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

Posts Tagged ‘Fit and Proper Person tests’

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 »

“Completely vindicated”? Well, not quite completely

Posted by John Beech on September 29, 2011

The press have been quick to quote Peter Ridsale as saying that he had been “completely vindicated” following the dropping of charges fraud brought against him by Cardiff Training Standards Department (see BBC and This is Plymouth for example).

In my book, in this case that fine arbiter of plain English, the Oxford Advanced Learner’s Dictionary, the primary definition of ‘vindicate’ is “clear of blame or suspicion“.

Undoubtedly he has been “completely vindicated” of ‘blame’ as the charges have been withdrawn, and he continues to be able to be a director of a football club.  He can continue to weave his own brand of magic, honed at Leeds United, Barnsley and Cardiff City.

Whether he has been cleared of ‘suspicion’ is, in my opinion, not quite so clear-cut however.  Further down in the press reports the reason the charges were dropped is revealed.  A council spokesman is quoted thus: “On paper, there was a case to answer, however, the council has recently obtained further evidence from prosecution witnesses and taken the advice of a leading counsel.  After a thorough analysis of this new evidence, and due to the reluctance of those supporters who raised concerns to provide witness statements, the council considered that a conviction after trial was unlikely.  Consequently, the council has decided to discontinue the prosecution.”  In these circumstances it would seem likely that there will those who still harbour a suspicion, possibly including some at Cardiff Trading Standards Department, and so ‘complete vindication’ is an interesting use of the language.

To remove both ‘blame’ and ‘suspicion’ it can be argued that the case would have had to have gone to trial, and ‘not guilty verdicts’ returned for all three charges.  Ridsdale had previously said “I will be vigorously rebutting the charges” (1).  He must surely be ruing the fact that the charges were dropped, and he was denied his opportunity to have his cases heard and to be ‘completely vindicated’.

Posted in Ethics, Fit and Proper Person tests | Tagged: , | 3 Comments »

Just how slow can a car crash be?

Posted by John Beech on July 3, 2011

On Tuesday we were told that the long-running Plymouth Argyle saga was on the verge of taking a significant turn according to Administrator Brendan Guilfoyle: “at a meeting with the preferred bidder held today, Tuesday, June 21, 2011, the terms of a formal sale and purchase agreement were agreed by both parties” (1).  These terms of course include the separation of ownership of the stadium and the club, invariably bad news for a club.

On Wednesday Peter Ridsdale, as ever the Spinmeister, announced “Our objective is to have [the deal] go through by the end of this week” (2), which, in my book at least, promptly increased the odds on this actually happening.

Sure enough, as I write, no deal has yet been announced.  Nor will any imminent deal have any significant impact on the longer term stability of the club.  There is still the issue of the club’s Golden Share to be resolved, and the potential fly in the ointment is Kevin Heaney, owner of Truro City Football Club and not entirely successful property developer (3).  Ridsdale happily purrs “Mr Heaney would only be the landlord of the [Home Park ground] and would have nothing to do with Plymouth Argyle Football Club. As long as the club is independently owned and financed, there is no reason why the Football League should complain.”  Predictably the Football  League’s chairman has promised that “the governing body will “rigorously enforce” its regulations before giving the takeover the green light” (4).  This is the Football League that rigorously enforced its regulations with respect to the anticipated removal of West Ham to Leyton Orient’s doorstep (5), so perhaps the Spinmeister has reason to be optimistic.  I doubt it however.

There is too the small matter of Ridsdale’s impending court case, which continues to cast a shadow over any new dawn in Argyle’s fortunes (details of the charges here).

As a Pompey fan, I am only too familiar with false dawns.  At present, the consensus among Portsmouth fans seems to be to give the new owners, Vladimir Antonov and Convers Sports Initiatives, a ‘fair chance’.  The Football League apparently have by sanctioning the takeover (6).  The Financial Services Authority were, against their general flow of approval, less inclined to allow another Vladimir Antonov business, the Lithuanian Bankas Snoras, to operate in the UK (7), the problem being a failure to provide all the required information to the regulator.  Another Antonov deal, the purchase of Spyker Cars from Saab attracted attention when there were allegations, strongly denied, that Antonov had links with the Russian mafia (8).

To me, it seems that, not only do we suffer from ineffective ‘Fit and Proper Person’ Tests in English football, we suffer from the lack of any Fit and Proper Governance Test.  While we are quick to (rightly) condemn what has been going on in FIFA of late, perhaps some mote-casting would be in order at the same time.

UPDATE – 5 July 2011

Apparently the deal is “all on track“, although presumably that’s the track with leaves on it.

Posted in Fit and Proper Person tests, Football League, Governance, Ownership, Stadium | Tagged: , , , , | 5 Comments »

When a club is at its most vulnerable

Posted by John Beech on March 27, 2011

A week can be a long time in football, but, having been out of the country for a week, working in the Tirol, I find it quite surprising in some ways how little has happened, or, to be more precise, resolved itself.  Two ‘sagas’ which have been on my radar screens for several weeks have made no real progress towards a denouement – the cases of Plymouth Argyle and Wrexham.  For both clubs, fans face the continuing uncertainty of who will be the new owners.

