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

Progress at Crawley Town

Posted by John Beech on October 3, 2009

In another unusual case of transparency, Crawley Town have released an insightful interview on the club website with Bruce Winfield, ‘major shareholder’ (1).  This comes in the context of the dropping of proceedings by HMRC to wind the club up, which prompted the Crawley Observer to announce a ‘Fresh Start for Crawley Town‘.

To understand this optimism needs an understanding of not just the recent history of the club, and its mismanagement by the Majeed brothers, but also a little further back.

Crawley certainly ‘has history’ with the tax authorities.  The Inland Revenue sought winding-up orders in July 1973, May 1974 and May 1977, when the club was in the Southern League Division 1, having turned professional in 1962.  By 1984 the club had not only achieved some form of financial stability, but had been promoted to the Southern league premier Division.  In 1997 they moved to the new 5,000-capacity Broadfield Stadium, built at a cost of £5m by Crawley Borough Council.

Off the pitch, matters were taking a different turn.  The Inland Revenue (one of HMRC’s two predecessors) sought another winding-up order in April 1998, and the club went into Administration with debts of £400k.  They were rescued by local businessman John Duly, who turned the club into a mini-family business.

Promotion to the Conference prompted a new strategy – going full-time.  In the summer of 2005 Duly sold the club to brothers Azwar and Shafqat ‘Chas’ Majeed, operating as the SA Group, and the club entered the worst period in its history.

By March 2006 the entire squad was up for sale, employees were told they would have to take a 50% pay cut, and it had emerged that Chas Majeed was an undischarged bankrupt, thus geing ineligible as a director under FA rules.

A period of mayhem followed.  Board members shuffled round, and Steve Evans was appointed manager.  Evans ‘had history’ with Boston United, and with the FA, who had previously banned him for paying a witness to mislead an FA enquiry.  Points deductions for financial irregularities, a transfer embargo, wages slashed, and the entire squad up for sale (2) were a prelude to the club entering Administration again in June 2006 (3), with debts of over £1m, a very high figure for clubs at this level in the pyramid.  This figure included a debt of £400k to HMRC.  The Majeed brothers were claiming over £750k owed to them by the club.  In August they tried, unsuccessfully, to buy the club back from the Administrators (4).

Somehow the club lurched on until August 2007, when a CVA was finally accepted (5).  All was far from well financially, and in March 2008 another winding-up order from HMRC, by now presumably tearing their hair out at the mere mention of Crawley or the Majeeds, was served (6).

This proved the lever that finally shifted the Majeeds. Within a week, Prospect Estate Holdings had bought the majority shareholding, and a consortium led by John Duly (with Phil Jarman) was in control (7) and the Majeeds had severed all links with the club (8).  To achieve this, Duly wrote off £200k still owed to him from when he had previously sold the club to the Majeeds (9).

Phil Jarman stepped down last November (10), and subsequently Bruce Winfield has become a major shar-holder.  Apart from the predictable wobble generated by the collapse of Setanta, the club’s affairs have taken a very significant turn for the better, and this last week has seen the announcement that the outstanding winding-up order has been formally dismissed (11) as noted above.

Bruce Winfield’s interview on the club website is at the same time upbeat and realistic, and hence a tad cautious.  Undoubtedly Crawley Town fans should be sleeping much sounder in their beds than they were under the Majeed era.  There is just one thing that would worry me slightly in their position.  Winfield talks, on the one hand, of the club being debt free “apart from the Directors loans [my emphasis]”, and, on the other hand, as part of the club’s core strategy, to “attract additional shareholders and investors“.  Put these two together and you get a picture of the current shareholders being perhaps reluctant to convert their loans into shares.  I am wondering then a) just how ‘soft’ these directors loans are as club debt and b) just how big they are.

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