Chased over debts by HMRC and then Barclays (30), the Welsh Premier League club was wound up at the end of May (31).

Northwich Victoria
Another depressing season for the clubs’ fans – evicted from their stadium (32), and then a crazy saga about where they could and couldn’t play (33), and expulsion from the Northern Premier League (34).  You couldn’t make it up.

Plymouth Argyle
It seems some time ago now, but the final chapter in the club’s survival was last October, and so within last season.  Mark Murphy has a neat summary of events here.

Port Vale
Yet another long-running saga – see postings passimandTwoHundredPerCentfor details.  Notable events and non-events during the 2011/12 season were the appointment of an Administrator in March (35), the lack of an attempt to take over by long-time suitor Mo Chaudry (36) and the Administrator’s misplaced faith in Keith Ryder as a potential owner (37).

Portsmouth
Here we go yet again.  The ‘club as company’ has been, more or less continuously, the basket case of English football for the past four decades, and this last season has proved no exception, with the arrest of the latest owners in November (38) and a now familiar drop into Administration in February.  I’m going to hold back in my lengthier comments for the moment as we seem to be on the point of either the start of a new chapter in the saga or dénouement.
Suffice it to say, in the red corner is Balram Chainrai, threatening to ‘save the club again’.  To me this is a bit like ‘giving up smoking’ – you can’t logically apply the phrase on more than one occasion.  In the blue corner is the Pompey Supporters Trust (vested interest declared – I have made a pledge to buy shares, and would urge all Pompey fans to do likewise here)

Prescot Cables
In an act all too rare in English football, the supporter-owned club took the difficult but realistic decision to return to amateur status (39).

Rossendale United
Effectively defunct at the end of the previous season, the club still appeared on my radar screen.  In March the club was still being chased for £37,000 by HMRC (40).  In January the defunct stadium had been gutted by fire (41), and the next month the owner, Andrew Connolly, had announced plans to redevelop the site with 50 new houses (42).  This forced the abandonment of plans for a resurrection club (43)

Rothwell Town
Which is, by the way, five miles from Kettering and thirteen from Irthlingborough.  In May 2010 the club had withdrawn from the Southern League due to financial difficulties (44), and a mooted rescue did not materialise (45).  Last October the club went into Administration (46), and in March the ground was put up for sale (47).  As far as I can make out, there have been no further substantive developments – again any local input would be appreciated.

Stockport County
Yet another season of uncertainty for County (see postings passim and TwoHundredPerCent).  The end of a ground-sharing agreement for Edgeley Park  with Sale Sharks will have added to the financial pressures (48).

Truro City
An interesting case of amazing success on the pitch, driven by a ‘benefactor’, which has proved unsustainable (49).  The club has been pursued by HMRC (50), struggled to play its players (51), and at the start of the current season has had to seek protection through Administration (52).  Two mysteries remain – the involvement of the Salisbury City Chairman, William Harrison-Allison (53), and the sale of the ground (54).  The timing of the latter will guarantee that this story has legs.

Widnes
The joker in this particular pack, destined to be an obscure name that only reappears occasionally in pub quizzes.  It marks an attempt by Steven Vaughan, he of Barrow, Chester and at one time allegedly Wrexham fame (see postings passim), through his son, to create a football club from scratch.  Originally to be called Widnes Town (55), it had to change its name on the not unreasonable grounds that Widens Town already existed (56).  Finding a ground to pay at proved challenging (57) and Stephen Vaughan seems to have opted to weave his own very particular brand of football magic in Malta instead (58).

Very roughly, the clubs involved fall into two groups.  First here are the League clubs.  Here there seems to be a continuing trend of slightly fewer clubs getting into financial difficulty, but those that do do so on a grand scale, and perhaps do so on a kind of cyclical basis – one crisis leads directly to the next one.

The second group, the non-League clubs, frequently display Benefactor  Withdrawal Syndrome (BWS).  The unsustainability of this business model becomes particularly problematic when the ‘benefactor’ has lifted the club up the pyramid to a level where his withdrawal makes survival especially difficult.  Clubs like Crawley Town and Fleetwood are surely vulnerable to BWS, not to mention the League and Premier League clubs of much longer standing who have become benefactor-dependent.

When I started preparing this posting, I did so with as close to a sense of cautious optimism as I manage.  With the natural exception of Portsmouth, surely things were beginning to look a little rosier in the football football finance garden.  Having completed it, I’ve fallen back to more usual mood of pessimism, wondering when club owners are going to get a grip and face reality (full marks to Prescot Cables as an exception).  Not that aren’t some good practice stories out there – Wrexham and Chester provide the most encouraging examples.

At least fifteen years ago I wondered ‘when the bubble was going to burst’.  This has obviously proved the wrong metaphor.  Suggestions for a more appropriate one are welcomed.

Posted in Benefactors, Debts, HMRC, Insolvency, Ownership, Resurrection, Trusts | Tagged: , , , , , , | Leave a Comment »

Why I shall be especially grumpy this Saturday afternoon

Posted by John Beech on April 3, 2012

Football clubs ‘in poor financial health’” a headline on the BBC News website has just screamed (1).  Apparently “many clubs are continuing to spend too much, principally on players’ wages, as they always have done”.  What?  Surely not?  Well, OK, the said headline was in the Business section of the BBC website rather than their Sports section.

Begbies Traynor, who over the years have been Administrators of Chester City, Kingstonian, Lincoln City, Huddersfield Town, Northwich Victoria, Wrexham, Farnborough Town, Crawley Town, Scarborough, Bournemouth, Halifax Town, Southampton, and now Port Vale, have just completed a survey looking at the finances of Football League clubs.

Beneath the trite headline, there was some detail of interest.

Of 68 teams surveyed in those divisions, 13 have signs of distress such as serious court actions against them, including winding-up petitions, late filing of accounts and “serious” negative balances on their balance sheets.

That 19% compares to just 1% in the wider economy, the firm said.

In particular “the financially distressed clubs include three in the Championship, six in League One and four in League Two.”  Obviously the survey had been completed under conditions of confidentiality, so we can only speculate on which these thirteen clubs might be that are under short-term financial pressure, a temptation which I will resist, at least publically.

There are also the clubs which, to me, have potentially longer-term pressures because they operate on business models which may not be sustainable.  Two which have caught my eye with their recent publication of financial results are one likely to be relegated to the Championship, Wigan, and one about to be promoted out of the Football League, Southampton.