The former is now in the hands of an Administrator, and the sale of the club seems, at least at the time I write, to hinge on the issue of how much previous owners are prepared to write off with respect to Home Park (1).  In the case of the latter, well, one reason I haven’t blogged on the trials of the club is the sheer rate at which stories have been breaking.  Ian King, over at TwoHundredPerCent, has been doing an excellent job in keeping the story up-to-date with added interpretation and comment, but even he seems to have grown just a tad weary of following the wilder intricacies of the competition to buy the club.  Arguably the only ray of sunshine for Wrexham fans has been the fact that they have been spared Stephen Vaughan as owner.

While there is a significant difference between the two clubs in terms of who is selling the club – an Administrator on the one hand and (how on earth do I summarise the situation at Wrexham?) let’s just say a sale by the latest of a series of ‘benefactors’ – what is particularly striking is an obvious similarity.  When it comes to the sale of a club, it is the club as ‘company’ that is for sale, and any concerns for the club as ‘construct’ take a seriously back seat.  [If you are not clear about the distinction I am making, see an earlier posting.]  There is, of course, an inevitability about this, but surely there should systems in place to ensure that the continuity of the club as ‘construct’ is not compromised through a bad change in club as ‘company’.

At present there are two checks in place – the ‘Fit and Proper Person Test’ and the handing over of the ‘Golden Share’.  There are so many examples of the repeated sale of a football club – think Portsmouth, with four owners last season, a period in Administration, and still an uncertain ownership for the future – that it is obvious that these two checks are woefully inadequate.  Amazingly the FA set up a committee (no, I know that’s not amazing, but bear with me) back in 2003 to sort out an effective Fit and Proper Person Test (1), and I take it as self-evident that we do not yet have one.  Similarly, the ‘Golden Share’ is normally handed on to new owners with little thought to the wellbeing of the club as ‘construct’.

Football governance, and its current inadequacies are very much on the agenda, and I live in hope of serious change.  (My submission to the House of Commons Select Committee is downloadable here; all submissions are available here.)

Increasingly I am minded that the introduction of a rigorous system of club registration is the reform we need to improve football governance.  One of the major difficulties I see for any reform is the issue of transition to a new system.  For example, advocates of introducing the Bundesliga system with ’50 + 1′ fan ownership seldom explain just how the current share holdings of the club will be transferred to fan ownership – which 50%?  A club registration system can be designed so that the well run club need make little or no changes to become registered.  Badly run clubs would have to reform, and, when a club changes hands, the new ownership would be placed under close scrutiny.

It’s just a pity that any reform will come too late to remove the current worries of Plymouth Argyle, Wrexham, Portsmouth, etc., etc. fans.  All they can do is pray is that their club as ‘company’ is delivered into ethical and benevolent hands, and that their club as ‘construct’ survives without, in the worst case scenario, an ‘Accrington Stanley, Aldershot, Maidstone United or the many more recent non-league examples’ discontinuity and the need for resurrection.  Nobody wants another club to face the need for resurrection, but, at present, the checks in place make it likely that some club will have to go through that drastic process in the future.

If club registration is to be effective, it is vital that the body which oversees it has teeth.  An unreformed FA would not be my choice.  In the current climate though, the dream of a reformed FA is perhaps not totally unrealistic.

UPDATE – 29 March 2011

Interesting piece by Matt Scott of The Guardian here.  All four strands he suggests will be incorporated into a Football Governance and Major Events Act are long overdue, but why just football?

Posted in Fit and Proper Person tests, Football Association, Governance | Tagged: , , | 10 Comments »

The Portsmouth Soap: Episode 94

Posted by John Beech on August 29, 2010

In what seems to be now a tradition, my being abroad for a week coincided with yet again a bizarre development at Fratton Park.  On Tuesday The Sun revealed that “Lever’s Pomped up for buyout. PORTSMOUTH are wanted by whizkid tycoon Thomas Lever. The 21-year-old Lamborghini-driving son of a wealthy Manchester businessman and local councillor is in advanced talks to buy the Championship crisis club” (1).

On Thursday The Knutsford Guardian had a slightly different spin on the story: “THE son of a bankrupt former Knutsford councillor has put together a £25m takeover bid for Portsmouth Football Club…  His father David was made bankrupt on July 5 at Manchester County Court” (2).  It would not appear that father David is necessarily down to his last bawby though.  According to a report of 14 July in the same newspaper, the bankruptcy arose as a result of a dispute over payment for the framing of 100 pieces of memorabilia by an international art services company (3).  David Lever had paid the company £10,000, but had not subsequently paid a further £3,500 although ordered to do so by a County Court judge in March, prompting the art services company to raise bankruptcy proceedings.

I don’t know why, but I get just a hint of déjà-vu about this in the Pompey context.  Presumably David Lever is free to leave Knutsford without fear of arrest on gun-running charges though.

The pressure is no doubt on Administrator Andrew Andronikou to find a buyer.  His CVA is based on a business model that presumes Portsmouth will stay in the Championship for the next five years, but the thread-bare squad have faced a dismall start to the season, with the club lying joint bottom of the Championship (with, by coincidence, Milan Mandric’s Leicester) after four games.  But will this lead to an ‘any port in a storm’ approach?  In my opinion, having the 21-year-old Lamborghini-driving son of a wealthy (but legally bankrupt) businessman as the club’s new owner would be (let’s be polite) a sub-optimal outcome.  But the actions of previous owners have led the club into this present position, where simply selling to the one potential purchaser is the only option for an Administrator.

