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

Posts Tagged ‘Transfer embargo’

On the embargo front

Posted by John Beech on August 8, 2010

A quick look at clubs and embargoes, not exhaustive, and needing qualification for the particular circumstances of each club, and obviously subject to changing reactions to the lifting of an embargo.  It does however suggest that the impact of a transfer embargo varies enormously, making it a rather blunt instrument as a sanction.

Accrington Stanley
The club has finally lodged its accounts for 2008/09, showing a loss of £300,000 and debts of just over £1m (1).  The embargo, which had been reimposed at the end of June (2) has been lifted, and two defenders have been signed (3).

Cardiff City
The embargo has just been lifted (4) and manager Dave Jones has two signings lined up (5).  He obviously hopes for a ‘flurry of signings’ but it seems unlikely that the club’s finances will allow a great deal of activity.

The for yesterday’s match against Coventry City gave the squad thus [click on image to enlarge]:

By the time of kick-off there had been some updates.  Ashdown had been cleared to re-sign, and the actual bench had but four possible substitutes.  Boateng, who did not appear at the Ricoh, is up for sale, as is Utaka, but on yesterday’s performance it is hard to see the latter fetching a decent figure. Kanu is yet to agree new terms.  Don’t hold your breath for a ‘flurry of activity.  It’s still very much a case of ‘Pray Up Pompey:

Pray Up Pompey

Preston North End
The transfer embargo was lifted at the end of June (6).  Trading has been constrained.

Sheffield Wednesday
The embargo has just been lifted (7), but again a ‘flurry of activity’ is not expected.

Southend United
The embargo has just been lifted (8).  Seventeen (yes, that’s seventeen) players have been signed by the newly-relegated club, which was repeatedly in court last season regarding HMRC debts, and which struggled to pay its players on time.  Double Nectar points all round then.

Posted in Sanctions, Transfer embargo, Transfers | Tagged: , , | 2 Comments »

Crystal Palace’s Park is its castle

Posted by John Beech on June 2, 2010

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.

Posted in Assets, Benefactors, Debts, Insolvency, Ownership, Stadium, Transfer embargo | Tagged: , , , , , , | 1 Comment »

Call me Stanley Cynical, but…

Posted by John Beech on December 13, 2009

There is nothing that quite winds up [oops!  better change that that to ‘rattles the cage of’ to avoid ambiguity in the current financial low] club owners and directors than the thought that a rival club is being inadequately punished.  Witness for example the stone throwing from a glass house of Hereford United’s Graham Turner at Stockport County when the latter ‘only’ received the standard punishment for going into Administration (see postings passim).

There must have been some spluttering of cornflakes yesterday over the breakfast tables, at least for those directors who read the Lancashire Telegraph. A report announced that Ilyas Khan, Accrington Stanley’s latest acquisition as ‘benefactor’, was minded “against lifting a transfer embargo during the January transfer window” (1).  The rationale for this?  “Because 20 is a reasonable squad size in any caseAs long as our injuries aren’t too bad then perhaps 20 is quite a good number to have

Should this be viewed as a welcome, and long overdue, realism creeping into Stanley’s financial management? If so, then only for the briefest of moments.  The key point here is that the embargo was imposed as a sanction – Stanley owe money to a football creditor, the PFA, who had stepped in to stop the previous regime crumbling, and to ensure that players received their wages.

If a cavalier attitude is taken to the repayment of football creditors, the whole transfer system is severely undermined, and the PFA may be reluctant in future to intervene in helping clubs pay their wages (not that in a properly run club they would ever have to).

The ‘sanction’ is no longer that – the transfer embargo is no longer either a punishment, or an incentive to behave ethically.  In short, it has become dysfunctional as a means of disciplining clubs, in much the same way that, as I have repeatedly argued on the basis of my research , deducting points is dysfunctional as a sanction.  We are moving to a situation where sanctions are dysfunctionally farcical. In the case of the transfer embargo, the effect or otherwise of a transfer embargo comes down to the luck or lack of it that a club has with player injuries.

The Accrington action should be seen as a clarion call to sort out the sanctions system, and rid it of its increasing dysfunctionality. Given the number of Premier League clubs currently with financial issues, now is not exactly the best time to have dysfunctional sanctions for financial mismanagement.

Posted in Ethics, Insolvency, Sanctions, Transfer embargo | Tagged: , , , | 1 Comment »

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