At Wigan (2), turnover was reported as up 16% on the previous year, although this, it was conceded, was “mainly due to the increased Premier League broadcasting rights contract”.   Worryingly though, net losses had risen from £4m to £7.2m.

Wigan fans might take some comfort from the fact that:

Net debt including bank borrowings and loans from David Whelan and his family remained virtually unchanged at £72.2m compared with £72.6m in the previous year Since the year end £48m of debt was converted to equity which significantly reduces the Club’s long term liabilities.

Chief Executive Jonathan Jackson commented:

This position would not have been possible without the continued financial support of Chairman, David Whelan. The post year end conversion of debt to equity has significantly strengthened the Club’s financial position and has, to a very significant extent, written off the debt owed to Mr Whelan.  The club cannot continue to make losses every year and we are continuing to shape all aspects of the Club to ensure the long term future remains positive both on and off the pitch.

Perhaps just a hint there that Mr Whelan’s pockets are not bottomless.  It was he who has called for control on players’ wages (3).  It was Wigan that managed to hit a wages/revenues ratio of an utterly unsustainable 208.3% in 2004/05 (posting passim).

Meanwhile over at Southampton another ‘debt for equity’ conversion was reported last Thursday (4).  The estate of former owner Markus Liebherr had ‘invested’ £33m over two seasons but had now converted these loans into shares.  (My reason for putting single quotes around ‘invested’ is that I do not see loans as investments.  If I had pushed my credit cards to their spending limits, would I talk in terms of MasterCard and Visa investing heavily in me?).

This conversion certainly takes the financial pressure off a club which last season made a net loss of £11m in gaining promotion from League 1.

The Liebherr family seem to be in that rare group of benefactors which includes Steve Gibson at Middlesbrough – those prepared to dig into their pockets deep and for the long term.  At Middlesbrough the club is “now free from debt owed to external providers” (5).

Looking along the South Coast from the perspective of a long-suffering Pompey fan (but who is number 1 a football fan rather than a club fan), a club in deep, deep trouble not least because it is still paying some players Premier League wages as it faces the drop, my eye caught on the wages/revenues ratio at Southampton, a very high 93%.

This counter-evidence in the discourse over the financial strengths and weakness of clubs is hardly typical.  While few clubs, correction, no English clubs, are as financially distressed as Portsmouth, the Begbies Traynor report paints a more typical picture.

As Portsmouth head for Southampton this Saturday, to be ‘entertained’ as the media like to phrase it, I’ll not be building my hopes up for a surprise Pompey victory.  The earlier derby this season may have been a draw, but Portsmouth now have a depleted squad, forced upon them by their financial circumstances (and as one might well argue, not before time).  No, I’ll be quietly fuming on the absurdity that the outcome on the pitch will have been determined ultimately by the lottery of how rich and how committed your club’s benefactor has been.  It may be a football match, but it certainly is being played in a context of competitive balance.  One club has been the subject of heavy financial doping, and is paying the price, and one is the subject of financial doping, but has so far kept the ‘habit’ under control.  One is a savage indictment of the failings of the benefactor model, and the other is fortunate enough to be able to say ‘OK so far’.

If any good at all is to come out of the ‘basket case’ circumstances Portsmouth finds itself in, it will be through a new and more sustainable financial model, which is why I fully support the community share offer from the Pompey Supporters Trust.  Post-commercial era football has totally lost it way.  Clubs have become the playthings of sugar daddies, and have, as in the cases of Portsmouth and Southampton, sugar daddies with no local connection.  Ownership has become a lottery, and fans have been betrayed as a consequence.  Football governance looks as it will receive only light-touch reform, but that is insufficient to set it back on a road where the results of games are determined in a context of competitive balance.  Financial Fair Play, whatever the extent to which it will actually prove successful, is a no brainer.  And fan ownership is the only way to ensure clubs are a part of the community whose name they are happy, and proud, to identify themselves by.

This posting is, for the moment, open to comments, but please bear in mind that this is not a fans’ forum – it is a personal blog, which is happy to encourage serious debate.  Trolls will have their comments deleted, as will those who favour the so-called banter of ‘scummers’ and ‘skates’.

Posted in Benefactors, Community, Debts, Financial doping, Governance, Insolvency, Ownership, Wages | Tagged: , , , , , , , | 5 Comments »

The Tax Man cometh…

Posted by John Beech on February 23, 2012

There can be no doubt that the abbreviation HMRC is one which has hit pretty well every football fan’s radar screen recently.  There have been the two big Administrations at Portsmouth and Rangers.  Bubbling away in the background is not only the issue of whether clubs’ use of Employment Benefit Trusts constitutes tax evasion (and is hence illegal) or merely tax avoidance (perfectly legal), but also HMRC’s challenge to the legality of the Football Creditors Rule, which has seen it take substantial hits in its revenues since the Crown lost its ‘preferential creditor’ status in 2003, which resulted in ‘football creditors’ coming higher in the ‘pecking order’ when things went pear-shaped.  At present clubs in Administration face an obstructive HMRC when seeking to enter a CVA which would see HMRC being paid anything less than 100p in the pound.

Has the general approach of HMRC to football clubs changed over time?  It states its position pretty consistently, as it did thus with respect to Rangers: “We can’t discuss specific cases for legal reasons, but tax that has been deducted at source from the wages of players and support staff, such as ground keepers and physios, must be paid over to HMRC.  Any business that fails to meet that basic legal requirement puts the survival of the business at risk.

So, just what is HMRC’s track record over time in pursuing football clubs?  I’ve been researching its propensity to ‘present a winding-up petition’ against a football club, and how it’s changed in terms of frequency over the period since 1960.  Some of the outcomes are unsurprising, but others may be a little surprising.

The full data set is available here, and I will endeavour to keep this list up-to-date.  It covers all English and Welsh clubs, but not Scottish clubs, and has been developed by searching the London Gazette database.

