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

Archive for February, 2010

Whither Chester?

Posted by John Beech on February 28, 2010

The decision of the Football Conference Chairmen to expel Chester City at last showed a will to take the decisive step to bring to an end the sorry tale of this club (see postings passim).

Well, probably that is with respect to Chester City Football Club 2004 Limited.  It can of course apply for membership of a lower league, but is still due in court to face a winding-up petition from HMRC on 10th March.  Not that Director of Football Morrell Maison seems too deterred (1).  He has presented his analysis of what has gone wrong:

Where Chester failed was the fundamental principle of football, they were unable to play games. Other club keep going because they play games.

“There is a lot of shock around the club at the moment but we have been in talks overnight to look at the options because there is still a business there, it still has a ground.

“I do not know what the Vaughan family are planning but I do know that the club could continue, get on an even keel, pay off it’s debts and apply for re-entry further down football’s feeder leagues.

“There are people who say they can get this club going well let’s see if they can.

Well, there you go, sorted!  Mind you, he also says “My first reaction was shock, but when you think, there are probably six or seven clubs operating at the moment in a similar position.”  I’d love to know which six or seven clubs he thinks have been expelled by their respective Leagues, have an owner who has called the fans ‘idiots’, and are trying to sell the club to a group of Danish fans.  Well worth a look, with respect to the last, is a great spoof website Project Brøndby (2 and 3).

Equally of course a new AFC Chester could apply.  More power to City Fans United!  Let’s hope they can bring football back to Chester on a realistic and fan-driven basis.

Posted in Football Conference, Governance, Resurrection | Tagged: , , | 2 Comments »

Drinking at the last chance saloon… (Pompey or the whole sector?)

Posted by John Beech on February 28, 2010

The world of football management has been attracting more than its fair share of clichés and unlikely metaphors of late, and who am I to disappoint.

Focus on Friday (English Football’s ‘Black Friday’?) was, unsurprisingly, on Fratton Park, where the media had gathered to report the utterly predictable and inevitable slide into Administration of a Premier League club for the first time.  Oddly there was little sense that this event was unsurprising giving that from 2007 when Leeds United went into Administration, insolvency events have happened to three League 2 clubs, three League 1 clubs and three Championship clubs.

Radio 5 Live's Paul Greer interviewing Colin Farmery and Kevin Ryan

Obviously at the vanguard of the media pack was local radio station BBC Radio Solent, together with BBC Radio 5 Live.  The entry into Administration had however attracted the interest of the mainstream news gatherers – BBC Breakfast, the BBC News, BBC 24 News Channel, Sky News, and even the US news channel Bloomberg (1).  Clearly what we were witnessing was a major news story.  But was it actually the right one?

What seemed to be missing was what the significance, or otherwise, of the imminent event was. Was it just a Pompey story, or was it a Premier League football story?  Or, dare I suggest, an emblematic news event for the whole English football sector?

There seemed to be too little sense that this was a story not of ‘the bubble bursting’, of ‘implosion’, or of ‘financial meltdown’, but rather more of English football heading steadfastly towards the brick wall of unmanageable debt aboard the juggernaut of the unsustainable benefactor model.  The collapse of Portsmouth’s finances was not well presented as part of a broader landscape of financial woes in English football.

Radio Solent did report that Bournemouth, on the Radio Solent patch, had been served that very day with a winding up petition by HMRC for tax debts of £314,000 (2), with only £100,000 available to meet the bill.  But even surrounded as I was at Fratton Park by the cutting edge of the football media pack, I found it hard to find out what had happened at the Football Conference meeting to decide the fate of Chester City.

While these two events are in a direct sense of a lower significance because they are about clubs lower in the pyramid, I find it hard not to see them as all parts of one picture – a picture of a sector at a crossroads with its back to the wall, up Portsea Creek (or any other creek you choose to mention) without a paddle, a sector which is shuffling deckchairs on the Titanic, while finding it hard to organise a piss-up in a brewery.