There is of course the new toughened-up Owners & Directors test, which replaced the old Fit & Proper Person test, that would have to be passed.  This case would certainly show whether or not the new test has any more teeth than the old one.  It would be interesting to know the thoughts of David Lampitt on the proposal – he is of course Portsmouth’s recently installed Chief Executive, but was formerly the FA’s Head of Financial Regulation.

Surely a time for new script writers of this particular soap, and a re-think of the plot.  The club does not need a re-run of a previous story line, especially one which led to the shambles the club now finds itself in.  Mind you, I’m not holding my breath.


PORTSMOUTH UPDATE - 11 September

Portsmouth did not get their golden share from the Football League yesterday because of incomplete paperwork (A).  David Lampitt explained that the end of the transfer window had made this problematic.  He expects this to be done within the next week.

The delay may have implications – it gives Tom Lever extra time to put his bid for the club together.


PORTSMOUTH UPDATE - 13 September

Thomas Lever is reported as falling out with Chris Dailly of Jumbo Bridging with whom he had been in talks about funding (B).  ‘Soap’ is definitely the right word for the Pompey saga.

Posted in Benefactors, Ethics, Fit and Proper Person tests, Football League, Governance, Insolvency, Ownership | Tagged: , , , , , , | 4 Comments »

Setting up own goals

Posted by John Beech on August 17, 2010

I’m not one given to railing against foreign owners in principle, providing that is that they are not absentee owners.  Lately though we seem to be finding foreign owners attracted to English clubs who just do not seem to have an appreciation of what is going on English football, and unaware of the obvious mistakes that can be made.  And no, I’m not just thinking Sulaiman Al Fahim and Ali Al Faraj.

At Leicester City, we have new Thai owners (1).  The head of the incoming consortium (although it is his father’s money that is at stake), 25 year-old Aiyawatt Raksriaksorn (apparently known as ‘Top’) has announced that “I believe the club have the opportunity to compete in the Championship and go to the Premier League next season“.  Oh dear, the dreaded A-word – ambition.  His father has said ‘they did not want to make money out of the club, but provide the cash to ensure they got into and stayed in the top tier of English football’ according to the report.  In another report (2), he is “committed to funding new players to get the club into the Premier League”, without raising ticket prices.  Surely at least a whiff of financial doping there, and either an ignorance of, or a refusal to comply with, the incoming UEFA Financial Fair Play protocol

Meanwhile at Blackburn, Ahsan Ali Syed,through his company Western Gulf Advisory, is making his pitch to buy the club from the Trustees of the late Jack Walker.  He claims “he does not want to buy the club for its business potential but to fuel his “passion” for football” (3).  He is reported as saying ‘he wanted to give manager Sam Allardyce a transfer kitty of up to £100million‘.  Irrespective of the ambiguous term ‘give’, this is blatant financial doping, and again the intent is flout the Financial Fair Play protocol.

This kind of action is not going to do the game any good.  Same old, same old ‘benefaction’, but on a larger scale.  If either press on regardless, there will be tears before bedtime, although no doubt having managed to get the respective fans greatly over-excited on the way.

What the new Owners & Directors Test needs is a section testing wannabe owners on the provisions and timescale of the Financial Fair Play protocol.  It would avoid an awful lot of false hope.

Posted in Benefactors, Ethics, Fit and Proper Person tests, Ownership | Tagged: , , , | Leave a Comment »

Developments at Wrexham

Posted by John Beech on March 30, 2010

Readers may recall that I have blogged on the farcical attempts of Wrexham’s owners to paralyse legitimate (as well as objectionable) discussion on the RedPassion message board (see RedPassion muzzled).  Excellent news – Gamlins, the solicitors acting for Geoffrey Moss, have now been “instructed to unequivocally withdraw all legal threats” to the board Moderator on fulfillment of two conditions (see 1 for an agreed statement).  The two conditions had already been agreed by the message board’s Moderator a few weeks ago.  Good to see common sense prevail, with hopefully the positive outcome of improved communication from the club.

In an entirely unrelated event, previous owners of the club, Mark Gutterman and Alex Hamilton, faced a private action in court today (2) brought by the Department of Business, Innovation and Skills (BIS).  Gutterman has agreed to being disqualified from becoming the director of any company for a period of seven years (3), and thus automatically fails the Fit and Proper Person Test.  Hamilton is however fighting the action, so ‘watch this space’ for further news.

Gutterman and Hamilton had taken over the club in 2002 “with the sole intention of making as much money as possible for themselves from the land on which the Racecourse Ground stands” (4).  Their plans to sell off the club’s ground for supermarket development failed, but not before the club had been placed in Administration, with the unfortunate distinction of being the first club to be docked 10 points for this.

A double dose of good news for a change!

Posted in Assets, Ethics, Fit and Proper Person tests, Stadium | Tagged: , , , | Leave a Comment »

Whatever happened to due diligence?