Here are some thoughts on what I found:

  • HMRC and its predecessors (the Inland Revenue, who were responsible for collecting direct taxes such as income tax [including PAYE] and National Insurance contributions, and HM Customs & Excise, who were responsible for collecting indirect taxes, notably VAT, merged to form HMRC in April 2005) seem to have shown little favour towards League clubs, and even less to non-league clubs.
    In total since 1960, they have presented a total of 181 winding-up petitions, against League clubs on 58 occasions, and against non-league clubs on 123 occasions.
  • The frequency has varied considerably.  There were only two petitions presented in the 1960s, whereas in the peak decade to date, the 1990s, 62 were presented.
    (Images can be enlarged by clicking on them)
  • A year-by-year plot of petitions since 1990 reveal a more nuanced pattern.  After a burst of activity in 2002, HMRC seem to have eased off presenting petitions until taking up the challenge again seriously in 2009, with a greater proportion of League clubs being the object of HMRC’s interest.
  • My impression from the list of clubs involved is that there is something of a North/South divide, with a disproportionate number of Southern clubs in the list
  • HMRC has complained of ‘serial offenders’ and there is some evidence of this.  Bournemouth were on the receiving end of 5 petitions between 1995 and 1997; Chester City received 6 between 1986 and 2009; Crawley Town received 6 between 1973 and 2010; Doncaster Rovers received 4 between 1988 and 1994; Hartlepool United received 7 between 1982 and 1993; Hull City received 6 between 1992 and 2000; Margate received 4 between 2001 and 2010; Northwich Victoria received 4 between 1983 and 2008; Southend United received 4 between 2000 and 2011; and Stockport County received 4 between 1975 and 1999.

Looking at just the list of Winding-Up petitions of course tells only part of the story.  The size of the debt to the Tax Man has grown astronomically.  When Accrington Stanley withdrew from the Football League in 1962, the club owed the Tax Man roughly £4,500; Portsmouth owed HMRC approximately £11 million when they sought the protection of Administration in 2010.  The interesting question is why did HMRC hold back in the period up to 2009 and allow such large debts to grow.  It’s not as if they have a track record in the longer term of being tolerant with football clubs.

One petition in the list intrigues me, and I would appreciate any input from readers who know of the circumstances: in 1993 Customs & Excise presented a petition against Gorton and District Sunday League Football Club, and the club was indeed wound up as a result.

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

That feeling of déjà vu at Pompey, all over again

Posted by John Beech on February 17, 2012

Portsmouth’s return to Administration today (1) for the second time in a smidgen under two years speaks volumes, especially coming in the week that Rangers, a rather more iconic club, suffered the ignominy of Administration too (2).  High profile those these events are, the phenomenon of financial problems is not confined to te top clubs.  This season so far we have also seen Darlington go into Administration, as have Rothwell Town way down the pyramid.  Prescot Cables have returned to amateur status mid-season, and poor Croydon Athletic have disappeared, at least for the moment.  (A full listing of English football clubs’ insolvency events in the modern era is available here; a warning, it does not make pleasant reading)

It would be easy to dismiss the case of Portsmouth as a special case (especially bad, that is).  The ‘club as company‘ has a long and shameful tradition.  It was formed in 1898 to replace the previous club, Royal Artillery, who were disbanded because of that delightful euphemism ‘financial irregularities’ – payments to players which were blatantly undermining their supposed amateur status.  Funny how history can return to haunt you.

By 1912 the owners were already in deep financial trouble, and the company was voluntarily wound up and promptly reformed, thus wiping out its debts (3), a procedure which is no longer legal, but was far from rare in those days.  The mind boggles at how football clubs today would behave if it were still a legal option like this open to them.  To use a ‘Partridgeism’, the club ‘bounced back’, entering the Football League in 1920, winning the FA Cup in 1939, and the old First Division title in 1949 and 1950.

The road was only downhill after that, obviously excepting the recent relatively spell in the Premier League and FA Cup win.  Sporting decline was followed by financial decline.  A series of owner/benefactors who failed in various degrees is a familiar mantra to Pompey fans – since 1973 the list reads John Deacon, Jim Gregory, Terry Venables, Martin Gregory, Milan Mandric, Sacha Gaydamak, Sulaiman Al Fahim, Ali Al Faraj, Balram Chainrai, and Vladimir Antonov.  Whatever criticisms can be made about them individually, the lack of any continuity has hardly been good for the club.  And there will doubtless be further criticism to come as the unravelling enquiries of both this period of Administration, and the previous one, tease more and more uncomfortable detail out of the wood work.

Of the 200+ files I have on English football clubs, Portsmouth’s is the biggest.  It would be convenient to say that this is because I am Pompey fan.  That would not  though be honest.  It’s because they have a spectacularly aberrant history of ownership and mismanagement.  ‘Spectacularly aberrant’ from normal business, that is.  Merely ‘worse than most’ with respect to other football clubs.

The themes which have dogged Portsmouth occur throughout my files, and all over this blog:

  • Owners who did not have deep enough pockets, and yet push clubs further into unsustainable financial positions
  • Owners unlikely to win ‘Ethical Businessman of the Year’ competitions
  • Owners who have clearly not read the dictum of Mr Micawber in David Copperfield (Charles Dickens was born in Portsmouth, so the reference is particularly appropriate)
  • Repeated failure to pay HMRC on time

Portsmouth’s latest ‘misadventure’ should provide a wake-up call.  But then so so should their one two years ago.  Will the governing bodies just hit ‘snooze’ again?  I like to think not, but, would you believe it, I’m not optimistic.

I can’t argue that the imposition of the Financial Fair Play protocol, or effective club licensing ,or an effective Fit and Proper Person Test would necessarily have avoided Pompey’s current discomfort.  Without them though, another round of insolvency events is inevitable.  It doesn’t have to be that way and nor should it be.

Surely the football world must finally wake up to sorting out, as its highest priority, its financial messes, by attacking the causes rather than the symptoms  rather than stressing over the number of English clubs left in European competition or who the next England manager should be.

Posted in Benefactors, Ethics, Financial doping, Fit and Proper Person tests, Globetrotterisation, Governance, History, Insolvency, Ownership | Tagged: , , , , , , , , | 4 Comments »

That elusive number of insolvent football clubs

Posted by John Beech on February 13, 2012

Today’s breaking news makes for grim reading.

First there are the reports that Portsmouth is to go into Administration again (1).  With the club’s bank account now frozen, players and other staff unpaid, and an early parachute payment in the offing, this comes as no great surprise.