With such a wide choice of clichés to choose to head this posting with, why then did I choose ‘drinking at the last chance saloon’.  Well, first because it is a cliché popularised by David Mellor, he of the toothless Football Task Force, which was charged with, among a wide-ranging number of items, reconciling “the potential conflict between the legitimate needs of shareholders, players and supporters where clubs are floated on the Stock Exchange” (3).  That final phrase seems lost to history today, but ‘Black Friday’ certainly seemed a day when the legitimate needs of shareholders, players and supporters were particularly in conflict.

Mellor of course used the phrase ‘drinking at the last chance saloon’ not with respect to football and the Task Force, but about the press and the reporting of his personal life (with its entirely false account of his use of football merchandising incidentally).  The reporting of football business is at times not always of the absolutely highest quality (obviously with honorable exceptions).

Take as just one example this headline from the same day on the BBC website: ‘Stoke City free of external debt‘.  The club is externally-free of debt the report began, but by paragraph 4 it emerged that “The club’s owners, the Coates family, have invested £17m interest-free and plan to put in another £24m“.  ‘Invested interest-free’?  Soft or otherwise, this is still a debt.

While the media focus on Friday was understandably on Portsmouth, the whole sector is running headlong towards the brick wall of UEFA’s Financial Fair Play protocol.  The shambles of Portsmouth’s finances are sadly symptomatic of the entire sector, albeit Pompey is one of the worst cases, but our concerns need to be with the sector rather than just with today’s headline head cases.

It’s time to wake up and smell the coffee, take the bull by the horns and sweep the Aegean stable!

Posted in Debts, Governance, HMRC, Insolvency, Ownership, Premier League, UEFA | Tagged: , , , , , , | Leave a Comment »

A Conference Chairman explains…

Posted by John Beech on February 22, 2010

… the key issues surrounding Friday’s meeting to discuss the fate of ‘stricken’ Chester City, in an interview with the Cambridge News (1).  (‘Stricken’ is an odd choice of adjective by the reporter concerned – surely the point of the meeting is to decide whether they will be ‘stricken’.  OK, I’ll move on from Percy Picky mode.)

The Chairman concerned is Histon’s Tony Roach and he makes clear just what a Herculean task they face:”We’ve been told there’s a meeting on Friday and that we have to vote. I don’t think it’s particularly right.

“Clubs have been asked to vote on the future of another football club and we’ll have the blood on our hands if we vote Chester out. I don’t necessarily agree with it at all.

“Teams above us could lose up to six points (if Chester are expelled) and that could give us an outside chance of reaching the play-offs, so there could be a benefit there to us.

“But we didn’t get to play Chester on Saturday and we’ve lost out on revenue because of that. So it’s all a bit of a mess.

So, absolutely nothing to do with the particular club under consideration, and its catastrophic recent history of mismanagement.  It’s to do with the rational decision of whether you want ‘blood on your hands’ apparently.

Let’s just hope that his approach is not typical of those voting.  They would do rather better with the quality of their decision-making if they simply focus on Chester City Football Club 2004 Limited, and put their squeamish haemophobia out of their minds.

Posted in Ethics, Football Conference, Governance | Tagged: , , | 4 Comments »

RedPassion muzzled

Posted by John Beech on February 22, 2010

RedPassion is a fan site for supporters of Wrexham and, like many such sites, operates a fan’s forum (1).  As I write, if you click through, you will be greeted with the following message:

As you might notice the RP forums are looking a little empty, this is due to legal correspondence from Gamlins Solicitors on acting on behalf of their client, Mr. Geoffrey Moss, a Director of Wrexham Football Club Limited.
A complaint was received, it however did not provide specific information to the content they found objectionable. I requested specifics so I could remove any objectionable content, as I and others have done many times before.
Sadly I have been notified at 11am that Gamlins will not provide me with that information, without cost. As a result I, or others, do not have the time to read through 222,000 posts inside the 24 hour deadline issued.
Due to this, I have been left with no option but to ‘zero’ the Red Passion forum posts and re-open the forum to new posts only.
This is very regrettable as the historic record of the forum is being lost, for example many years of Live Match Threads, European Years memories and the like.
I do hope this situation changes, and I am provided with the information requested so I can comply with the request to remove objectionable material and return the RP site to its former glory.
The forums are now re-opened for new posts, but again please keep in mind the site rules, terms and conditions and general etiquette.
Anyone with complaints can follow the example of several Wrexham Village representatives who over the last couple of days have brought posts, avatars and signatures to the attention of myself and mods and have been more than happy with the way their issues were dealt with.
(12th Feb 2010)”