Posted by John Beech on February 13, 2010

In much the same way that you would get a surveyor’s report as a matter of course when considering buying a house, so you would ‘conduct due diligence’ if you were considering buying any company, especially so, I would have thought, if the company happened to be a football club.  It seems that due diligence is going out of fashion in the football sector.  Let’s look at just two recent examples:

  • Notts County
    Way back on 5th January (1) the club’s debts were reported to be £1.5m. When Ray Trew bought the club on Thursday, the same figure was being reported (2). Today new Chief Executive Jim Rodwell says the figure could be more than £5 million: “We will not know until we have had a close look over the next three to four days. We were asked to step in to save the club so we could not take the due diligence process as far as we wanted to before we made the commercial decision to buy the club.” And that is after Sven Goran Eriksson has agreed to kiss goodbye to the £2.5m he was still contracted to earn.
  • Birmingham City
    Carson Yeung, the new owner, called in the police over what he saw as financial irregularities (3) after he had bought the club.  In a statement it was announced that “Due diligence is proceeding and this is really the first episode” (4).  As previous owner David Sullivan was swift to point out of Yeung helpfully: “He merely asked us about ten questions and failed to bring in accountants or auditors. It’s a bit like me buying a house and failing to conduct a survey and then moaning when the damn thing collapses” (5).

Now, if new owners are so casual when buying a club, and the various Fit and Proper Person Tests are as difficult to pass as getting a Provisional Belgian Driving License, perhaps the football sector could learn from the House Information Pack you now have to provide when selling a house, or the 12 months MOT that you would expect to get when buying a second-hand car.  Perhaps what we need in English football is not an ineffectual Fit and Proper Person test, but rather a Fit and Proper Football Business Licence.  Without this License, the club’s owner wouldn’t be allowed to hold the current ineffectual ‘ticket’.

It could be a requirement that every football company should hold this License every summer in order to be allowed to compete the following season.  Given the FA’s penchant for a ‘tick box’ approach, the application for the Licence could be very simple and might look something like this:

  • Who actually owns the company, and the ultimate parent company? (Well, OK, perhaps a bit tricky for, say, Leeds or Portsmouth)
  • Has your largest shareholder ever been to see the club play?
  • Can your largest shareholder locate your club within 50 miles on a blank map?
  • Are you up to date with all your tax payments?
  • Have you paid all your football creditors?
  • Can you produce a written guarantee that your ‘soft’ debts will not be called in within the next five years?
  • Is your wages-to-revenues ratio less than 60%?
  • Do you have a fans’ representative on your board?
  • Do you have a Plan B for when it all goes pear-shaped on the pitch?  (Please attach)

To hold the Licence, you must be able to answer the first question, and answer ‘Yes’ to all the others.

OK, it’s all a bit back-of-a-fag packet and needs some honing – suggestions are welcome.

But seriously, unless English football starts to put its own house in order and reign in the more absurd excesses that derive from the dysfunctional and unsustainable Benefactor model of football business, it will continue like a Toyota with a loose floor mat heading for the UEFA brick wall of the Financial Fair Play protocol (see postings passim).

Posted in Fit and Proper Person tests, Governance, Insolvency | Tagged: , , | 5 Comments »

Portsmouth: the continuing soap

Posted by John Beech on February 7, 2010

One of my friends, who is also a colleague and a fellow Pompey fan, always says that supporting Pompey reminds him of a John Cleese quotation: “I can cope with the despair. It’s the hope I cannot handle“, which reflects rather well my personal feelings at the moment.

The club of course is facing its fourth owner this season, Balram Chainrai. The circumstances of him acquiring ownership are unusual in the football sector, but certainly not unknown in the wider business world – the club had failed to repay a loan to Chainrai, and he exercised an option in the contract of the loan to claim ownership (of 90% of the shares in the club) (1). Unlike his predecessors he has readily admitted that he has no interest in ownership and is looking to sell the club.

Not surprisingly this refreshing honesty has caused ructions. A representative group of five supporters have met with the Premier League to discuss their concerns (2), and the Supporters Direct website reports the meeting (3) thus:

Fans from the Pompey Supporters Trust and SOS Pompey campaign were today promised a ‘detailed investigation’ into the new owner of Portsmouth Football Club during a lengthy meeting with Premier League CEO Richard Scudamore and Mike Foster.

The League promised that Mr Chainrai will face a detailed investigation into his ownership of Portsmouth FC including a face to face interview with the Premier Leagues Business Intelligence Specialists.

The meeting, which followed correspondence from the Trust to the League expressing serious concerns about the Club less than a week ago, was described by the Trust as ‘highly productive’, with the Premier League announcing a number of specific measures it intends to take to ensure the effective regulation of Portsmouth Football Club in future, including the right to intervene and administer the club should it prove necessary.

In addition, the Premier League will consider our suggestion of the possibility of onsite day to day scrutiny of Portsmouth’s operations for an interim period.

The Trust went on to say “We are reassured that the situation at Portsmouth Football Club will continue to be a matter of the highest priority within Premier League headquarters. Mr Chainrais’ ownership of Portsmouth Football Club will face an unprecedented level of scrutiny and any further failures to fulfil the ordinary obligations of a Premier League club will bring swift and immediate action.”

My heart welcomes these reassurances emanating from the Premier League, but my head has a number of problems with all of this:

  • To submit Chainrai, and Portsmouth, to particularly strict scrutiny suggests that there is some flexibility in the application of the Premier League rules & regulations and their Fit & Proper Person Test.  This is simply unacceptable.  In any case, if the Premier League does act particularly rigorously, it leaves them open to legal challenge from both Chainrai and the club itself.
  • It is not the application of the rules & regulations and the Test that is at the heart of the matter – it is about the effectiveness, the actual strength and weakness, of those rules & regulations and the Test in particular.  Clearly they are deficient, and getting excited about how rigorously they are applied is simply avoiding this, the real issue.
  • It is a case of shutting the stable door after the horse has bolted.  If a club’s board is to expose itself to the risk of losing ownership through defaulting on a loan, it is then, when such a loan contract is signed, that the Premier League should be scrutinising the Fitness and Properness of the potential new owner, not when the loan is actually defaulted on.

