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

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.


4 Responses to “Chester City drinking at last chance saloon”

  1. Simon Cope said

    “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.”

    Actually, I’m still confused as to exactly what the esteemed Mr Watmore was meaning when he addressed this issue. In response to the question you put to him he stated that there would not be the same FPPT in the Premier League, Football League and Conference, but then said it was important to ensure there was a “continuum” in the test (or tests?) through the levels. I’m not entirely sure what he meant by this – you could interpret it as meaning that there would be one test, but with different levels of stringency, which seems a little odd. Was he suggesting that Premier League clubs warrant a greater level of protection against potential malcontents than a club in the Conference North? If so, why? Surely all our clubs should be protected to the same degree?

    • John Beech said

      Before getting into this slightly complicated area, I must point out that I should have put a ‘sarcasm’ emoticon after the word ‘vital’ in my sentence that you have quoted, Simon. In bold!

      The three Tests (PL, FL and FA, the latter applying to the Conference, although I must admit I’m unclear as to whether it applies further down the pyramid – the continuance of Spencer Day [formerly Trethewy] as owner of Chertsey Town would suggest that either it doesn’t apply, or that the FA don’t apply it) show relatively small differences in their lists offences which would debar someone from being a director of a football club. The case of Chester City, moving as they did over the summer from the FL to the Conference, in highly contentious circumstances, is a relatively rare one where a director may change his pass/fail status because of differences in the lists.

      My thoughts are that, yes, the situation does need looking at (I agree with Watmore in this respect), but I hardly see it as the important issue to do with Fit and Proper Person tests. Watmore actually returned to this non-vital issue when asked bluntly about the issue of how easy it is to pass any of the tests, and avoided expressing any view on the current almost 100% pass rate. That I find deeply worrying.

  2. Ron Ipstone said

    The CVA of Chester City Football Club Ltd (Oldco) which was ‘approved’ at a creditors meeting held on 11 June 2009 was revoked by order of the High Court sitting in Manchester on 29 July 2009, on the appeal by HMRC. The Oldco’s Administrator’s proposal to the creditors dated 22 May 2009 stated that there was a conditional sale agreement for the assets of Oldco between the Administrator and Chester City Football Club (2004)Ltd (Newco), the condition being the approval of the CVA. Once the High Court’s judgement had been pronounced, Mr Vaughan announced that Newco had in fact completed the purchase of the assets of Oldco on 26 May 2009.

    In the absence of a valid CVA Newco had no right under the rules of the Football Conference to be admitted to the Blue Square Premier League, and could only be admitted with the Football Conference exercising its unfettered discretion to admit Newco to its membership. Equally the Football Conference could refuse to admit Newco to its membership in its absolute and unfettered discretion. Or, a third alternative and the one that happened, the Football Conference could admit Newco to its membership on terms that it agreed to an unappealable points deduction.

    It exercising its absolute and unfettered discretion the Football Conference could have taken into account whatever factors it liked, including questions as to the suitability of otherwise of the directors and shareholders of Newco to be fit and proper persons to be involved in the management of an Association Football club. Obviously if Newco’s directors etc. did not meet the requirements laid down in the rules of the Football Conference regarding fit and proper persons, one would have thought that it would not exercise its discretion in Newco’s favour.

    In my view the problems which are now faced by Chester City Fc’s new owners, i.e. Chester City FC (2004) Ltd, are the same ones which faced the old owners, Chester City FC Ltd, namely that it is running at a loss. A loss which caused the old owners to go bust with debts of several million (the High Court disallowed a debt of £1.7 million claimed to be owed by Chester City FC Ltd to another of Stephen Vaughan’s companies, but there seemed to be other creditors in the region of £4 million plus). With the new owners in effect being the same persons as the old owners and with the same system of corporate governance being in place, it would not have been difficult in July/August before this season began to anticipate that Chester City FC would run out of funds before the season ended. The failure does not lie in the rules of the FA relating to fit and proper persons, no matter how inadequate those rules might be, but in the failure of the Football Conference to be firm and to refuse Chester City FC admission once its CVA had been revoked by the Court.

    • John Beech said

      Many thanks for the very informative input Ron.

      I would certainly agree with your analysis which leads to the conclusion that the Conference should have stood firm, although I suspect that they came under pressure from the FA to produce a fudge which avoided Chester City ‘doing an Aldershot’.

      Where I would disagree though is that this in any way lets the inadequate Fit and Proper Person tests (sic) out of the ‘blame frame’. I tend to take a longer term view, and look for a hierarchy of causation. Chester City’s history going back at least to the 1990s, with the stadium problems and the Mark Gutterman regime, followed by the sale to Terry Smith, etc. etc., is a catalogue of bad management. If there had been an effective Fit and Proper Persons test back then, the subsequent history of Chester City would almost certainly have been very different.

      If ever there was a time for one fit and proper Fit and Proper Person test, it is surely now. An article by Marina Hyde two days ago in The Guardian (1) demonstrated clearly that an effective test can be operated even in the far more litigious and free-market-oriented USA.

      (I’m just about to add a comment to my earlier posting ‘Stephen Vaughan on Management about his recent pronouncement on paying debts.)

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