Yesterday provided a good example of the potential power of social media in reporting breaking news. Sadly the Twitterati were more concerned with reporting from Theo Walcott’s golf club than from the meeting where Crystal Palace would ‘do or die’. As we now know, they have, thankfully, lived to fight another day.
At the heart of yesterday’s crisis meeting was the terms of any future sale of Selhurst Park. The CPFC 2010 consortium, prospective new owners, were at crunch point in the negotiations to buy the club, from one Administrator, and the stadium, from a second Administrator. Their desire to reunite club and stadium makes sense from every point of view and is a sign of a healthier future.
Club and stadium had first become separated in 1998 when then owner Ron Noades sold the club to Mark Goldberg, but retained ownership of Selhurst Park. The club was then struggling financially, but a ten-year lease was agreed. Goldberg appears to have been under-funded as a benefactor, and in 2000 Simon Jordan acquired the club.
In 2006 Jordan claimed that he had acquired the freehold on Selhurst Park (1), but it transpired that Nodes had in fact sold the ground to a company owned by 60% by Paul Kemsley and 40% by HBOS (the ‘BOS’ being Bank of Scotland [now 40% itself owned by the UK government], not the Royal Bank of Scotland [an entirely different bank, now owned 84% by the UK government]). Jordan however persisted in claiming that he was de facto owner of the ground (2), although also claiming that he had a 25-year lease. The actual ownership has been a complex saga, a detailed account being published by David Conn in The Guardian in October 2008 (3).
To cut a long story short, the recent history of both the club and the stadium has been deeply troubled financially, and Simon Jordan has become increasingly demotivated. In June 2009, Rock Investments, the Kemsley company which then owned Selhurst Park, went into Administration (4). By August 2009, the club was hit with a transfer embargo following a dispute over unpaid bonuses and signing-on fees from last season (5). Jordan pumped a further £5m into the club (6), but in January this year, under a second transfer embargo, the club was forced into Administration by property company Agilo, who had been supporting the club with loans (7).
A credible rescue attempt, taking over both club and stadium, would thus necessitate complex negotiations with not one but two different negotiators. Again for the sake of brevity, we reached the situation where the CPFC 2010 consortium had reached agreement in principle to buy the club, but negotiations for the purchase of the stadium were in stalemate. The problem was over the rather oddly termed ‘anti-embarrassment’ clause that Lloyds, owners of HBOS, and the major creditor of the stadium, were seeking to impose.
This ‘anti-embarrassment’ clause covered the situation if the new owner subsequently sold the stadium for a profit. This might seem an academic point given Croydon Councils stated policy regarding the use of Selhurst Park for football, but Lloyds appear to have agreed a price that was less than might have achieved had they chosen to press for a change in policy and then sell Selhurst for property redevelopment. Not surprisingly then, they were not prepared to see the CPFC 2010 consortium possibly make a profit at their expense at some time in the future. The CPFC 2010 consortium felt that, in the unlikely event, they would not be prepared to see Lloyds profit from any investment they (the consortium) had subsequently made in developing the infrastructure at Selhurst Park, which would presumably bolster any resale price. Academic, yes, but, given the figures involved, a matter which needed to be resolved before pens were put to paper.
A complication in the negotiation of the sale of the club to the CPFC 2010 consortium had been Simon Jordan’s agreement to the proposed CVA. As a ‘benefactor’ who had pumped his personal money into the club, it is perhaps not surprising that he was reluctant to lose both ownership of the club and a considerable amount of money. The proposed figure of 1p in the pound to be paid to creditors was hardly an enticing offer.
Fortunately common sense seems to have prevailed all round (I’m tempted to say ‘for once’) and agreement has been reached for both sales to the consortium. For once, the future for Crystal Palace looks brighter, if not yet rosy.
The generic lessons of this sorry sage are clear:
- The separation of ownership of club and stadium is a dangerous road to go down, even if a lengthy sell-and-lease-back arrangement is agreed. In fact, the longer the period, the greater the exposure to risk of being unable to pay the lease, let alone invoke a buy-back clause. Think Leeds United.
- The generosity of a ‘benefactor’ is really stretched when he faces losing both ownership and his money. The latter presupposes the former after all.
Clear lessons to be learned for far too many club. will they have been universally learned? Frankly, it seems unlikely.