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

How much more benefaction can Pompey take?

Posted by John Beech on December 30, 2009

The news that Portsmouth face a winding-up petition from HMRC (1) can hardly have come as a surprise to anyone. After all, HMRC have had the club under close scrutiny, recently charging both Chief Executive Peter Storrie, former Chairman Milan Mandaric and former manager Harry Redknapp. Nor are winding-up petitions entirely unknown at Fratton Park – the London Gazette reveals that they were served with winding-up petitions in 1998 (T. P. T. Fire Protection Services Limited), and 1999 (Inland Revenue), not forgetting a voluntary winding up back in 1912.

Portsmouth provide a textbook example of the unsustainability of the benefactor model.

My records go back to the 1970’s, and the end of benefaction by John Deacon.  He arrived as ‘saviour’ Chairman in 1972.  By 1976 the club was reduced to being kept out of bankrupcy in 1976 by the donation of £25,000 collected by fans.

Deacon somehow held on as Chairman until 1988 (he was personally declared bankrupt in 1994), when he passed the benefactor baton on to Jim Gregory (fresh from selling QPR to Marler Estates).  Gregory lent the club money, but in the mid-nineties called the loans in.

Next up was Terry Venables, who was reported, the club’s financial state being so dire, as investing a £1 to become Chairman.  He drew a handsome salary but was continually absent because he was also heading up Australia’s bid for World Cup glory.

In December 1998 the club went into Administration, with Gregory’s son Michael at the helm.  To the rescue came Milan Mandaric, who had previously been the benefactor of FC Lika, the San Fransisco Earthquakes, the Florida Thundercats, the Connecticut Bicentennials, the Oakland Stompers, the Edmonton Drillers (these last three being the same franchise), Royal Charleroi Sporting Club and OGC Nice – clearly a man who was into a club for the long term.

To be fair to Mandaric, he did put a reported £25m into the club and saw them rise to Premier League.  Having bought the club from the Administrator for £4.5m, however, he sold it in to Alexandre Gaydamak for a reported £30m in 2006, with Portsmouth fans apparently ‘daring to dream that Alexandre Gaydamak’s takeover of the club could do for them what Roman Abramovich has done for Chelsea‘ (2).

That of course is not quite what happened. The latest woes with successive owners I have blogged about before (see postings passim).  First there was not-a-Dr Sulaiman Al-Fahim – ‘often described as the “Donald Trump of Abu Dhabi”‘ (3) – who had discovered during his brief flirtation with Manchester City that he was, in fact, Truly Madly Pompey (well, one out of the three at least).  When it transpired that he actually wasn’t a Donald Trump, there arrived Ali Al-Faraj, who less than three months ago promised ‘substantial investment‘ (4).  The cheque, it would seem, is still in the post.

What next?  Well, my guess would be a new owner, a Donald Trump of the Far East, or not, as the case may be.

What is abundantly clear is that yet another benefactor is probably not what Pompey needs.  Don’t get me wrong – I’m not saying that none of these benefactors has done the club any good.  Mandaric is arguably an exception, but quite what Venables ever did for the club remains unclear.

For Portsmouth, as with most clubs, the benefactor model has proved desperately unsustainable – soft debt called in, jumping ship, lack of any funds etc. etc. etc.  How fans can fall for it, as they did so recently at Notts County, never ceases to amaze me.

But we can all relax – there is a Fit and Proper Person test I’m told.

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8 Responses to “How much more benefaction can Pompey take?”

  1. […] to be made bankrupt. A long saga of mismanagement and broken promises is ending in disaster. As John Beech comments, looking at the club’s history back to the 1970s, “Portsmouth provide a textbook […]

  2. John Beech said

    LATEST

    The club has issued a statement – apparently it is “shocked and surprised this action has been taken in respect of VAT, PAYE and National Insurance Contributions which either have been, or are about to be paid, or are disputed“. Do they really think that HMRC will take no action simply because the club says it is about to pay, or disputes the figure?!!

    Full statement here.

  3. the mole said

    Well, from my understanding (sources) of the situation, they even owe the printers of matchday programmes money. Would be a shame if the (dwindling) supporters can’t even buy a souvenir programme for their final ever game should the car crash actually happen.

  4. the mole said

    John,
    I am terrible at this researching lark, sorry. Can you tell us what the cut-off dates are for points deductions being applied in the current season.

    I understand that the outgoing board at Pompeys neighbouring club Southampton appeared to time admin very badly for the club, some say it was a spiteful act.

    I’m just wendering whether Pompey (knowing that they have absolutely no chance of survival in the Premier League) will announce it soon thus starting next season on a level pegging with other Coca Cola teams?

    • John Beech said

      An interesting can of worms, which hopefully won’t need to be opened! I’ll post a fuller reply shortly.

    • John Beech said

      The cut-off date you refer to is a Football League one, introduced in June 2007 to block the so-called ‘Leeds Loophole’. It is actually a ‘moveable feast’, being defined as the fourth Thursday in March, which in 2010 will be 25th March.

      BUT its context is the relegation of a club from one level of the Football League to another level of the Football League. The situation of having to consider a club being demoted into the Football League from the Premier League while in Administration has not arisen so far, so we are moving into uncharted waters.

      My interpretation, and I emphasise that it is only that, is that Portsmouth would start the season in the Championship with a 10 points deduction whenever they had entered Administration. The situation is further complicated however by whether or not they had agreed a Company Voluntary Agreement (CVA).

      While there are no precedents for a club having suffered an insolvency event (the technical category which includes ‘going into Administration’) and then moving from the Premier League to the Football League, there is of course the recent case of Chester City moving from the Football League to the Football Conference. Behind the scenes there were discussions involving both governing bodies and the Football Association.

      If Portsmouth face the drop while in Administration, it would be safe to say that there will be similar behind the scenes discussions, and it would be a wise man who could say with certainty what the outcome would be. Much would depend on who the (new?) owner(s) of Portsmouth will be at the time, and whether they have been putting their money where their mouth is. It will also depend on how the Football League Regulations stand up to being tested in this way for the first time.

      • the mole said

        Thank you for that John,in essence this appears to be a situation that the authorities never thought would arise then? I actually feel for the supporters of all clubs in these current times as without careful stewardship the whole house of cards would come tumbling down.

        There can not be many clubs out there who are genuinely debt free and run on an actual money/money out basis though. I can only think of one off the top of my head and ironically they are not a million miles away from Portsmouth. Maybe Southampton fans who bemoaned the previous Rupert Lowe era will come to realise that he actually did them a huge favour by initially delivering what the fans and city needed (a new stadium) and then peaking with a decent team under Gordon Strachan (IIRC). Did not Strachan leave after being told there would be no new money spent one hte team? Another irony is that not long after they appointed Harry Redknapp, who despite being a prolific team builder was not allowed to ‘wheel and deal’. If Mr Lowe had let him have free reign it may well have been Southampton facing extinction!

        Nice chatting
        Dave

      • John Beech said

        To be fair, Football League Regulations do specify a ten point deduction, but they are not comprehensive in their handling of a variety of different circumstances. A cynic would suggest that this is deliberately so, to allow flexibility!

        As for Southampton, Lowe was not the perfect Chairman, but trying to keep the club on an even financial keel was one of his objectives. His success in meeting this objective is debatable, but he does deserve some credit for at least trying to reign in running costs.

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