Now there is a thin line between might be defended on the grounds of freedom of speech and what is offensive and even libelous. What is clear is that only a small number of the 222,000 postings will come anywhere near that line.  For Gamlins to be unwilling to specify ‘without cost’ which threads and comments are causing offence is, in my opinion, an outrage.  It must surely result in the human rights of the vast majority of entirely innocent posters being infringed.  Shame on you Gamlins and Geoffrey Moss for this massive over-reaction! It’s simply ridiculous to expect the entire forum space to be taken down because you won’t specify ‘without cost’ what it is that you, perhaps quite reasonably, find objectionable.

It appears that the club website had reported inaccuracies about RedPassion, which, upon complaint from RedPassion, they removed. Presumably RedPassion didn’t charge the club to specify what the problem was!

More recent news is perhaps encouraging:

On Tuesday the 16th I again requested the specific information to be provided to allow myself or others to remove any potentially objectionable posts from RP (as is normal). This has not been provided.
I have earlier today (Thursday 18th) requested it for a third time.
I am however pleased to say that I have been informed that the club’s board does see RP as important and do wish to see it thrive. Therefore I am confident with their support and cooperation RP will be returned to normal shortly – hopefully in time for kick off and the return of the Live Match Thread 🙂

Watch the RedPassion space!

Posted in Censorship, Fans | Tagged: , | 5 Comments »

Revised HMRC court schedule

Posted by John Beech on February 19, 2010

With the various adjournments granted and a couple of strikings out (Hinckley and Accrington paid their debts), I thought it might be useful to publish the revised list of when cases are next due in court:

  • 24 February – Notts County
  • 1 March – Portsmouth
  • 3 March – Burscough (‘final’); Cardiff City; Southend United
  • 10 March – Chester City (although that assumes the company still exists by then)

Posted in Debts, HMRC, Insolvency | Tagged: , , | Leave a Comment »

Portsmouth: the still continuing soap

Posted by John Beech on February 19, 2010

On Wednesday the news was that a local arrest warrant had been issued for the club’s still Non-Executive Chairman Sulaiman Al Fahim (1), I wondered yesterday as I drove down to Portsmouth for the 5 Live Portsmouth Fans Forum (2; available for 1 week in UK only) what news might break during my journey.  Sure enough, I arrived to find reports that a request had been made to the Premier League to be able to sell players outside the transfer window (3).  This presumably is code for asking for permission for other clubs to be allowed to buy Pompey players outside the window.

Quite how this might work without provoking rioting is unclear.  FIFA may yet give permission just to enjoy the mayhem this would cause in among fellow Premier League clubs.

The mood of the meeting, held perhaps with intended irony at the Moneyfields Sports and Social Club, itself just along the road from The Jolly Taxpayer pub, was one of resignation overlaid with a touch of déjà vu.  There was some bewilderment and confusion over who to blame for the club’s predicament, although we were spoilt for choice.  The only moment that created genuine excitement was an expression of amazement at Peter Storrie’s salary.

My friend, colleague, and fellow Pompey fan Jon Guest tends to explain supporting Pompey by quoting John Cleese from a low point in his personal life: “I can cope with despair. It’s the hope I cannot handle.” This seems to capture the mood of the meeting.

That is not to say that there was any sense of defeatism.  On the contrary, the newly formed Portsmouth Supporters Trust was there in strength, and there was a clear feeling that ‘we fight on’.

