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

Insolvency round-up

Posted by John Beech on September 6, 2009

As the first Administration of the season has just happened, it’s worth a quick review of the clubs in trouble. So, in alphabetical order:

  • Accrington Stanley
    Stanley seem to be operating in another world, a rose-tinted one which is somewhat divorced from the real one. Faced with dwindling gates, the collapse of their sponsor and a winding-up order from HMRC in June over a debt of £300k, the club announced its intention of paying off the tax debt in 12 monthly installments (but failed to do so), has changed Chairman, been subbed by an interest-free loan from the Supporters Fund, talked of strengthening the Accrington Stanley brand (if it has a brand, it is surely not one that needs strengthening; a more positive move would be an entire re-branding), have had a temporary planning request turned down by the local council (this relates to a ‘temporary’ control room which has been there for three years much to local residents’ objections), and announced that they will apply for £1.2m funding for ground redevelopment. Last week HMRC gave the club eight weeks to pay up or face closure. Stanley’s response? To “pull on heartstrings” and pass the buckets round. Things look distinctly grim, that is, unless there is a change in ownership – fans, backed by local business-man Ilyas Khan, look the only viable prospect if the the third failure of a club in Accrington is to be avoided.
  • Bournemouth
    Significant progress since the Mitchell takeover, but still under a transfer embargo and in a CVA they are not out of the woods yet. See Club Statement and Mark Murphy’s twohundredpercent article.
  • Chester City
    (See postings passim 1, 2 and 3)
    By ‘doing a Leeds’ and buying the club back from the Administrator, Stephen Vaughan has undoubtedly eased the pressure from the club’s creditors, but it seems unlikely that the finances are yet in good order. There has been talk of engaging with the various fans bodies, who seem to be uniting in adversity, but I would interpret this as an indication of how shaky things still are. After all, Vaughan does not have a great track record in running clubs with the fans’ interests in mind. There is also a possibility that both the Conference and the FA may yet seek to regain ground after the shambles of how Chester’s case was dealt with at the end of last season.
  • Farsley Celtic
    (see postings passim 4, 5, 6, 7, 8, and 9)
    To say that Farsley have been skating on thin ice over the past few months would be an understatement. To stretch the metaphor to its limits, latest events suggest that the ice has broken and fortuitously frozen over again in the nick of time. Last Friday saw an extraordinary series of events: the Joint Administrators announced the closure of the club as no acceptable offers had been made (10), and had informed both the FA and the Conference; then, late the same afternoon, it was announced that a consortium headed by John Palmer, the club’s President, had reached an agreement with the Joint Administrators to buy the club (11); finally, the Conference announced that the next day’s tie against Stalybridge Celtic could go ahead, and that they would be “seek[ing] clarification from the administrator as to the long term future of Farsley Celtic FC Ltd”. There things currently rest, but cautious optimism seems to be appropriate.
  • Folkestone Invicta
    There is still the matter of debts of around £70,000 and an HMRC winding-up order to be resolved, but latest news I have found is a statement by a director that “we now understand much more clearly what the options are, and there seems to be a willingness on the part of HMRC to help us find a solution that allows Invicta to continue” (12). Previous statements have also tended to be optimistic, so this saga clearly has a way to run.
  • Halesowen Town
    (see multiple postings passim)
    The fight by the Yeltz Trust to avoid the club’s implosion since Morrell Maison took over continues. Most recently, an AGM decision to place control of the club with a fan-based consortium was overthrown in court having been challenged by Maison. A fans’ boycott is now under way, and the re-run of the AGM should take place shortly. In my opinion, unless the Trust succeed in gaining control there is every prospect of the club folding.
  • Harlow Town
    With debts of £270,000, the club is proposing entering a CVA, which will result in a ten points deduction (13). £95,000 is owed to Harlow Council and £40,000 to HMRC (14). The club has faced serious boadroom disruptions – the Chief Executive Jeff Bothwell had signed over his shareholding to his ex-wife Carol, and then resigned from the Board, as did all his fellow directors, leaving Mrs Bothwell as 100% shareholder (15). So far, she has been putting up a fight to save the club, but the obstacles to survival are considerable, not least the return to court to face HMRC.
