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

Archive for August, 2014

On Coventry City, Hereford United and Salisbury City, not forgetting the Owners & Directors Test

Posted by John Beech on August 28, 2014

So, Coventry City will finally return to the Ricoh. Interestingly, the large CCFC logo which adorns the stadium had never at any point been taken down, suggesting that ACL, the Ricoh owners, always believed a compromise with Sisu could be achieved.

According to the Coventry Telegraph, the big breakthrough in negotiations was as the result of ‘Divine Intervention’. What they meant was that Joe Elliott, long-time key figure in much of what has happened, but recently ostracised by Sisu, persuaded the Very Reverend John Witcombe, Dean of Coventry Cathedral, to intercede. He turned to Bill Marsh, a professional mediator, with some track record in these matters, including involvement in the sale of Brighton & Hove Albion by Bill Archer.

What remains outside the public domain are the details of the new agreement – who conceded what? The Coventry Telegraph paints a picture of willingness by both parties to reach a conclusion. CCFC have announced their pleasure at returning; ACL have remained silent.

The spotlight on football’s top basket case switches then away from Coventry, and falls on two other clubs, Hereford United and Salisbury City. Both cases involve contentious new owners, and hence bring the need once more for scrutinisation of the Owners & Directors Test, more widely known as the Fit and Proper Person test.

In the case of Salisbury, a new owner Outail Touzar, a Moroccan businessman, was approved, and he bought the club. Pretty rapidly the club was describing the negotiations as “a trail of lies, deceit and deception”, and the local MP has branded Touzar ‘a charlatan’. Now you might think that this, together with the fact that Touzar was reported to be recruiting players notwithstanding the club’s transfer embargo would bring his fitness and properness into question. Apparently not.

Over at Hereford, the club, already deeply distressed financially, was sold to Tommy Agombar, who immediately exuded a totally misplaced optimism about what his ownership would bring. Agombar had a theft conviction, and duly failed the Owners & Directors Test.

A 1:1 draw for the efficacy of the Owners & Directors Test? Decidedly not! The previous owner of Hereford United had sold the club in the knowledge that Agombar had this conviction, Agombar was free to sell the club to whoever he wished once it was declared that he had failed the Test, and in fact sold it to a company which specialised in buying distressed debts, thus placing the club deeper in the financial mire.

It is fundamentally wrong that ownership of the club should ever have passed to someone who had not passed the Owners and Directors Test, and equally wrong that such a person can then sell on the club.

Not only is the Owners & Directors Test fundamentally flawed by its inability to prevent, for example, Touzar, buying a club, its operation is fundamentally flawed in that does not prevent someone who has not passed it to sell the club on. As well as a system of Club Licensing we need a system for licensing Club Owners. Without already holding such a license, no one should be allowed to buy the majority shareholding in a club, let alone then sell it.

With respect to Salisbury City, it also needs to be asked why Touzar has not at the very least been charged with bringing the game into disrepute. The current chronic failure of the FA to help rather than hinder clubs in financial distress must be addressed.

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Posted in Fit and Proper Person tests, Football Association, Governance, Insolvency, Ownership | 1 Comment »

Moving on from ‘SISU OUT’

Posted by John Beech on August 15, 2014

It was a difficult choice of topic after so many months, but Coventry City is probably the obvious choice for me – I live about a mile from the old Highfield Road ground and could hear the roar on matchdays.

By chance, I was turning out last week and came across a copy of the Coventry Observer from 20 December 2007. My reason for keeping it was apparent on page 3 – two stories which began thus:

  • Last minute deal secures football club’s future
    Coventry City were just half an hour away from going into administration when pen was finally put to paper on a long-awaited takeover deal.
    with the clock ticking towards Friday’s 4pm deadline for a deal to be struck, the Sky Blues confirmed shortly before 3.30pm, the takeover by SISU Capital was going ahead – securing the club’s future and banishing the threat of administration…

  • Arena pledges support for club’s future
    Ricoh Arena chiefs have pledged to support SISU Capital’s efforts to return Coventry City to the Premier League…

Clearly much has changed since December 2007. The club had been through a disastrous period in the years immediately before. Debts had been reported as running as high as £38 million; year after year the club made operating losses; and investing in the new £60m stadium had proved a step too far. Indeed, the stadium, the brainchild of the club’s then Chairman, Bryan Robinson, had only become reality by the club passing the stadium project over to Arena Coventry Ltd (ACL), a joint venture company consisting of Coventry City Council (50%) and the Alan Edward Higgs Charity (50%), a trust set up to help deprived children from Coventry.

The then owners of the club – the major shareholders, owning 90%, were Craigavon (City MP Geoffrey Robinson’s family trust, and Sir Derek Higgs, son of Alan Edward Higgs) – announced their intention of placing the club into Administration. Apart from Sisu, the only potential buyer was ‘Greek billionaire businessman Alki David’, who rapidly backed off when he realised the scale of the debts he would inherit.