Meanwhile, North of the Border, it is reported that Rangers are declaring their intention of going into Administration (2).  In theory at least, Administration might yet be avoided – they might manage to negotiate a deal with their creditors, but this seems unlikely as it involves HMRC and a sum of £49m , or they might find a new owner in the meantime (which seems almost as unlikely).  The process of ‘declaring intent ‘ provides a company with temporary protection from creditors.  Two precedents from English football spring to mind: Plymouth Argyle (who did subsequently go into Administration) and Coventry City in 2007 (who found a buyer in the nick of time, thus avoiding Administration).

Those interested in the complexities of what has been going on at Rangers should follow the excellent Rangerstaxcase blog.

It was the case of Coventry City that prompted me back then to find what proved to be an elusive number – the number of top flight clubs that had gone into Administration.  So elusive did it prove to be that I started compiling relevant data in an attempt to produce it myself.  The results of this research I have now added to the blog on a new page No. of Clubs, accessible by clicking on the link or from the top menu.  Please read the bumf at the top of that page before diving in!

Posted in Insolvency | Tagged: | 2 Comments »

2011 – The Year in Insolvency Events

Posted by John Beech on December 31, 2011

Below is a round-up of the insolvency events I have logged during 2011.  The definition of insolvency event is a debatable one, and I prefer a descriptive rather than prescriptive one.  Broadly I would define an insolvency event as one which reflects a discontinuity in the operation of the ‘club as company’ caused by insufficient funding.

Where the Court or Companies House has been involved, I designate the insolvency event as ‘hard’ (and shown in bold), and, where this is not the case, I designate it as ‘soft’.

Repeat events at a particular club are italicised.  Any errors or omissions posted as comments will be corrected with due acknowledgement.

CLUB

DATE

INSOLVENCY EVENT

‘HARD’ OR ‘SOFT’

TIER

Leyton

12/01/2011

Expelled from Isthmian League because of debts; subsequently dissolved (see below)

S

8

Windsor & Eton

02/02/2011

Compulsory Liquidation

H

7

Plymouth Argyle

21/02/2011

Filed intent to enter Administration,
then did so

H

3

Eastwood Town

01/06/2011

Sold for £1

S

6

Rossendale United

18/06/2011

Expelled from North West Counties Football League because of debts

S

9

Gedling Town

25/06/2011

Again withdrew from East Midlands Counties Football League

S

10

Rushden & Diamonds

05/07/2011

Administration

H

5

Hucknall Town

14/07/2011

Reverted to amateur status

S

7

Leyton

17/07/2011

Dissolved

H

10

Dawlish Town

22/07/2011

Withdrew from Western League

S

9

Prescot Cables

16/10/2011

Returned to amateur status mid-season

S

8

Rothwell Town

17/10/2011

Administration

H

8

For comparison, this second table shows the insolvency events in 2010:

Crystal Palace

26/01/2010

Administration

H

2

Folkestone Invicta

05/02/2010

Entered CVA

H

8

Portsmouth

26/02/2010

Administration

H

1

Chester City

10/03/2010

Compulsory liquidation

H

5

Farsley Celtic

10/03/2010

Compulsory liquidation by Administrator

H

6

Grays Athletic

12/05/2010

Relegated from Conference National; sought to drop a further level to Isthmian League

S

5

Nelson

16/07/2010

Resigned from League; folded

S

9

Ashford Town (Kent)

20/07/2010

Administration

H

8

Gedling Town

25/10/2010

Withdrew from East Midlands Counties Football League

S

10

Atherstone Town

18/12/2010

Resigned from Southern League

 S

8

In an increase from 10 insolvency events to 13, although drop from 6 to 5 of ‘hard’ insolvency events.  These are in absolute terms fairly small numbers so it is difficult to generalise with any certainty.  Nonetheless they are large enough as percentages of the total numbers of clubs in the various to warrant some albeit speculative comment.

Although the insolvency events at Portsmouth and Plymouth Argyle in particular of the bigger clubs have attracted much media coverage, the incidence of insolvency events in clubs in tiers 7, 8, 9 and 10 is rarely even noted other than by local newspapers.  It would easy to dismiss their higher level of incidence as simply a reflection of the fact that there are far more clubs in each of these lower tiers.  While that is certainly part of the explanation, it must be remembered that we are not quite comparing like with like.  At these levels there are no broadcasting rights to be lost through relegation, and the difference in financial scale of operation between successive tiers is low.  Indeed, the business plan B in case of relegation will not be significantly different from the business plan A of staying up.  There should therefore be proportionately fewer insolvency events.

In my view there are  surprisingly high number of insolvency events at the level of semi-professional clubs.  The smaller budgets should be easier to manage, and any shortfall of revenues should be relatively easily absorbable if the club is owned by a local ‘benefactor’.  Even a whip-round with collecting buckets should be enough to ward off an impending insolvency issue, unlike at, for example, Portsmouth, with their debts rising at one point to a reported £135 million.

On the one hand, lower tier clubs exhibit a greater realism than Football clubs, as evidenced by the number of ‘soft’ events with clubs simply dropping a tier voluntarily.  On the other hand, they can be driven into financial doping by a ‘benefactor’, leaving them with entirely unsustainable business models when the ‘benefactor’ either loses interest is unwilling or unable to continue the club’s enforced ‘habit’ for cash injections.

I certainly see the same worrying signs in the football sector as I have done for more years than I care to remember.  Higher level clubs remain as vulnerable as ever, and lower level clubs seem to be becoming more vulnerable.  As the year turns, a number of clubs are in imminent threat, the most obvious being Darlington (1).  At higher levels, few would discount Portsmouth as a prime candidate for Administration unless a ‘benefactor’ buyer can be found, and the club launches off down yet another ownership cycle.

In a nutshell, I fear another depressing year for fans at too many clubs.  Here’s hoping that the various versions of financial fair play protocols can begin to bite and force clubs into sustainable business models.  Let’s also hope that all the words recently expended on football governance by politicians lead finally to an effective licensing system which includes an effective fit and proper persons test.

All best wishes to blog readers for the New Year.