The whole process seems to have drifted into a dysfunctional approach.  If Chester City had taken a loan from the Bank of England, and the latter had acquired ownership of the club through the Vaughan family failing to keep up repayments, would the Conference be focusing their attention on the financial suitability of the Bank of England as a club owner?  (Actually, probably best not to think about the answer to that one, but I’m sure you get my drift!)

If Chainrai is quickly successful in finding a new owner, he will become a tiny footnote in the club’s colourful ownership history.  It is Ali Al Faraj who will be remembered, and how he somehow passed the Fit and Proper Person Test.  It is the next owner who worries me – Premier League, please help me to cope with the hope by doing a fit and proper job of scrutiny with him.

Posted in Fit and Proper Person tests, Governance, Ownership, Premier League | Tagged: , , , | Leave a Comment »

More on Portsmouth’s woes

Posted by John Beech on December 20, 2009

Since my last posting on Pompey (1), not a great deal has happened off the pitch it would seem.  On the pitch, Liverpool have been defeated, with the media reporting this as ‘Rafa this’ and ‘Rafa that’, largely failing to give credit either to the Portsmouth players or to Avram Grant, notwithstanding the statistics for the game (2), which suggest an impressive performance.  However

David Hurley of the Portsmouth Evening News has highlighted the fact that January will prove a critical month for the club (3). With debts estimated at £60m, the club will face demands for:

  • £10m by way of football creditor payments to other clubs (including those due to Watford [see postings passim]);
  • £9m due to previous owner Sacha Gaydamak, disputed as to whether this owed by the club or by Sulaiman Al Fahim personally;
  • repayments due to banks.

While the club may be happy to focus on the positives of the result against Liverpool (4),  they are becoming increasingly mired with legal actions against past and present key personnel:

  • Peter Storrie faces prosecution by HMRC (5), a case which Storrie believes is ‘seriously flawed’ (6);
  • former manager Harry Redknapp faces prosecution by HMRC (7) over matters which relate to his days at Pompey, but which Redknapp dismisses as ‘farcical’.

We shall have to wait and see whether their optimism is justified, and, if it isn’t, what the ramifications for the club are.

Meanwhile, David Hurley also reports that “Israeli lawyer Daniel Azougy is now in charge of Pompey’s books… Reports that Azougy has [sic] convictions for fraud has only added to the uncertainty surrounding the club.

Paul Jiggins of The Sun is more specific: “Disgraced lawyer Daniel Azougy is controlling the club’s finances, despite a string of convictions for fraud dating back eight years. He was found guilty of FOUR counts of embezzling client funds in Israel in 2002.  He was sentenced to five months in prison – but did not spend any time behind bars as he was allowed to do his time in community service instead.  Azougy was also banned from practising law by the Israeli Bar Association for FOURTEEN YEARS.  Then in March this year, Fratton Park’s new finance man was sentenced to two months’ community service and a year’s probation – and fined £25,000 – for a securities fraud resulting from a dodgy share transfer back in 1999.Azougy was found to have lied to the Israeli Stock Exchange bosses over the deal.  He got off with a light sentence because the offence happened 10 years earlier.” (8)

It would appear that the ineffectual Fit and Proper Person test doesn’t in any case apply to him because, as Jiggins reports the club as saying, “He is working for the owners on finance, but he hasn’t got an official title.” Oh well, obviously there’s no problem there then.

Clearly Pompey is in for a turbulent month.

Posted in Ethics, Fit and Proper Person tests, HMRC, Insolvency, Ownership | Tagged: , , , | 2 Comments »

More high drama at Weymouth

Posted by John Beech on November 24, 2009

A press conference scheduled for last night was postponed, and the Dorset Echo has carried two reports today (1 and 2) which provide some insight, if not full transparency, on what is going on.  Cancelled press conferences are a bit of a Weymouth thing – back in March one was cancelled when Stephen Beer, who was expected to be announcing a £300,000 investment in the club, was rushed into hospital with a suspected stroke just thirty minutes before it was due to take place (3).

So far as I can tell, the Ryan/Beasant offer (see 4), which had looked set for confirmation, had in fact been rejected, the alternative George Rolls bid, at least according to George Rolls, former Chairman of Cambridge United, having been accepted instead.  This, it would seem, was to be announced at last night’s press conference, which was cancelled at one hour’s notice.

Derek Bish of the Dorset Echo suggests that pressure had been put on the board by Malcolm Curtis, a former director currently trying to recover money owed him by the club, by saying in an email that he would demand immediate repayment of his £221,000 loan if Ryan and Beasant were allowed to take over the club.

Ryan confirmed late this morning that the directors had placed unacceptable conditions in his way (get rid of Beasant? pay off Curtis? [JB]), thus in effect rejecting his offer, adding “Consequently our offer was rejected in favour of George [Rolls]‘s“.

There is no confirmation from the club that Rolls’s bid has been accepted, the club website having gone very quiet.  There does not seem to be a third alternative other than Administration, which the board has tried desperately to avoid.  Definitely one to watch.

Posted in Debts, Fit and Proper Person tests, Insolvency, Ownership | Tagged: , , , | 2 Comments »

Why Weymouth should be worried

Posted by John Beech on November 21, 2009

Just how brazen can you get in flouting the Fit and Proper Person test?  See my last posting for some suggestions.  There is however a new contender.