Today’s news story is the emergence of New Zealander Victor Cattermole as a potential purchaser of the club (4).  Cattermole would fit well with certain previous owners.  He has a penchant for companies based in the British Virgin Islands (he’d fit in well with Ken Bates too), and advertising for his online investment programme has been banned by the New Zealand Securities Commission (5).  It actually went further, warning people about committing any money to the scheme (6).  Doubtless he would sail through the Premier League’s Fit and Proper Person Test, or should that be ‘drive a coach and horses through’?

Posted in Insolvency, Ownership | Tagged: , | 3 Comments »

Folkestone Invicta enter CVA

Posted by John Beech on February 16, 2010

What with being away and more focussed on clubs such as Portsmouth, Chester and Notts County, I’m afraid I missed an insolvency event on 5th February – Folkestone Invicta, of the Isthmian League Division 1, have opted to enter a CVA (Administration would have been the more drastic alternative) in order to meet debts of £170,000 (1 and 2).  £135,000 is owed to HMRC, the other major creditor being HSBC Bank.  Under the CVA the debts will be paid off in regular monthly installments over the next five years, and it would appear that HMRC have agreed to accept around 50p in the pound.

The club narrowly avoided Administration last June (3), and had struggled financially after failing to attract a main sponsor.  I would have to admit that my Folkestone Invicta file is on the thin side, and if any local blog reader can flesh out some more detail it would be much appreciated.

Posted in Debts, HMRC, Insolvency | Tagged: , , | Leave a Comment »

English excesses exported?

Posted by John Beech on February 16, 2010

With Deloitte’s annual publication of its Football Money League, identifying what Deloitte euphemistically calls the ‘richest’ clubs (it is based on revenues and conveniently ignores debts), we have become used to English clubs being at the vanguard of high revenues.  In its most recent version published almost a year ago (1) there were seven English clubs in the Top 20.  In addition to Manchester United, Chelsea, Arsenal, Liverpool, Tottenham, Newcastle (doubtless set to disappear from the next list) and Manchester City (equally doubtless set to have roared up the Top 20), Germany and Italy have four representatives each, Spain and France two clubs each, and Fenerbahce slipping into the list at no.19, which was historically occupied by one of the Auld Firm.

Although now a year out of date, the list might serve as an indicator of the salaries clubs would be prepared to pay in 2009/10.  A list (2) of the Top 50 Players Wages for 2009/10 published by the excellent futebolfinance website (now added under the Links tag above) suggests that either English clubs are reigning in their wild costs or their profligate spending has started to catch on abroad.

Of the five most expensive players, four play for Real Madrid or Barcelona, with Eto’o of Inter squeezing his way into this otherwise Spanish forward line.  Of the top 19 players, who earn 6.5m euros a year or more, eight play for English clubs, two for Italian teams, and nine for Real Madrid or Barcelona.

Of the Top 50, 20 play in England, 17 in Spain (mostly for the familiar two, but with single representatives from Seville, Valencia and Atletico Madrid), 9 in Italy for a selection of the bigger clubs, and 4 in Germany (all for Bayern Munich).

Too much might be made of this data, but there is certainly a suggestion that Real Madrid and Barcelona are pushing ahead in the high salary stakes, seemingly unconcerned by the problems that the debts of their English counterparts have brought to the fore recently.  Real’s willingness to spend, financed by bank loans, suggests that once again others in football follow the English way, perhaps not altogether wisely in this case.

Finally of interest in the futebolfinance list to followers of English football is that there are seven players from Chelsea in the Top 50, and six Manchester City players compared to four from Manchester United. The only other English clubs to feature are Liverpool with two and a lone Arsenal player just scraping in.

Posted in Costs, Wages | Tagged: , | 1 Comment »

Whatever happened to due diligence?