Posted in Insolvency | Tagged: | 3 Comments »

Round the Lower Levels Part 2

Posted by John Beech on December 21, 2011

At last, Part 2 of my overview of what is happening from a broad financial perspective.  Part 1 ran alphabetically up to Prescot Cables, and is available here.  With a slight jump backwards, we pick it up with:

  • Port Vale
    An interesting case of ‘fan ownership’.  Valiant 2001 bought the club from the Administrators in 2003 (1) – the club had debts of £2.4m and was said to be losing £500,000 a year (2) – and in doing so avoided the real threat that football might have disappeared from Vale Park (3).
    Survival has been a battle, with the problem of sponsors not paying and a threatened takeover (4), and the need for a loan from Stoke City Council (5).  Nevertheless the club managed to complete its CVA in May 2005 and to come out of Administration in October 2006.  Meanwhile local boy Robbie Williams had bought shares for an undisclosed sum (6).  However Chairman Bill Bratt had “taken the club as far as I can” by September 2008 (7), but was denying takeover rumours the following month (8).
    Into the New Year and a row was brewing over the apparently different involvement with local rivals Stoke City by the council (9).  Bratt attempted to clarify the club’s difficulties here, and pointed out his already considerable commitment to the club (10).
    Fan opposition to the way the board was running the club mounted, and Bratt pointed out the obvious:

    Supporters have protested against the board in recent weeks, and Bratt said it could be potentially destructive.
    “If we go, what happens? We fold immediately. If that’s what they want, they could take the club down, not the board,” said Bratt.
    He added: “I’m quite happy to walk away from this club right now, but the banks and creditors would come in straight away, and there’s no Plan B in place. (11)

    Plans B, C and D have however emerged in recent years – the failed attempts by various parties to invest in the club (Harlequin Properties (12); Mike Newton (13); Mo Chaudry (14); and most recently Blue Sky International (15)), although there has been investment by Peter Miller (16).
    All the uncertainty has prompted an attempt by fans to oust the board (17).
    All very sad.  The days of fan-benefactors like Jack Hayward, Jack Walker and Steve Gibson seem to have gone, and fans need to be clear in discriminating between ‘fan-owned’ and ‘Supporters Trust owned’.

  • Portsmouth
    I’d planned to avoid blogging about Pompey until the situation became clearer, but it hardly seems reasonable not to comment in this context.
    The immediate situation sounds reasonable, with the immediate possibility of points deduction probably not on the Football League’s agenda (see previous posting).  The issue is just how long the ‘immediate’ will last – current indications are that it will all too brief, with time and money running out sometime next month.  Whether Keith Harris will have been able to weave his magic in finding a buyer before then (18) seems unlikely – Pompey are hardly the most attractive of clubs to buy in their present mess (19).  I have it on good authority that even the liquidation of the ‘oldco’ is proving to be contentious.
    Administration for the club (as opposed to the existing Administration of CSI) looks increasingly likely, with its inevitable 10 points deduction, threat to keeping up the CVA payments (and further points deduction).
    Increasingly liquidation and resurrection by the Pompey Supporters Trust looks the only viable longer-term scenario.
  • Rossendale United
    The club did not reapply for membership of the North West Counties Football League at the start of this season (20), and a new club is being resurrected (21).  News is scant, any local informed input would be appreciated.  See also my posting in March where I argued that the club was a classic case of Benefactor Withdrawal Syndrome (BWS).
  • Rothwell Town
    In October the Rowellian Football Social Club (trading as Rothwell Town Football Club) did go into Administration (22).  Again, any local informed input would be appreciated.
  • Rushden & Diamonds
    Following their expulsion from the Conference (23), the club tried but failed to get into the Southern Premier League (24), and went into Administration (25).  That appears to be the end of the club in this manifestation, but an AFC Rushden is being formed (26).
    This seems to be another case BWS, although perhaps with twists yet to emerge…
  • Southend United
    In November the club announced “Roots Hall Development Moves Closer” (27).  So, nothing new there then.  Meanwhile, the Fossetts Fantasy Farm project has been “has been removed from the [Council’s] capital programme until the certainty of developer contribution can be ascertained” (28).
  • Truro City
    The club owned by Kevin Heaney, wannabe owner of Plymouth Argyle, is in deep, deep trouble.  Wages have been unpaid (29) and the ‘Stadium for Cornwall’ project now has a big question mark hanging over it (30).
    HMRC are chasing tax debts of over £100.000, and the club has until January 16 to come up with the money or face a winding-up order (31).
  • Wakefield
    A not entirely unfamiliar story here too (32), with unpaid wages and money owed by a sponsor (33).

All too worryingly, I could start going round the alphabet again, with various tales of various woes at Barnet (34), Cheltenham (35), Chorley (36), Coventry (37), Croydon Athletic (38) and Dorchester Town (39), although at least the last of these has a positive side, a possible takeover by Dorchester Town Supporters Trust.

It looks as if the race is definitely on for the club to face the first insolvency event of 2012.  February is the second highest peak for insolvency events (behind may), so it could well be a close run thing.

I’m beginning to wind down (or is it up?) for Christmas, so, in case I don’t post again in the next few days, a very Happy Christmas, or Bah Humbug (delete as you consider appropriate), to all readers.

Posted in Benefactors, Debts, HMRC, Insolvency, Ownership, Stadium | Tagged: , , , , , | 1 Comment »

Pompey and the potential for points deduction

Posted by John Beech on November 29, 2011

Having carefully got through as far as Prescot Cables in the first half of my round up of clubs in trouble below the Premier League, I had rather assumed that I could at least get Part 2 published before returning to the subject of Portsmouth.  Clearly that was not meant to be.  So here are some first thoughts on what will be an ongoing saga of, well, Pompeyesque proportions.

For most fans there will be the question of points deduction, a matter for the Football League.  As it stands, at least for the moment, the company which owns Pompey, Portsmouth Football Club (2010) Limited, is not in Administration, as it is at pains to point out in its official statement (1); it is the parent company, Convers Sports Initiative plc, which is (2).  It is the issue of how closely the two companies are linked that the Football League will have to rule on.

The obvious precedent to spring to mind is that of deadly rivals Southampton, where the decision was that the company owning the club and the parent company were so intimately involved that the club should suffer points deduction on account of the parent company going into Administration.  It’s worth quoting from the Football League’s statement (3) at the time:

The [Grant Thornton] report [on which the decision was based] concluded, among other things, that:

1.The Holding Company has no income of its own; all revenue and expenditure is derived from the operation of Southampton Football Club Limited (SFC) and the associated stadium company.

2.The Holding company is solvent in its own right. It only becomes insolvent when account is taken of the position of SFC and the other group companies.

3.The three entities (the Holding Company, SFC and the stadium company) comprise the football club and they are inextricably linked as one economic entity.