  • Merthyr Tydfil
    By finally forcing the previous owner Wyn Holloway out through getting the club into Administration, Merthyr Tydfil Supporters Trust have managed to give the club at least a fighting chance of survival. Given the dire financial circumstances in which they took over, they have their work cut out for them.
  • Lewes
    This troubled club has been fighting off Administration for the best part of a year. HMRC has tried to have them wound up over a tax bill of £110,000, but an agreement to pay be installments was reached and has, to date, been kept (16). The next three months are likely to be make-or-break.
  • Northwich Victoria
    Where does one begin? I have been drafting a posting on the club for several months now, but events always seem to render my efforts out-of-date. To cut a very long story short (one which I still plan to tell), the club is still in Administration, and still negotiating a CVA with HMRC. Debt to HMRC alone is reported as being as high as £450,000.
  • Portsmouth
    After months of uncertainty, Sulaiman Al Fahim has finally taken over the club , and bank loans which were due have been almost completely covered by the sale of players. Peter Storrie has admitted on 5 Live that, with respect to going into Administration, “on a couple of occasions it got very close” (17). The worst is then over, but it remains to be seen whether Al Fahim can pump enough money into the club, whose membership of the Premier League for another season looks currently rather unlikely.
    Intriguingly, as I write, ‘Dr’ Al Fahim is now listed as a director of the club (but so still is Alexandre Gaydamak), but not yet of the club’s holding company, Miland Development 2004.
  • Salisbury City
    The club which has been up for sale for a £1 (providing the new owner agreed to pay off the club’s debts) succumbed to Administration last week (18), an action that will have surprised few. The debts include £200,000 owed to HMRC. There is talk of a number of serious investors, but whether any of these will come good remains to be seen.
  • Southampton
    Following the takeover while in Administration by Markus Liebherr, a steady strategy of rebuilding is beginning to be implemented. Fans of Saints can probably start to relax, so long as they accept there will be no short-term magic wands; certainly it looks as if the club is entering a rather more stable period in its history.
  • Stockport County
    With a controversial pay-out of 1p in the £ to creditors, the sale of the club to a consortium headed by Jim Melrose should have been smooth, but worryingly it still lingers on, with the Football League still concerned about some of the details.
  • West Ham
    Following the Icelandic banking earthquakes last season, things seem to have stabilised at least in the short term. A recent report by Simon Evans of The Independent suggests that “the Hammers have breached debt covenants laid down by creditor banks to the club, which in theory could have tipped them into administration. However, the banks have so far resisted triggering such a move” (19). Certainly there is a debt mountain to climb for any would-be purchaser, so the club will be keeping their fingers crossed that Saudi property investor Ali Al Faraj will take up the challenge.
  • Weymouth
    The club has to come up with £50,000 by this coming Tuesday to avoid Administration – a tall order. Chairman Ian Ridley has put an incredible amount of effort into turning the club round financially, but has just had to stand down on grounds of ill health – bad news for both him and the club.

I could go on – Hyde United, for example, faced a winding-up order recently from HMRC, but I haven’t managed to find a recent report on what has or hasn’t happened – but the general picture is clear: too many clubs in deep financial problem, and this only September.

My research (20) showed that August was the month with the fewest insolvency events, rising to a first peak in November, then falling before a second and higher peak in May, so statistically we can expect further insolvencies over the next few months.

[See also UPDATES to ‘Insolvency round-up’]


4 Responses to “Insolvency round-up”

  1. John Beech said

    I should perhaps have included Southend United in my list. The club has until 28 October to pay HMRC £690,000. Chief Executive Geoffrey King presents an anodyne if evasive front on this and other financial issues however (1)

  2. John Beech said

    For more on the situation at Lewes, see the Rooks Supporters Trust website, and Newsletter 6 in particular.

  3. John Beech said

    Al Fahim’s takeover at Portsmouth is not, as I’d suspected, complete – see 1.

  4. […] on September 12, 2009 I’ve added a couple of short updates as ‘comments’ on the ‘Insolvency round-up’ posting, specifically on Lewes, Portsmouth, and […]

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