Latest on the takeover at Weymouth from the Dorset Echo includes the following gem: ““We are on course to fulfil our due diligence and will make a full statement on Monday on our decision, which is to carry on and take the club on,” said …” (1)

The name that follows is not that of Chris Ryan, presented as the “prospective new owner” (2), but that of Steve Beasant, who the Echo euphemistically describe as ‘Advisor’ to the Ryan consortium.  Beasant was declared personally bankrupt less than a year ago (3) following the compulsory winding-up of two of his companies, leaving debts running into millions of pounds.

Beasant happily speaks of ‘we‘, and indeed the club itself referred to the investment proposal as having come form “Chris Ryan, Steve Beasant and a group of un-named investors” (4, 13 November).

The Ryan consortium would present Beasant’s position as “purely a consultant on behalf of the consortium” (5), which is hardly compatible with Beasant’s use of ‘we‘ mentioned above.

If Beasant is not “a person who exercises or is able to exercise direct or indirect control over the affairs of the Club” (from the FA’s own rules on who the Fit and Proper Person test applies to), then what on earth is he?

Once again the  Fit and Proper Person test proves itself to be absurdly ineffective.  It seems anyone can circumvent it by describing themselves as a ‘consultant’ or an ‘advisor’ and owning less than 30% of the club.

If the FA does not act swiftly to plug the obvious loopholes in the test, it will be seen as an object fit for proper ridicule. It is in serious danger of bringing the game into disrepute, for want of a better expression.

Meanwhile, unless some action is taken before the Monday deadline for finalising the sale, Weymouth will be subjected to the business practices of someone whose recent track record is hardly one to inspire confidence.  Hasn’t the club suffered enough?

Posted in Fit and Proper Person tests, Football Association, Governance, Ownership | Tagged: , , , | 1 Comment »

Should Steven Vaughan be worried?

Posted by John Beech on November 18, 2009

Well, obviously he should about the future of Chester City, but I was thinking rather more of the implications of his signing an undertaking banning him from acting as a company director until the year 2020 (1).  The specific implication is that “may no longer act as either an active or inactive director, or exercise control over an individual who is a director, of any company” according to Companies House.

Although Vaughan had been a director of Chester City Football Club Ltd, the company which went into Administration in May, he is not a director of Chester City FC (2004) Ltd, the company which now owns the club.  He is, however, the owner of Chester City FC (2004) Ltd.  We are thus moving into the shadowy world of what is known as a ‘shadow director’, defined as a person upon whose instructions the majority of the board of directors of a company are accustomed to act.

It is because of the potential existence of shadow directors that expressions like “exercise control over an individual who is a director” appear.  Indeed, the FA Fit and Proper Person Test rules and regulations include the following within the definition of a director of a football club:

  • a person in accordance with whose directions or instructions the persons constituting the management of the Club are accustomed to act; or
  • a person who exercises or is able to exercise direct or indirect control over the affairs of the Club. For the purposes of this definition, a person shall be regarded as being able to exercise direct or indirect control over the affairs of the Club in particular but without prejudice to the generality of the preceding words if that person owns or is entitled to acquire 30% or more of the share capital or issued share capital of the Club or the voting power in the Club.

It was because of this last sentence that the FA has just required Vaughan to reduce his shareholding (2).  It is the rather more open to interpretation first bullet point that there will be dispute.

A look at possible precedents paints a rather one-sided likely outcome.

I’ve blogged before on Spencer Day (formerly Trethewey), ruiner of Aldershot, convicted fraudster (six counts, plus one of obtaining credit while bankrupt), and now owner and team manager of Chertsey Town FC, and also on the brothers Muduroglu.  Sami, disqualified from being a company director, used the cover of his brother Eren, who lived in Turin, as Chairman to run Fisher Athletic into the ground.

There are other examples of driving a bulldozer through the spirit of the Fit & Proper Person test.  At Salisbury City, Peter Yeldon, who had been severely reprimanded and fined for malpractice by the Professional Standards Office of the Institute of Chartered Accountants in England and Wales (3), served as a director.

Reading through my files when preparing yesterday’s posting, I was reminded of the case of Mike Diamandis at Swindon Town.  He “supplied management and financial support on a day-to-day basis” by the club’s own admission (4) and, in meetings with potential investors, was “at the forefront of these discussions” (5).  He attended meetings alongside the board members (6).  The BBC described him in december 2006 as “the man who – behind-the-scenes – has effectively run the football club for the last five years” (7).  Diaminidis was not a director of the club – he had been disqualified from acting as a company director in 1992 (8), and had been “in breach of a director’s disqualification between 1997 and November 2004 which later became the subject of criminal investigations” (9).  The authorities seemingly did not see him as “a person in accordance with whose directions or instructions the persons constituting the management of the Club are accustomed to act“.

Vaughan, it would seem from precedent, does not have much to fear.  Once again, the Fit and proper Person test proves to be neither fit nor proper.

Perhaps the pressure has got to him nonetheless.  The Liverpool Daily Post carrys a report that Chester City is in talks with a consortium interested in buying the club.  This was revealed by Chairman Ian Anderson rather than the ‘presumably about to be ex-owner even if the consortium doesn’t buy the club’ Stephen Vaughan.  He was, I would imagine, too busy arranging the transfer of shares, not that he is inexperienced in the procedures, having once famously and quite openly sold his Chester shares to a local painter and decorator and promptly bought them back again once a tie against Barrow had been played, Vaughan still being the owner of Barrow at the time (10).