If we compare the situation at Southampton then with the situation at Portsmouth now, there are major differences.  At Portsmouth currently:

  1. CSI does have income of its own and definitely does not derive all its income and expenditure from Portsmouth Football Club (2010)
  2. CSI is insolvent in its own right; its insolvency does not arise because of any insolvency on the part of Portsmouth Football Club (2010)  [I grant you that it’s hardly a cash cow, but it’s not Portsmouth that has brought CSI down]
  3. CSI and Portsmouth Football Club (2010) are not inextricably linked as one economic entity; CSI’s website shows their structure (4) to consist of a number of unrelated subsidiaries: Boom!, DGB Convers, GP Week, Leaders, Power Play Golf, Sportpost and WRC, as well as Portsmouth FC

On this basis, there is a strong case that CSI’s Administration should not result in a points deduction for Portsmouth.

If Portsmouth Football Club (2010) should itself seek protection by going into Administration, that would be entirely different matter, and points deduction would without doubt be incurred.  The Football League has no precise published tariff, but I would expect something in the region of 17 to 20 points.  How likely is that to happen?  The Administrators of CSI will almost certainly be looking to sell off its components, and Portsmouth is in effect already ‘on the market’.  With the added complication of Portpin and Balram Chainrai’s involvement in the insolvency of CSI though, it’s not a club that will be fighting off suitors.  In the meantime, the club “has funding in place for the short term, but will now be seeking alternative investment for its longer-term requirements”.

Not a very encouraging situation, but what’s new for Pompey fans?

[For new readers, I make clear that I am Portsmouth fan and a member of the Pompey Supporters Trust.  The thoughts above are, nonetheless,  my thoughts from the perspective of an academic researcher.]

Posted in Football League, Governance, Insolvency, Points deduction | Tagged: , , , | 16 Comments »

Round the lower levels Part 1

Posted by John Beech on November 28, 2011

Plenty has been happening once you look down the football pyramid since I last gave a general overview.  The continually flashing lights on my radar screen have of course been Plymouth Argyle and Wrexham, although, for entirely different reasons, I have resisted the very strong temptation to blog on these two clubs.  In the case of Plymouth, I have been put off by the plethora of non-news that has been churned out over the last few months – it seemed as if 90% of this consisted of Peter Ridsdale purring that one of two takeover attempts was due to completed ‘next wekk’.  At Wrexham, in distinct contrast, real news was happening at a staggering rate – I did actually start a posting, but, while, I was writing it, two press releases issued which made my opening paragraph redundant.  In any case, my friends over at Twohundredpercent gave (happenings and non-happenings) at both clubs excellent coverage.

A third nebula seems to heading towards my radar screen – the ever-dependable Portsmouth, but with one Henry James Redknapp due in court shortly, I’ll hold back for the moment at least.

It’s not as if the radar screen has been otherwise blank though.  In alphabetical order of clubs then:

  • Astley Bridge
    (I haven’t managed to identify which league the club plays in – any offers?)
    The club, which has been around since 1892 (1), is under threat thanks to thieves who stole the club’s pitch mower (2).  The club cannot afford the alternative of having the council mow their three pitches at a charge of £1500 for five cuts.
  • Bournemouth
    The club has failed to buy back its Dean Court stadium which it was forced to sell and lease back almost six years ago (3).  Meanwhile, 50% of the club’s shares have been sold to a 41 year-old Russian petrochemicals trader (4), and chairman Eddie Mitchell purred “His arrival brings security to the club”.  Is it just the Pompey fan in me that finds this less than reassuring?  I hope so.
  • Carlisle
    Carlisle have formidable issues with the existing Brunton Park stadium, not least the threat of a repeat of the 2005 flooding (5).  Just over two years ago the club was losing £1.2m a year and facing gates down to just over 6,000 (6).  By March 2010, gates were down to around 5,200 and budget cuts had to be imposed (7).
    Now we have the results of a feasibility study (8) and ‘Project Blue Yonder’, which would see the building of a new 12,000-seater stadium (9).  Certainly this appears more realistic than Plymouth Argyle’s ill-fated plans for a 40,000+ stadium, but not a great deal more so – Plymouth has a population of just over 250,000 whereas Carlisle’s population is just over the 100,000 mark.
    No easy solutions to the club’s dilemma I’m afraid.
  • Dawlish Town
    I’m a bit thin on information here, but a link (10) said that the club had withdrawn from the Western League Premier Division in July.
    The club website (11) is still live, but does not appear to have been updated recently.  With doubtless no intended irony, it still has a link to an item headed “Chairman dreams of promotion and new stadium
    Their Wikipedia entry (12) begins with that damning phrase “Dawlish Town A.F.C. was a football club…
    A Facebook page (13) implies that the club has disappeared, and a new FC Dawlish Town is being formed.
    Can anyone with local knowledge expand on this?
  • Harlow Town
    A winding-up petition from HMRC was dismissed in court o 14 November because the club had paid its tax bill (15).  This followed on entering a CVA in September 2009 (16).
    See also postings passim.
  • Hucknall Town
    After a particularly turbulent period last season (16), the club has new owners (17) who talk of turning into a community club.   There is even talk, perhaps just a tad OTT, of the club as a ‘sleeping giant’ (18).  All in all, things a lot a rosier nonetheless.
  • Kettering Town
    Ah, the inimitably enigmatic Imran Ladak!  See postings passim.
    Having solved the impending problem of the end of their ease, Ladak took the club to Rushden’s Nene Park (19), which everyone hoped would see the start of a new period of stability (for Kettering, at least)
    Ladak is now ‘open to offers’ for the club (20), the entire team is transfer listed (21), players are partly unpaid (22), and as a result it has been transfer embargoed (23)
    Who can guess what Ladak will do next?  This, after all, is the man who brought in Gazza to run the club, sacking him after six games (24).
  • Prescot Cables
    This Community Interest Club has taken the decision to return to being an amateur club, the financial pressure having built up following the lack of a sponsor (25).

Part 2 will be coming to a screen near you shortly.  I’ve now more or less recovered from the failure of my laptop’s CPU and hence its scrapping, so normal service should now be resumed.

Posted in Debts, Insolvency, Ownership, Stadium | Tagged: , , , | 4 Comments »

Unsung heroes

Posted by John Beech on October 14, 2011

The news that Plymouth Argyle’s players and administrative staff are still failing to get their full pay (1) is not, of course, really news at all.  This situation has been going on for roughly a year.  It’s a message of despair that has become as familiar as Peter Ridsdale cooing that he expects a deal to be finalised very shortly.