Posted by John Beech on February 13, 2010

In much the same way that you would get a surveyor’s report as a matter of course when considering buying a house, so you would ‘conduct due diligence’ if you were considering buying any company, especially so, I would have thought, if the company happened to be a football club.  It seems that due diligence is going out of fashion in the football sector.  Let’s look at just two recent examples:

  • Notts County
    Way back on 5th January (1) the club’s debts were reported to be £1.5m. When Ray Trew bought the club on Thursday, the same figure was being reported (2). Today new Chief Executive Jim Rodwell says the figure could be more than £5 million: “We will not know until we have had a close look over the next three to four days. We were asked to step in to save the club so we could not take the due diligence process as far as we wanted to before we made the commercial decision to buy the club.” And that is after Sven Goran Eriksson has agreed to kiss goodbye to the £2.5m he was still contracted to earn.
  • Birmingham City
    Carson Yeung, the new owner, called in the police over what he saw as financial irregularities (3) after he had bought the club.  In a statement it was announced that “Due diligence is proceeding and this is really the first episode” (4).  As previous owner David Sullivan was swift to point out of Yeung helpfully: “He merely asked us about ten questions and failed to bring in accountants or auditors. It’s a bit like me buying a house and failing to conduct a survey and then moaning when the damn thing collapses” (5).

Now, if new owners are so casual when buying a club, and the various Fit and Proper Person Tests are as difficult to pass as getting a Provisional Belgian Driving License, perhaps the football sector could learn from the House Information Pack you now have to provide when selling a house, or the 12 months MOT that you would expect to get when buying a second-hand car.  Perhaps what we need in English football is not an ineffectual Fit and Proper Person test, but rather a Fit and Proper Football Business Licence.  Without this License, the club’s owner wouldn’t be allowed to hold the current ineffectual ‘ticket’.

It could be a requirement that every football company should hold this License every summer in order to be allowed to compete the following season.  Given the FA’s penchant for a ‘tick box’ approach, the application for the Licence could be very simple and might look something like this:

  • Who actually owns the company, and the ultimate parent company? (Well, OK, perhaps a bit tricky for, say, Leeds or Portsmouth)
  • Has your largest shareholder ever been to see the club play?
  • Can your largest shareholder locate your club within 50 miles on a blank map?
  • Are you up to date with all your tax payments?
  • Have you paid all your football creditors?
  • Can you produce a written guarantee that your ‘soft’ debts will not be called in within the next five years?
  • Is your wages-to-revenues ratio less than 60%?
  • Do you have a fans’ representative on your board?
  • Do you have a Plan B for when it all goes pear-shaped on the pitch?  (Please attach)

To hold the Licence, you must be able to answer the first question, and answer ‘Yes’ to all the others.

OK, it’s all a bit back-of-a-fag packet and needs some honing – suggestions are welcome.

But seriously, unless English football starts to put its own house in order and reign in the more absurd excesses that derive from the dysfunctional and unsustainable Benefactor model of football business, it will continue like a Toyota with a loose floor mat heading for the UEFA brick wall of the Financial Fair Play protocol (see postings passim).

Posted in Fit and Proper Person tests, Governance, Insolvency | Tagged: , , | 6 Comments »

A touch of the surreal

Posted by John Beech on February 12, 2010

I blogged recently on Portsmouth’s sense of humour in now offering financial services on its website (1).  This touch of the surreal has started to spread to their fellow clubs who face adjournments in their winding-up petitions from HMRC and are due back in court shortly, and therefore the continued existence of each of whom is under threat .

Southend United “deserve special mention” for six nominations for the Football League Awards 2010 (2).  I’m sure they are worthy of some of them, but amazingly these include one for the Best Marketing Campaign.  Would that be the celebrated Confetti PR campaign slagging off HMRC? Let’s hope for the club’s sake HMRC have no input to the judges.

Cardiff City have even more amazingly been nominated for Best Marketing Campaign too.  Well, there was that cracking season ticket campaign, the one where they forgot that they had promised to spend money on players as the incentive.  According to WalesOnline however, “A club official yesterday insisted they had won the nomination for the “originality” of sending Christmas cards with fans’ names on the front and gifts to all Platinum Ambassadors – and not the controversial Golden Ticket pledge to spend the money on new players.” It does make more sense, doesn’t it? Christmas cards with names on; simply brilliant.