This latest move against Vaughan is not really a scalp, maybe a short-back-and-sides, but definitely not yet a scalp.

Posted in Fit and Proper Person tests, Football Association, Football Conference, Governance, Ownership | Tagged: , , , , | 2 Comments »

Insolvency overview

Posted by John Beech on November 15, 2009

Three weeks is a long time in football management – it was only on 25 October that I posted my last overview.  Previous ‘overviews’ can be accessed by clicking on the ‘Overviews’ tag at the top of the page.

With a number of clubs things have become clearer, but for many the confusion has just changed to a new confusion.

  • Accrington Stanley
    The absurd brinkmanship that saw the club rescued on the footsteps of a court has seen Ilyas Khan come in as non-executive Chairman, but with ex-Chairman Dave O’Neill effectively in day-to-day control as Managing Director and Head of Operations.  Khan is now talking of the Championship in three to five years (1), not suggesting a great degree of realism, and seems to have forgotten all the talk of being pro-fan – certainly no indications of any fan directorships.  The current crisis is over, but I’m not encouraged at the prospects for the longer term.
  • Bournemouth
    Bournemouth won my Soap Star of the Year Award last season and obviously are reluctant to give up the title.  Eddie Mitchell announced last Monday that £80,000 had been paid to HMRC (2) and the remaining £70,000 would be paid by today (although, as I write, that second payment had not been confirmed).  Where this money has suddenly materialised from is not being revealed, although Mitchell says it is being “paid through hard work – not through loans or anything else. It is hard work which usually does it”, whatever that means.
    A case brought by Jon Piper against Vice Chairman Jeff Mostyn personally over a loan of £30,000 has been dismissed, but he is taking action against the club over a different loan.
    Meanwhile manager Eddie Howe is making himself more and more attractive to other clubs by sustaining moss impressive performances on the pitch.
    Definitely one with legs.
  • Bromsgrove Rovers
    The club has been bought from the Administrator by Mike Ward (3), together with as yet unnamed partners, but these do not include Tom Herbert, former Chairman.  The purchase has yet to be approved by the FA, and Ward is not make any announcements at this stage on his strategy.
  • Chester City
    See postings passim.  The club, or rather the company, its owner and the board, continue to make a mockery of football governance.   Owner Steven Vaughan is, it would appear  no longer a ‘fit and proper person’ following being banned from acting as a company director, or in any way controlling a company as a result of his involvement in a VAT scam while a director of Widnes.
    Vaughan however “indicated to The [Chester] Chronicle that his disqualification will not effect the club as he has no part in running it” (4).  As if!  An FA spokesperson said to the Chronicle: “All I can say at this stage is that we are aware of the decision and that we will be considering it in line with the requirements of our Fit and Proper Person Test”.
    Meanwhile the Conference have given Vaughan Chester another extension to paying their football creditors! (5)
    The club website is its usual informative self – the most recent news item is ‘Youth team coach required’, posted as recently as 6 October.
    Quite why the FA and the Conference both continue to pussy-foot around is far from clear.  Their lack of action is setting very dangerous precedents.  Frankly, phoenixing as AFC Chester is becoming the only viable way forward.
  • Darlington
    No developments of significance, but new owner Raj Singh is busy trying to get sponsorship from local businesses (6).
  • Halesowen Town
    See postings passim. The day of decision by the creditors on who of two rival bids has come and passed, with the meeting postponed.
    So, an unusually quiet period of activity for the club by recent standards, but Yeltz fans must just be wishing that the whole sorry episode comes to a definitive conclusion.
  • Hyde United
    The club has survived its immediate demise, but a debt of £50,000 to HMRC remains (7).  In what way the board is going to change its business model in order to meet this remaining debt has not been announced, but apparently it allows new signings (8).
  • Ilkeston Town
    Back in July, the club faced a potentially serious problem with the personal bankruptcy of benefactor Chet Whyte (9).  Latest news is that a deal for the Whyte family to sell the club to a group of Nottingham businessmen has collapsed (10).
  • King’s Lynn
    Not much to report here other than new signings (11). The deadline to pay HMRC £65,000 remains 25 November.
  • Lewes
    The club was given a three-month adjournment on 3 September  of an HMRC winding-up order, and have to pay off the outstanding debt at £10,000 a month.
  • Margate
    By way of a change from developments, or lack of them, at other clubs, some unmitigated good news – the club has cleared its debt to HMRC in full, having raised money through a successful shares issue (12).  Excellent news!
  • Merthyr Tydfil
    The Supporters Trust, now running the club, have had to make some tough decisions.  Wages have been cut by 50% (13) in the light of unexpected debts of £40,000 to the FA, Merthyr Tydfil Borough Council and the Administrator, and disappointing revenues.
  • Northwich Victoria
    Still no CVA agreed.  As a result, the club cannot yet receive the financial benefits of their successful cup run, thought to be £43,000 so far (14), with an FA Cup Second Round tie at home against Lincoln to come.
  • Ringmer
    Still a news blind spot, I’m afraid. Unless, of course, you know better – any information would be gratefully received.
  • Salisbury
    Discussions between the would-be consortium (15), the Administrators, the Conference and HMRC are ongoing, with the Administrators “still confident that agreement can be reached” (16).
  • Southend United
    See postings passim, and The continuing Southend saga in particular.
    The matter remains closed apparently, at least to Chairman Ron Martin, even if the mystery of where the money came from remains unresolved, and there is no indication of how a repeat of the recent fiasco will be avoided.
    Presumably the move from Roots Hall remains ‘transitional’ and, at least to Chairman Ron Martin, there was ‘no financial crisis’ (17).
  • Stockport County
    The Administrators remain confident that ongoing discussions will lead to an exit from Administration (18).  We shall see.
  • Weymouth
    See postings passim.
    Ian King recently described the club as “one of the ongoing financial basket-cases of the last three years in non-league football” (19), and with good reason.  I see them as a seemingly never-ending Western, with an ever-changing cast of ‘good guys’ and ‘baddies’.  The end may yet be nigh however.
    To cut a complicated and ongoing story short, here are the most salient points.
    On 28 October, the club announced their intention of appointing Administrators ( a pre-Administration legal move) (20).  This prompted two expressions of interest in buying the club.  One was led by Chris Bryan, local businessman, and involves one Steve Beasant, the other being led by ex-Cambridge United chairman George Rolls.  However the deadline was passed without either group formalising a deal.
    Director Paul Cocks then announced that the club was “under an obligation to take formal insolvency proceedings” (21).
    The Ryan offer had been one of £2 (sic), but has subsequently been revised upwards.  Beasant cannot be one of the directors as he is a property developer (no, that’s not yet a reason for failing the Fit and Proper Person test, although it probably should be, but bear with me) who was declared bankrupt at the end of last year (22).  This hardly augurs well.  Ryan has been putting the case for his bid on the Weymouth Independent Fans Forum on the thread OUR OFFER under the particularly irritating pseudonym of ‘True Facts’ – a tautology since there cannot be a fact that is not true. Cocks has also been posting on the forum (23), and on the club website (24).  He resigned as a director on Friday night, although his resignation has yet to be accepted. News on the club website may dry up if his resignation is accepted.
    All of which leaves the club in an unholy mess.