There are still those who do not break out in sympathy with the players at least – you know the sort of stuff: “Overpaid prima donnas.  Serves then right.  No sympathy whatsoever.”  This is of course nonsense.  Plymouth Argyle is not a Premier League club, and the majority of players are on salaries that do not even begin to approach the telephone numbers that Premier League players command.  They do have the professional Footballers Association supporting them though.  Still, it’s hardly easy to adjust to dramatic changes in family income whatever your salary is.  I should know: I once had no choice but to make the first Mrs. Beech redundant from our shared workplace.

The administrative staff will undoubtedly be on generally lower salaries, and I have even more sympathy for them.  Apart from being worse off financially, they didn’t sign up to a profession where a transfer to somewhere else in the country was going to be an industry norm.  I’m sure most of them are local folk, who have more than demonstrated their loyalty to a club which is not just their employer but a club that they care about.  They are the real unsung heroes.

In a different news story today, another super-loyal administrator (in the non-insolvency sense of the word) has left his club/employer after an amazing 38 years – now there’s loyalty.  This is the case of Portsmouth’s Club Secretary, Paul Weld (2) .  As the club website points out: “Paul has worked through nine changes of ownership, 19 different managers (22 if you include Frank Burrows, Alan Ball and Harry Redknapp, all of whom managed Pompey twice), encompassing two periods of administration, four relegations, four promotions, one FA Cup final triumph, one FA Cup final defeat and a season in Europe!”  No doubt it was the two periods of Administration that must have caused the greatest stress in the Weld household.  Why did he remain so loyal when there must have been more secure job opportunities open to him over the years?  Well, “A Pompey fan, Paul was an active member of the London Supporters’ Club before arriving at Fratton Park from the Football Association as assistant to the then secretary Jimmy Dickinson, before taking over as club secretary.”  So, someone to whom it was clearly more than ‘just a job’.  And here’s a hint, Paul – yours is an autobiography that I can’t wait to read.

I’m sure there are similar stories to be told at a myriad of clubs.  Let’s not forget these unsung heroes, especially in the troubling circumstances of the current Plymouth Argyle administrative staff.  A club is much more than just the team who turn on Saturdays.  Let’s hope that those directly involved in the takeover negotiations can bring a rapid close to the brinkmanship and haggling, and show a little humanity to their loyal staff and their families.

Posted in Community, Human Resource Management, Identity, Insolvency, Investors | Tagged: , , , , | Leave a Comment »

Some rather late and ineffective justice for Luton fans

Posted by John Beech on September 11, 2011

There was some small crumb of comfort for Luton fans in the news that four of the directors of the previous owners of the club had been banned from being company directors (1) (and hence now fail the Fit and Proper Person Test).  Former chairman Bill Tomlins was disqualified for six years; Derek Robert Peter, the former CEO and a chartered accountant was disqualified for seven years, and Richard Sidney Bagehot and John Mitchell were each disqualified for three years.

The official statement from the Insolvency Service (2) who investigated Luton Town, or more exactly the old company, Luton Town Football Club Limited (“LTFC”) – which is not in any way connected with present owners Luton 2020 – makes clear the scale of what had been going on under the club’s previous owners:

The investigation by The Insolvency Service found that the directors of LTFC had breached Football Association (FA) and FIFA rules and caused LFTC to trade at the risk and detriment of HM Revenue and Customs (“HMRC”), being in arrears with PAYE and NIC within a few months of commencing to trade and recently not declaring or paying its VAT liability.

Between July 2004 and February 2007 LTFC acted in breach of FA and FIFA rules and regulations on payments to football agents. The FA enquiry found that the company had dealt with unlicensed football agents and made payments totalling £157,000 through its holding company Jayten Stadium Limited (‘JSL’) using funds provided by LTFC which should have been paid by LTFC itself and routed through the FA.

During the same period of July 2004 and February 2007 the directors individually either caused or allowed the company to trade at the risk of and ultimate detriment to HMRC which was owed £3,578,661. The Court heard there was a pattern of non-payment and chasing from HMRC.

Why I say “small” crumb of comfort is for two reasons.  First, the club has had to suffer as a football club for the misdemeanours of these previous owners (see previous posting where I wrote of Luton’s ‘unfair disadvantage’) in terms of points deductions and the resultant relegation to the Conference.  Seeing four people just banned from being company directors hardly results in an overall balance of justice being seen to be done.

Secondly, the perceived lack of balance in justice is exacerbated by the fact that these goings-on came to light as a result of whistle blowing from within the club, which should have in part mitigated the punishments handed out to the club.

The success in bringing about these bans must give HMRC a good feeling for their ongoing fights with football clubs.  These currently include the major fight North of the border against Rangers (a blog worth a look at on this is Rangers Tax Case as is The Scotsman), their attempt to have the Football Creditors Rule thrown out by challenging the leagues in court rather than taking action against individual clubs, and the ongoing cases against Harry Redknapp, Milan Mandric and Peter Storrie.  Some interesting reading coming up there’s no doubt, and the various court rulings may have significant implications for all clubs.

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

Round-up of insolvency events 2010/11

Posted by John Beech on August 27, 2011

Things looked slightly better than in the previous season in simple terms of the number of insolvency events I have logged – ten events involving nine clubs, compared to twelve events each at a different club in the previous season – although there were still some large clubs involved.  In 2009/10 we had seen Crystal Palace, Portsmouth, and Chester City crash financially; in 2010/11 it was the turn of Plymouth Argyle and Rushden & Diamonds, the latter disappearing and the fate of the former hanging on a knife-edge as I write (there is clearly no cause for celebration when a) no money has actually been paid, b) the Football League has yet to agree the Golden Share being passed on, and c) the prospective owner of the club is facing three charges of fraud at another football club in four weeks time (1 and postings passim)).

In alphabetical order the clubs in 2010/11 which suffered what I include in my definition of insolvency event were:

Atherstone Town  (Tier 8 )

The club had become dependent on the bank-rolling of Chairman Aidey Burr (2), who stood down in November 2009.  By December 2010 the club was forced to announce their intention to withdraw from the Southern League Division One Central (3).  They now play in the Midland Football Alliance.