Let’s hope both Chairmen are still around to pick up any actual awards.

Portsmouth are so far bereft of any prize nominations in the Premier League or elsewhere.  Can we expect to see their name put forward for the Nobel Prize in Economics perhaps?

Posted in Chutzpah | Tagged: | 1 Comment »

More turmoil at Notts County

Posted by John Beech on February 11, 2010

With the kind of spin which even Peter Ridsdale would be proud, Chairman Peter Trembling has issued the following statement on the Notts County website (1) which begins:

I am delighted to announce that the search for investment into this football club has concluded and last night I signed over my 90% shareholding in the club and hence the ownership to a new consortium. This consortium will reveal themselves and their plans for the Club at a press conference on Monday.

We have been on a relentless search over the last couple of months for parties intent on and able of investing £25m – £50m into Notts County. I have said all along that for relatively little investment and the capability to build thereafter, this opportunity represents one of the best, pound for pound in football. Proposed investors have concurred with that statement and have shown intent and proof of funds in their respective quests for getting involved with Notts County.

It all sounds so wonderful that one wonders why both he and Eriksson (2) are bailing out, and especially why he sold for £1 (a price not actually mentioned in the announcement), putting the club at the same value as Salisbury City.

Might it just possibly be to do with the club’s debts, which the new owner has to take on.  There’s the £325,000 bill from HMRC, currently the subject of a court adjournment until 24 February.  And the bill of £95,000 due to Marstons the brewers (3).  Oh, and unpaid players recently (4).  Total debts are reported as being £1.5 million.

It’s worth recalling that the disastrous state of the club’s finances have emerged during a period of sheer hyperbole about heading for the Premier League under the regimes of mysterious benefactors/investors who turned out to be rather short in the green-and-readies department.  This period started with the Supporters Trust selling their shares to Munto Finance.  For one pound as it happens.  So ‘added value’ will presumably not be a phrase to be heard from the departing owner.

The incoming owner is Ray Trew, late of Lincoln City.  Having left their board over strategic differences, he was then involved with three companies who cancelled their sponsorship contracts with the club – Contract Solutions, Sports TV and Castlemaine Accountancy (5). A campaign to lower fans’ expectations has already begun (6).

Posted in Chutzpah, Insolvency, Ownership | Tagged: , , | 2 Comments »

The suspension of Chester City

Posted by John Beech on February 11, 2010

As Stephen Vaughan seems unwilling to do the decent thing and fall on his sword, the Conference have given him a shove in the right direction by suspending the club, ostensibly for failing to fulfill fixtures (1).  The suspension is for seven days, but as the police will no longer man matches at the Deva because of an unpaid bill, the players will no longer play because they haven’t been paid for three months, and the club, in the Conference remember, has debts of £700,000 (see Ian King’s excellent TwoHundredPerCent scoop for details), it’s going to take a EuroLottery rollover win to see the club back on the pitch in its current format.

Trading solvently?  My arse, as Jim Royle would put it.  (See previous posting)

May Chester City 2004 Ltd. be confined to the dustbin of history, and let’s hope to see AFC Chester arise very shortly.

Posted in Debts, Football Conference, Governance, Insolvency | Tagged: , , , | 4 Comments »

Yesterday in court…

Posted by John Beech on February 11, 2010

Four clubs were facing winding-up petitions yesterday, and none were wound up or forced into Administration.  In three cases the outcome was simply an adjournment.

The media focus was on Portsmouth because of its Premier League status.  The club tried to make a case that the debt was in part to other clubs rather than HMRC, but, since this was for VAT which ultimately is HMRC’s, neither HMRC’s lawyer nor indeed the judge were terribly impressed.  The total debt claimed by HMRC is of the order of £12 million which must have concerned the judge.  She was more concerned by the fact that, in her opinion, the club was ‘trading insolvently’ that is, their revenues could not match their costs and/or their assets do not cover their debts.

