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! Football Finance

Developments at Chester City

Posted by John Beech on June 18, 2009

The latest developments at Chester City seem to have attracted surprisingly little comment, let alone criticism. Regular readers will recall that Chairman Stephen Vaughan took the club into Voluntary Administration a month ago (1).

Former player David Jones got as far as requesting due diligence with the Administrator, but did not reach a deal to buy the club (2). Then on 29 May Stephen Vaughan revealed his cunning plan – he would buy the club back from the Administrator. He argued “… if I take the club through a CVA (Company Voluntary Arrangement) the debt will be £290,000. But if the club goes to another bidder the debt will be £4,290,000” (3). In a nutshell, he was prepared to write off the debt the club owed to him if he was allowed to buy it back, but not if anyone else bought the club.

To no-one’s surprise there were no new bidders.

At a meeting with creditors on 11 June, a CVA was agreed. The club was to bought by the slightly perversely named Chester City 2004 Ltd (owned by the Vaughan family) – surely that should be Chester City (2009) Ltd – and creditors to be paid 15p in the pound over a four year period (4). The shuffling around of share ownership is not unknown to Vaughan. In 2001 Chester were drawn against Barrow in the FA Cup and Vaughan happened to own both clubs. To allow the match to go ahead, Vaughan sold his Barrow shares to a local painter and decorator three days before the match and promptly bought them back two days after the match (5).

With remarkable good luck in at least one sense, Chester had not only been relegated a tier, but from the Football League to the Football Conference. Unlike the case of Leeds United, where Ken Bates bought the club back from the Administrators, Chester City would need to placate a new governing body.

The following day the Football Conference held their AGM and decided to accept Chester City with a 10 point deduction for going into Administration, news which appeared on the Chester City website that very afternoon (6) but, as I write, has yet to be announced on the Conference website.

So far the only criticism I have found has come from Woking Chairman Shahid Azeem (7). He said “For a club to have £7m worth of debts and then go into administration, only for the same chairman to buy back the club at 15p in the pound, including all the assets, is wrong.We were told they hadn’t broken any rules though because they were not a Conference club until they were accepted at the AGM on Saturday”. This seems a strange a logic when Chester will start the season with a ten point deduction for going into Administration, which also occurred before they went into the Conference!

It should be noted that Woking had a vested interest in Chester’s application to join the Conference – Woking were relegated at the end of this season. It reminded me of Hereford United’s Chairman Graham Turner’s condemnation of Stockport County (8), who went into Administration but survived in League 1, unlike Hereford who were relegated.

What bothers me in all of this is the lack of any criticism, Azeem’s excepted, of Vaughan’s action. The Chester Evening Leader, apparently suffering from short-term memory loss as to how the club came to be in its present situation, has billed Vaughan as ‘CHESTER CITY SAVIOUR’ (9). Vaughan himself is quoted as saying “I would expect a big influx of new players in the next seven to 10 days.” (10) and “We’re coming into the division in a healthier situation financially” (11). It’s as if the last month had never happened.


5 Responses to “Developments at Chester City”

  1. […] were some guilty verdicts (3). Back in the nineties, Stephen Vaughan, now at Chester City (see 4 and 5) was investigated with respect to the laundering of drug monies, but no charges were brought […]

  2. […] around the family has of course been in the news recently with the Vaughans of Chester City (7). Is the FA happy with these developments? Will they intervene? I’m not holding my […]

  3. John Beech said

    It seems the FA at least have some concerns over what has happened, and have, at least for the moment, refused the new set-up their licence application (1)! The club has been advised by the FA to cancel their pre-season friendlies.

    This one looks as if it’s found its legs at last.

  4. […] Late extra: Not to mention goings on at Chester City – see my update comment at the bottom of Developments at Chester City. […]

  5. […] City (See postings passim 1, 2 and 3) By ‘doing a Leeds’ and buying the club back from the Administrator, Stephen […]

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