The club thus stood, to borrow the recent words of David Conn (or a Guardian sub-editor perhaps) on the edge of an abyss.

Coming in then as saviours of a club in distinct danger of liquidation, how then did we reach today’s situation of repeated legal confrontation and the club’s exile?

Sisu were by their own admission new to the football business. They brought in football business experts such as Ray Ranson and Ken Dulieu. Their judgement proved questionable and both departed. As the performance on the pitch deteriorated and the club suffered a further relegation to League 1, the fans became severely disenchanted, a situation compounded by Sisu’s almost non-existent transparency or engagement with the fans.

Opposition to Sisu became public and organised, and we drifted into phases of protest characterised by a series of slogans.

The first of these was the unequivocal SISU OUT. Understandable though this was, in my eyes it always seemed at best only half a strategy – and what next? The further Sisu sank funds into the club, the less likely it was that anyone else would want to buy the club. In the six and a half years of Sisu’s ownership only the brief appearance of Preston Haskell IV presented any viable alternative to Sisu. It became abundantly clear that a presumption of the SISU OUT slogan – that Sisu were willing to sell – was ill-founded, and even wishful-thinking.

The straw that broke the back of many fans was the decision of Sisu, in an attempt to force ACL’s hand in the increasingly bitter disputes over rent and matchday revenues, to take the club into exile at Northampton. We then entered a phase where the slogan of choice was BRING CITY HOME. A perfectly simple proposition on the face of it, but one which begged the intractable questions of how and under what conditions.

The most recent phase has seen protests with banners saying LET DOWN, which begs the question of by whom. Moz Baker of the Sky Blue Trust when interviewed on local television earlier this week cited Sisu and the Football League, and it’s not hard build an argument for either nomination. I would add to this list ACL and its joint owners, Coventry City Council and the Alan Edward Higgs Trust. I would also add to the list the previous owners of the club, for it was they who precipitated the current situation by deciding to move away from the old stadium at Highfield Road, which resulted in the separation of ownership of the club and its stadium.

From a business perspective, it is perfectly understandable and indeed reasonable that the club owners would want the matchday revenues, particularly with the restraints that Financial Fair Play protocols now place on spending . Equally understandable and indeed reasonable is that the owners of the stadium would also want the matchday revenues, particularly as the football stadium is the core of the revenue generating potential of the infrastructure.

So, we are in the situation where the entrenched positions of the two main proponents are understandable and reasonable from their own perspectives. The only way out of the impasse would be compromise by one or both parties. At present we have a war of attrition. There are unsubstantiated rumours that talks are taking place between Sisu and ACL. If true, we can only hope that ‘jaw jaw’ will stop ‘war war’. The present situation with the club in exile is patently bad for the owners of the club, for the owners of the stadium, and, above all, for the fans, and indeed for the Council Tax payers in Coventry (of which I must put my hand up as being one). The only gainers are the lawyers.

A return to the Ricoh is a no brainer. There must surely be some way forward through compromise.

 

[A reminder – this is a personal blog which is moderated.  Abusive comments will not be posted; counter-views are not considered inherently abusive.]

 

Posted in Assets, Cashflow, Debts, Football League, Governance, Insolvency, Ownership, Revenues, Stadium, Strategy | 5 Comments »

Ready to come back onto the e-pitch

Posted by John Beech on August 13, 2014

Back in February last year (!) I noted a change in life circumstances and wondered “How this will affect my blogging is not yet clear.” As you may have noticed, it had a major impact on my blogging.  Between March and July this year, for example, I made 16 work-related trips, twelve of them abroad, so blogging rather slipped down my ‘to do’ list.

Nonetheless I have continued throughout to keep my club files up-to-date, but the relatively little time I had for social media I put into three news sites. Directly related to the content of this blog is Scoop.it! Football Finance.   A second site, Scoop.it! The Business of Sports Management includes football management issues that are either beyond the area of finance or are beyond England (the site is tagged and that link picks up just the football stories.  A third site, Scoop.it! The Business of Events Management, includes football events such as the various World Cups (2014, 2018 and 2022), and news on these individual events can be pulled up by clicking on the appropriate tags.

To my regret, my blogging silence has included a number of intriguing (in both senses of the word) sagas – in alphabetical order, Birmingham City, Cardiff City, Coventry City, Hereford United, Leeds United, Portsmouth, Reading, and Salisbury City, for example, spring to mind, all of which have been well covered on the Scoop.it! Football Finance site.

There was much I could have blogged on these clubs and others. With a reduction in my future work commitments I plan to start blogging again regularly.  Just looking at that list of clubs, with the one exception of the fan-owned Portsmouth, there remains much to be concerned about in terms of their finances, how they are managed by owners, and the overall governance of English football.  I plan to play myself back into regular blogging, so do please return to the blog over the coming weeks.  New postings will be announced on Twitter.

As to what the topics of upcoming postings will be, I feel spoilt for choice…

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