A football club trading insolvently?  Now there’s a surprise!  😉  By any conventional definition of ‘trading insolvently’ this is standard practice in the football sector.  Against the law for the directors to do so, but rarely pursued.  Clearly Portsmouth were to be the exception, no doubt because of both the size of their debt and their parlous financial state.  They were ordered to produce a ‘statement of affairs’ (1) — a financial breakdown of their assets and liabilities.  This has to be completed within seven days, HMRC then has two days two consider its implications, and the court will sit again on 19th February, the earliest possible court date.  The period of seven days is harsh when compared with, for example, the 42 days grace given to Chester City.  At least Portsmouth are solvent enough to pay their players even if it is repeatedly late, unlike Chester.

It has to be said that things look very grim, with Administration looking an increasingly likely outcome, which ironically is probably not the best outcome either for the club or for HMRC.  The shortness of the seven day period effectively means that seeking new owners (now up to three possible candidates [2]) becomes a secondary task.  The midnight oil will have to be burned at Fratton Park to build a case that the club is not insolvent under Balram Chainrai’s ownership, a bit of a diversion as he has made clear his intention is to sell.

The club’s statement is here.

Cardiff City were also granted an adjournement, but of 28 days.  Spinmeister Peter Ridsdale doubtless wove his usual magic of tales of investors queuing up to invest in the club and the prospect of selling assets (within 28 days?).  They had at least paid off £1 million of their £2.7 million debt.

Southend United also managed to secure a 28 day adjournment.  The case against them is somewhat lower grade – a dispute over £200,000.  Chairman Ron Martin has managed to restrain his usual anti-HMRC outburst, a confetti-free statement on the club website merely noting that an adjournement has been granted (3).

Best result was secured by Conference Noth Hinckley United, who had the petition struck out as they have paid their £190,000 debt to HMRC (4).  Their transfer embargo has also been lifted (5). Exactly what has produced this turnaround in the club’s finances is unclear, Chairman Kevin Downes having banned contact with the local media (6).  It seems unlikely that Downes has injected the cash as his own company, FE Downes Ltd, was wound up in December by, good heavens, HMRC (7).  FE Downes Ltd was owed £250,000 by the club.  If any reader can cast any insight on where the cash injection(s) have come from, and whether they are in the form of loans or share purchase, please get in contact.

Meanwhile in unrelated HMRC/Portsmouth cases in court today, Harry Redknapp and Milan Mandaric have had their cases adjourned to 14 April and have been released un unconditional bail (8).

Posted in Debts, HMRC, Insolvency | Tagged: , , | 8 Comments »

Varying the capacity of stadiums

Posted by John Beech on February 9, 2010

Last week I was at the FH Kufstein University of the Applied Sciences Winter School in Austria, and, among a number of very interesting presentations from both academics and practitioners, was one given by Rainer Quenzer, Managing Director of Nüssli International AG, a Swiss company which specialises in building temporary and semi-permanent  modular stadiums (see the Nüssli International website).  I must admit that I had little idea how sophisticated this branch of the construction industry had become, with modular designs that can be very quickly assembled and dismantled.

My thoughts turned to the London 2012 stadium, which is designed so that its capacity can be reduced once the Games are over, and which Karen Brady is eyeing for West Ham.

I was also reminded of the clubs who have become embroiled with unrealistically high capacity stadiums, the most obvious example being the white elephant at Darlington.  Currently Southend United, Plymouth Argyle and Worcester City are working on designs for new stadiums which, at least to my mind, the intended capacity is arguably high, Plymouth being particularly so, with a planned capacity of 40,000 (1). I think there are more appropriate adjectives to describe this particular project than ‘audacious’ and ‘sensational’, which the Western Morning News chooses.

Given the sophistication of designs from, for example, Nüssli International, I wonder to what extent this option for a new stadium has been considered in English football.  I can’t think of an example where this approach has been seriously considered by an English club (corrections please if you can think of one), and, given the increasing criteria for stadiums and their seating capacity that are needed as a club climbs through the middle levels of the pyramid (which are no longer necessary or supportable financially if the move upwards turns into reverse through relegation), it strikes me that this is perhaps short-sighted.