Dawlish Town (Tier 9)

In March 2011 Chairman Dave Fenner stood down (4) because of work commitments.  In July the club withdrew from the Western League (5) with debts of £60,000 owed to landlord Teignbridge District Council and brewery Carlsberg Tetley.  The club faces a winding-up petition brought by the latter (6).

Eastwood Town  (Tier 6)

An unusual case.  The club has been on the rise since Rob Yung began a frenzy of financial doping, boasting “I personally pay the players’ wages and any other money that comes in from the fans through gate money and the like goes straight into the club” (7). No notion of Financial Fair Play there then.  The club’s rise has been impeded by stadium restrictions, and Yung put the club up for sale for £1 (hence its inclusion in the list) (8).  The good news is the club is debt free (but whether it is sustainable at its current level without Yung to feed its financial habit remains to be seen) and new owners are in place (9).

Gedling Town (x2)  (Tier 10)

Another case of benefactor withdrawal, but with more serious consequences.  Chairman Roly Ash had bankrolled the club for many years (10 and 11), but at the beginning of the season gave up, withdrawing the club from the East Midlands Counties Football League.  In November new club officials were announced (12) but in June the club again withdrew from the League (13).  A bizarre consequence is that each of the club’s players now has to pay the League £22 to cover the fine imposed on the defunct club!  It would seem that there is a Football Debtors Rule too.

Hucknall Town  (Tier 7)

Another oddity.  The club has had a recent history of financial struggling, and matters suddenly came to a head in May when it was hit with a £75,000 VAT bill by HMRC.  For a number of years, it emerged, the club had decided not to pay VAT on revenue items such as gate receipts (14).  With a hefty helping hand, a significant part was paid off and an agreement reached over the balance (15).  In the meantime the ownership structure has had to be drastically altered and the club has been forced back to amateur status (16).

Leyton  (Tier 7)

After a period of troubled ownership (17), the club (not to be confused with better known neighbours Leyton Orient) withdrew from the Isthmian League because it could not pay its subscription.  There was a mass exodus (18), and the club, London’s oldest, was formally dissolved in July (19).

Plymouth Argyle  (Tier 3)

An ongoing can of worms that I don’t propose to reopen in the context of this round-up.  I’ve covered the saga in postings passim, and it has been very well covered by twohundredpercent.

Rushden & Diamonds  (Tier 5)

The club went into Administration in July (20) and effectively folded.  Finances had gone from bad to worse since being taken over by Liam and Steve Beasant in December.  A number of rumoured last-minute rescues failed to materialise, and a resurrection club is now under way (21).  The club’s demise had a silver lining for Kettering, who, under pressure because their lease was coming to an end, have now moved into Nene Park (22).

I have mixed feelings about this.  Certainly its good news for Kettering (which is roughly eight miles from Nene Park in Irthlingborough – the ‘Diamonds’ part being ‘Irthlingborough Diamonds’), and a rational case can be made for the Kettering, Wellingborough, Rushden and Irthlingborough area being ‘over-populated’ clubs.  But football is not an entirely rational topic.  A League club has been lost, and there are still questions to be answered about its rapid decline.

Windsor & Eton  (Tier 7)

Another sad case.  An indulgent benefactor failed to restrain an overly ambitious manager (23).  By May 2010 debts had risen to £137,000, including £50,000 owed to HMRC (24).  In spite of various reprieves, the club was eventually wound up at the beginning of February 2011 (25).  A resurrection club, Windsor FC, has been formed (26).

Although there has been a small decrease in the number of insolvency events, it is worth noting that a number of clubs came perilously close to inclusion in the list – Hinckley United (27), Welling United (28), and Wrexham (29) for example.

While League clubs have shown a general trend towards better financial management and control over recent years, non-league clubs remain very vulnerable.  Common factors ate benefactor-dependence followed by benefactor withdrawal, and tax payment issues.  Clubs at the lower levels are being forced to seriously consider ‘downgrading’ to semi-professional and even amateur status.  There is little evidence that these trends will change.

If readers spot any omissions, please let me know.  I’m afraid last season’s monitoring was necessarily a tad inconsistent because of too many nights spent away for work in hotel rooms with dodgy internet connections.

Posted in Insolvency, Ownership, Resurrection | Tagged: , , | Leave a Comment »

Of (dream) stadiums at Plymouth and Southend

Posted by John Beech on May 29, 2011

While the insolvency process has many shortcomings when it comes to football clubs, one good thing it does do is shake some of the skeletons out of the cupboard.  As a Pompey fan, I’m expecting some pretty shocking data, and, who knows, even legal proceedings, to emerge as forensic accountants work on the liquidation of the old company (1).

At Plymouth Argyle a bit of a shocker has emerged (2) – the sum spent on the ill-considered attempt tp get a new stadium on the back of England’s inglorious 2018 World Cup bid.  If you haven’t already seen it, sit down, because it was an eye-watering figure of up to £1.2m.  It doesn’t take the 20/20 vision of hindsight to see that this was plan that didn’t make sense for Argyle – see my posting Are we going stark stadium bonkers? from April last year.

Argyle fans might spare a thought for the fans of Southend United (see postings passim), where £1.2m had been spent over a year ago on the as yet unstarted Fossetts Farm new stadium, of which club Chairman Ron Martin’s family will be the financial beneficiaries.  A year on and this figure has certainly gone up.  Last February the club requested Southend Council’s Development Control committee to confirm the development of the new stadium as two components (3), which required the preparation of two new detailed plans for the submission.  This request has been approved by the Council (4).  Meanwhile there is the matter of getting shop owners out so that the Roots Hall redevelopment by Sainsburys can be given a clear run (5), doubtless with the lawyers adding to the overall final bill.

The Roots Hall redevelopment by Sainsburys cannot begin until the first part of the Fossetts Farm development is completed.  I just wonder how long Sainsburys will tolerate the delays  as this whole saga of a move to Fossetts Farm has been dragging on for over ten years.  Perhaps I should be more understanding – Pompey have been talking of a new stadium since the 1970s, but then they haven’t pursued the idea as relentlessly, and I suspect at a rather lower cost to the club.  Who knows, perhaps the investigations surrounding the liquidation of the old company may reveal a secound bout of absurd 2018 profligacy on the South coast (6).

Posted in 2018, Insolvency, Stadium | Tagged: , , | 2 Comments »

 
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