The Portsmouth Horror Show
Posted by John Beech on April 24, 2010
It is to the credit of Andrew Andronikou, the Administrator, that with an unexpected transparency that he has published the report (1) to be presented to the creditors at the meeting on 6th May. That said, there is little more that can be said to deserve the term ‘credit’ in this latest episode of the sorry saga of Pompey’s decline and fall.
The report sets out to the creditors the various options, which are essentially that they agree a Company Voluntary Agreement (CVA) or the club is liquidated in an attempt to pay off the debts. It is abundantly clear that, while the creditors cannot realistically expect to recover anything like all the monies owed to them (reports have suggested that the crucial figure missing from the report is settling for 23p in the £ ), liquidation would be an even less attractive option for the creditors. Whether the creditors will accept this kind of level of payment remains to be seen, but it is difficult to see why Andronikou is so optimistic that a CVA will be agreed, although the quite what the situation is with prospective new owners, and their willingness or otherwise to contribute to paying off the debt, is, as yet, known only to Andronikou.
Inevitably the richness of financial data in the report provides the entrails to be picked over in order to assign blame for Pompey’s decline and fall. A good starting point is the fact that wages had risen to the level of 109% of revenues, not exactly a sustainable business model. It could only be sustainable with a benefactor prepared to keep pouring money into the club – a luxury that Portsmouth has not enjoyed of late. A major tranche of the club’s debt is to previous owners – £39.2m in the form of unsecured loans and £14.2m secured against the stadium, the better part of half the debts – who are not prepared to write their money off, in effect, as equity in the way that Abramovitch or Gibson have done at Chelsea and Middlesbrough respectively.
Is it as simple then as attributing Pompey’s ills to their involvement with the ‘wrong sort of benefactor’? Well, only at a very simple level. At the next level down in a hierarchy of causation, there is the issue of how it would have been possible to have avoided the wrong sort of benefactor. Certainly these benefactors must accept a major part of the blame – after all, they chose to take on the role.
To me the story of Portsmouth since Gaydamak decided to walk away has been a savage indictment of the obvious inadequacies of the benefactor model, offering examples of a benefactor who gave up, a benefactor who simply didn’t have the necessary funding, a benefactor so disinterested that he never visited the club, and a benefactor who ended up in that position by default rather than by plan.
The media have tended to focus more on the mid-size debts, and there are plenty of rich pickings among the entrails here. The staggering level of debt to agents, for example. The largest is to Jaques Perais for the sale of Diarra to Real Madrid, a matter of over £2m. So significant is the debt that Perais is on the Creditors committee (a first perhaps for football Administrations?), other members including two football clubs Stade Rennais and RC Lens (again perhaps a first?).
The small-size debts reveal a particular horror show. Among is the shameful debt of £2702 to those stalwart supports of the game, St John Ambulance. Pompey fans have a history of dipping their hands in their pockets – in 1976 SOS Pompey raised £35,000 [which would be of the order of £200,000 today] from fans to save the club (3) – and it is not surprising that fan Tom Purnell established a webpage to raise money to clear the disgraceful debt, something that was achieved in roughly a day (4). Well done Tom!
Since the publication of the report, it has been suggested that the figure of £119m debts may yet rise further (3). In particular, there is still some uncertainty over future bonuses and appearance fees for players that will need to be paid. The Portsmouth Evening News has already uncovered two unlisted debts that are even more shameful (4) – the club owes two cancer charities almost £15,000, money already raised in their names. The fans have shelled out over St John’s Ambulance, the players have shelled out to keep ground staff in their jobs (5), so isn’t it time that the former owners and/or the former Chief Executive dug deep to stop the club’s name sinking even lower?
I must admit that although I am not often shocked by new stories of appallingly bad management in English football, Andronikou’s report is exceptionally disturbing reading. Just how many more wake-up calls do we have to have before the game gets itself properly in order? The self-serving Premier League Chief Executive Richard Scudamore is right when he says Pompey’s problems are just that (6), but, unless the process of governance precludes the antics we have seen in the boardroom at Fratton Park of late, English football continues to head remorsely towards a brick wall.