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

The curious case of Cardiff

Posted by John Beech on May 7, 2010

So, Cardiff City have not finally settled their tax bill with HMRC and thus have not yet avoided the possibility at least of being wound up (1).  Everything is not yet rosy in spite of the wonder Malaysian cash injection, which presumably is still in the post.  At the previous court appearance the club was given 56 days and told that it was their ‘last chance’.  This time the adjournment is being marked as ‘final’ apparently.  How we debase our language.  It would seem that HMRC were convinced that this time the investment is indeed imminent, and for once they did not oppose an extension.

There is good news nonetheless –  the Spinmeister Peter Ridsdale is to go on May 31st., reportedly as a condition for the injection of £6m by Malaysians Datuk Chan Tien Ghee (TG) and Tan Sri Dato Seri Vincent Tan Chee Yioun (Vincent Tan) (2).

Ridsdale’s reaction, surprisingly muted by his normal standards, has been pretty predictable -“My time in Cardiff has been an enormous challenge, but one that we have successfully risen to and one that leaves the infrastructure in place to continue with forward momentum. It is with sadness, but great pride, I hand over to a fresh management team.

The club assesses Ridsdale against his initial brief thus: “Firstly, to assist in the construction of the new stadium, secondly to establish the Football Club within the Football League Championship, and thirdly to seek new funding. All three of these will have been completed by the shareholder meeting” (4).

Well, the stadium has indeed been built, but at what price?  That of a crippling debt to Langston which has the club has only lately started playing off.  As for the new funding, TG was drawn to Cardiff because his son was offered a trial there (5), and it was only at a later stage that Cardiff director Alan Whiteley introduced TG to Ridsdale.

I just wonder which of the following recent incidents alone give Ridsdale his great pride:

  • March 2008: Langston take the club to court over lack of any repayments on the loan.  The court finds for the club, but the pressure is now on to actually repay some money.  It has cost the club £500,000 to fight the case.
  • July 2008: The club announces losses for 2006/07 of almost £5m (6)
  • May 2009: Losses for 2007/08 are £1.5m (7).  Attendances were down by 8%.  Ridsdale took a pay cut as the income paid to WH Sport – his consultancy firm – fell from just over £1m in the previous year to £325,000.
  • June 2009: Ridsdale rejects claims that WH Sport are going bust.  The company had “merely stopped trading because he is now on the payroll at Cardiff City and the outstanding monies [nearly £374,000 to the Inland Revenue and £36,000 to other creditors]are in the process of being paid” (8).
  • August 2009: Ridsdale vows to “pay more than £370,000 he personally owes to the tax authorities by the end of this year” (9).  In 2006/07 WH Sports was paid £1,034,490 for Ridsdale’s services to the club. That included a bonus of £500,000, paid to him for saving the club from liquidation.
  • September 2009: A club sponsorship deal for £250,000 is signed with 777ball.com (10).  Less than aweek later 777ball.com’s logo is withdrawn from the club’s shirts as the sponsor does not have authorisation to advertise in Europe (11).
  • October 2009: Ridsdale announces a five-year freeze on season ticket prices for 10,000 people (12).
  • November 2009: The club is given a 70-day adjournment of a winding-up petition brought by HMRC (13).  The club website insists “Today’s court order had the effect of withdrawing the threat of a winding-up order rather than imposing it… Cardiff City Football Club have every confidence in their future financial stability and fully expect to be in a position to make further investment in its playing squad in the January transfer window” (14).
  • December 2009:  The winding-up petition is formally dismissed as a repayment schedule has been agreed with HMRC (15).  According to Ridsdale, “this puts any doubts that anybody had about the future of the club behind us” (16).
  • January 2010: The News of the World reports that the club has failed to make the first payment to HMRC as agreed, and faces a new winding-up petition (17).  The club’s response is that “We are happy that Cardiff City Football Club’s relationships with its creditors including HMRC are such that we will not have any financial issues that will affect the ability of the club to continue to trade as normal in all aspects of its business.” (18).  A week later it is revealed that a second winding-up petition had been issued before Christmas (19).  Ridsdale now insists “We have every confidence that all monies owing to HMRC will have been repaid by the end of January” (20).
    £3m raised from the sale of future season tickets will not now be spent on bolstering the squad as previously indicated; it will used to reduce debts.  Those who bought the season tickets are not amused.
  • February 2010: With only £1m of the £2.7m tax bill paid, a further adjournment is granted, this time for 28 days (21).
    The season ticket debacle is raised in the Welsh Assembly (22).
    It emerges that the club’s stadium subsidiary faces a winding-up petition over a £700,000 debt in connection with catering equipment (23).
  • March 2010: The Football Association of Wales complain that Cardiff City have not paid them money for a friendly international played at the club’s stadium in November.  A club spokesman is “surprised” (24).  Ridsdale explains to WalesOnlineIf you are asking whether we still owe money to the FAW from the Scotland match then yes, we do. But that is only because we have not done the reconciliation [on the gate receipts]” (25).
    The club launches another drive to sell season tickets (26).
    The club faces HMRC in court again and are given a 56-day adjournment.  HMRC’s barrister describes Cardiff City as “plainly insolvent” (27).

Which brings us back to the current (fourth) adjournment.  In case you had forgotten, I was wondering what it was that gave Ridsdale his great pride.