A key issue is, of course, costs (stands can be bought or rented by the way).  Does any reader have any knowledge on whether this approach stacks up financially?

Posted in Costs, Stadium | Tagged: , | 4 Comments »

Portsmouth: the continuing soap

Posted by John Beech on February 7, 2010

One of my friends, who is also a colleague and a fellow Pompey fan, always says that supporting Pompey reminds him of a John Cleese quotation: “I can cope with the despair. It’s the hope I cannot handle“, which reflects rather well my personal feelings at the moment.

The club of course is facing its fourth owner this season, Balram Chainrai. The circumstances of him acquiring ownership are unusual in the football sector, but certainly not unknown in the wider business world – the club had failed to repay a loan to Chainrai, and he exercised an option in the contract of the loan to claim ownership (of 90% of the shares in the club) (1). Unlike his predecessors he has readily admitted that he has no interest in ownership and is looking to sell the club.

Not surprisingly this refreshing honesty has caused ructions. A representative group of five supporters have met with the Premier League to discuss their concerns (2), and the Supporters Direct website reports the meeting (3) thus:

Fans from the Pompey Supporters Trust and SOS Pompey campaign were today promised a ‘detailed investigation’ into the new owner of Portsmouth Football Club during a lengthy meeting with Premier League CEO Richard Scudamore and Mike Foster.

The League promised that Mr Chainrai will face a detailed investigation into his ownership of Portsmouth FC including a face to face interview with the Premier Leagues Business Intelligence Specialists.

The meeting, which followed correspondence from the Trust to the League expressing serious concerns about the Club less than a week ago, was described by the Trust as ‘highly productive’, with the Premier League announcing a number of specific measures it intends to take to ensure the effective regulation of Portsmouth Football Club in future, including the right to intervene and administer the club should it prove necessary.

In addition, the Premier League will consider our suggestion of the possibility of onsite day to day scrutiny of Portsmouth’s operations for an interim period.

The Trust went on to say “We are reassured that the situation at Portsmouth Football Club will continue to be a matter of the highest priority within Premier League headquarters. Mr Chainrais’ ownership of Portsmouth Football Club will face an unprecedented level of scrutiny and any further failures to fulfil the ordinary obligations of a Premier League club will bring swift and immediate action.”

My heart welcomes these reassurances emanating from the Premier League, but my head has a number of problems with all of this:

  • To submit Chainrai, and Portsmouth, to particularly strict scrutiny suggests that there is some flexibility in the application of the Premier League rules & regulations and their Fit & Proper Person Test.  This is simply unacceptable.  In any case, if the Premier League does act particularly rigorously, it leaves them open to legal challenge from both Chainrai and the club itself.
  • It is not the application of the rules & regulations and the Test that is at the heart of the matter – it is about the effectiveness, the actual strength and weakness, of those rules & regulations and the Test in particular.  Clearly they are deficient, and getting excited about how rigorously they are applied is simply avoiding this, the real issue.
  • It is a case of shutting the stable door after the horse has bolted.  If a club’s board is to expose itself to the risk of losing ownership through defaulting on a loan, it is then, when such a loan contract is signed, that the Premier League should be scrutinising the Fitness and Properness of the potential new owner, not when the loan is actually defaulted on.

The whole process seems to have drifted into a dysfunctional approach.  If Chester City had taken a loan from the Bank of England, and the latter had acquired ownership of the club through the Vaughan family failing to keep up repayments, would the Conference be focusing their attention on the financial suitability of the Bank of England as a club owner?  (Actually, probably best not to think about the answer to that one, but I’m sure you get my drift!)

If Chainrai is quickly successful in finding a new owner, he will become a tiny footnote in the club’s colourful ownership history.  It is Ali Al Faraj who will be remembered, and how he somehow passed the Fit and Proper Person Test.  It is the next owner who worries me – Premier League, please help me to cope with the hope by doing a fit and proper job of scrutiny with him.

Posted in Fit and Proper Person tests, Governance, Ownership, Premier League | Tagged: , , , | Leave a Comment »

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