Other clubs on my radar screen are the Premier League trio Hull, Portsmouth and West Ham, for well publicised reasons, together with a number of Football League clubs who I have mentioned in previous postings, now plus Watford (25).

Posted in Debts, Fit and Proper Person tests, HMRC, Insolvency, Ownership | Tagged: , , , , | 23 Comments »

Chester City drinking at last chance saloon

Posted by John Beech on October 21, 2009

It was less than a fortnight ago that I was blogging on the Stephen Vaughan approach to management, and some of the odd theories he proposed on how to run a club (1).

The Conference is now running out of patience with the way Chester City is being run.  This afternoon they published this blunt statement:

In accordance with Membership Rule 11 – for the non-payment of football creditors – Chester City FC have been placed under an immediate player embargo, in as much that:

“1. Chester City FC has not complied with the terms of the compromise agreement set by the Football Conference to allow the club to participate in the competition at the commencement of the current season; and further to that fact, the club has been given 7 days, operative up to 5.30pm 26th October 2009, in which to meet the said payment terms of that agreement, otherwise they face the threat of expulsion from the Football Conference.

“2. Chester City FC has failed to pay monies owing to Wrexham FC for away ticket sales relating to their fixture played on 27th September 2009 and further to that fact, the club has failed to meet a 7-day payment deadline imposed by the Football Conference.

“3. Chester City has failed to pay Vauxhall Motors FC monies owed in relation to the loan of Paul Taylor, which should have been met no later than 14th October 2009.

“The Football Conference will not be making any further statement on this matter at this time.

So, pay up by Sunday evening, or be expelled from the Conference.  Quite where they could go if expelled mid-season is unclear.

Not paying football creditors is of course considered to be the ultimate sin by the governing bodies – it led to Halesowen Town being banned by the FA in July (2) under Morell Maison (who, incidentally, has been arrested on suspicion of fraud in an investigation “in relation to various allegations concerning matters in relation to Halesowen Football Club” [3]).

This all needs to be seen in the context of Chester City coming out of Administration on 26 May via a CVA which saw creditors being paid 15p in the pound (4).  It has to be asked – was allowing this a wise decision on the part of the Administrator, Martin Shaw of Refresh Recovery?  Refresh Recovery are relative newcomers to the football Administration scene, but also provide the Administrator of Northwich Victoria.

It must also raise questions regarding the Fit and Proper Person tests, the FA variant being the one applicable to Conference clubs.  The position of Ian Watmore, Chief Executive of the FA, at least as he expressed at the Supporters Direct Conference (5), will ensure that the vital issue of the harmonisation of the variants of the Test is addressed.  However, the fact that the pass rate is similar to that of, say, O Grade Breathing, does not seem to be a matter of concern to him.

As for Stephen Vaughan at Chester City, surely it is time for him to bow out before the club hits an ultimate low.  However, unless a miracle happens by the end of this week, he may have no option but to put the club back into Administration, a bigger blow to the long-suffering club than to him!  It’s time the FA addressed this paradox – we saw the iniquity of punishing the club rather than the perpetrator at Luton.

On the present evidence, I have to say it doesn’t look likely that any changes are imminent.

Posted in Debts, Fit and Proper Person tests, Football Association, Football Conference, Governance, Insolvency, Ownership | Tagged: , , , , , | 4 Comments »

 
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