It would seem that for once the adjournment actually is a technicality.  The Malaysian investment has come in the nick of time.  However, £6m is only just beginning to look at the club’s debts, and it remains to be seen whether the future level of investment will prove adequate.  Let us hope so for the long-suffering fans’ sake.

For other clubs, there is a warning – Watch out! There’s a Ridsdale about!  He might want to spend five years ending in great pride at a club near you.

Steve Tucker of the South Wales Echo summed up Ridsdale’s impact on Cardiff City rather neatly: “In the end Ridsdale’s tenure was a rollercoaster ride for supporters. But, like any rollercoaster, it is one many people will get off nauseous and relieved … and probably reflecting that the lows in many ways out-weighed the highs” (28).

There is one bit of bad news for Cardiff however.  Having announced his departure, within a matter of days it is announced that he will continue to be involved with the club, offering free advice on transfer activity (29).  Just how much free Ridsdale advice can a club afford?


CARDIFF UPDATE – 11 June 2010

The club is now reported as having settled its £1.9m debt to HMRC (A).  It strikes me as at least slightly curious that it has taken so long.

The new regime seem set to continue the tradition of spinning so strongly established over the last few years.  New Chief Executive Officer Gethin Jenkins told an EGM on May 27: “Going into last weekend the level of enthusiasm for the club was clear as we broke season ticket records, coming close to 16,000 sold excluding corporate sales. This enthusiasm has been matched by increased commercial interest from businesses across South Wales” (B).  Nothing to do with Peter Ridsdale misleading fans on how the income would be spent then.


CARDIFF UPDATE – 16 June 2010

At the High Court today HMRC officially withdrew their winding-up petition over the £1.9m tax bill, this being the club’s fifth appearance in court (C). The club will however have to pay legal costs.

Further update same day:

This has been announced on the club website (D), although no mention of the order for costs. The statement speaks of “look[ing] forward to the season and to develop our ongoing recruitment plans“. If I were a Cardiff fan I think I would have be hoping for a statement that included something along the lines of “We now have a sustainable business plan that will ensure we pay off our debt to Langston on schedule, and that we will avoid any winding-up petitions in the future“.

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4 Responses to “The curious case of Cardiff”

  1. A brief comment, as a Cardiff City supporter and season ticket holder. You make a very fair point, that Peter Ridsdale’s tenure has not been entirely without incident.

    As an observation, though – Ridsdale took over from Sam Hammam, who was ambitious and created a buzz about the club. He was not able to deliver the new stadium, but Ridsdale was.

    A final comment. I was one of those people who bought a season ticket on the basis that the money would be spent on pushing the club towards the Premiership. I got a season ticket at a price freeze, so I was not one of those disgruntled supporters who complained.

    • John Beech said

      Thanks Michael. Whatever Ridsdale has and hasn’t delivered, it’s been at a high price.

      What worries me about the season tickets is that it is using future revenues to pat past debts, thereby leaving the club in a corner in the future. Too much of any new investment is already ear-marked. It all smacks of desperation – which Ridsdale could have been more transparent about rather than always painting a falsely rosy picture.

  2. […] afternoon at Wembley, financially troubled Cardiff City play Blackpool in the Championship Play-Off final. Most Englishmen will be rooting for the […]

  3. Steve said

    Thanks for that useful summary of the situation at Cardiff City Football Club. The situation there appears to be even stranger than you described, as it’s been alleged that the club has mortgaged any profit to be made from the sale of around a dozen of their players and has taken a loan out (and presumably spent it) on the strength of the end-of-season Football League merit award and TV money (http://www.guardian.co.uk/football/2010/feb/24/peter-ridsdale-cardiff-city-finances). So, little revenue to be had from season ticket sales for 2010-11 as most of the expected ticket sales have now happened, and the income used to pay existing debts/running costs; TV/merit award money gone; income from player sales vastly reduced; an imminent demand from HMRC for £1.9 million (due to be heard on 16 June unless the club settle beforehand); a wages bill estimated at £1 million a month; outstanding debts on the stadium and to a variety of local contractors; and the huge debt to Sam Hamman.

    It’s true that the club now has a backer who’s variously described as a ‘multi-millionaire’ or a ‘billionaire’. However, so far his consortium has only ‘invested’ £6 million into the club. It’s not clear how much of that went towards buying out Peter Ridsdale’s majority shareholding in the club but I would guess a substantial amount; some at least of it will go to paying the HMRC debt; the rest, together with income from the play-off games, may just cover the wages bill over the summer but I doubt there’d be much left to invest in new signings. (In fact, although Dave Jones has been sufficiently reassured by the new owners’ pledges of investment to sign on for another term, so far CCFC look like shedding players and cutting back on their costs rather than splashing out for the new season.)

    Ridsdale, meanwhile, may continue to be an important player at the club as it has been reported that many of the 60% of shares that aren’t held by the Malaysians (or the small amount held by the Supporters Trust) are held by friends and associates of the former chairman.

    Administration for now looks unlikely – partly because of the Malaysian investors, who have the potential to bail out the club (it remains to be seen whether they have the will), and partly because, I presume, Sam Hamman wants all his investment back and would sooner see the club deducted 25 points than agree to a CVA. This is just speculation, of course.

    The thing that baffles me is the lack of any coverage in the media, apart from your article, one or two on specialised websites, and the piece on http://www.guardian.co.uk I referenced above. I’ve been trying to interest some national newspaper journalists in the story and they just don’t seem interested. Not a sufficiently glamorous club I suppose.

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