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Circling the Drain
If there is one thing I have seen from the Championship this year it’s that Blues aren’t the only team with financial worries. I wanted to take some time out to talk about tonight’s opponents Portsmouth – who are truly circling the drain – and what we can learn from their possible impending demise.
As you well know, Pompey have been in trouble for some time. The 2009/10 season saw massive upheaval, ownership changes and the first Premiership club going into administration. I think that year also proved how ridiculously useless the fit and proper person test for club ownership is as it’s now fairly plausible that one of the owners that year Ali al-Faraj may well not exist.
After relegation, administration and a hard-fought battle with the tax man Portsmouth found themselves sold to a firm called Convers Sports Initiatives, owned by Russian multi-millionaire Vladimir Aleksandrovich Antonov. Unfortunately for Pompey, Antonov was arrested in November 2011 following investigation into alleged asset-stripping of a Lithuanian bank called Snoras. Once again, Pompey are in trouble – and now the taxman is trying to force a winding up petition to go through over a £1.6million tax debt which the club have defaulted on.
Whilst I’m not the biggest fan of Pompey I do feel a bit for their fans and I have to agree with the assertion I continually see online from some of them that until they get rid of the toxic owners and creditors they currently have, there is no solution for them. I’m of the feeling the best solution for all concerned is if the taxman wins their case and the football club is wound up – with the so-called “golden share” given to their fans’ supporters trust who have been readying a “Plan B” – a phoenix club. Yes, that club may have to start again much further down the football pyramid but it will be with a clean slate – which I think is the most important thing.
Of course, there have been some uncomfortable noises from Blues fans too – “there but the grace of God go we” as it were. However, there are marked differences between Blues and Pompey that we should take comfort in. For instance, Portsmouth FC own nothing – they don’t own their ground, any land, or a training ground whereas Blues still own St Andrews. The debts at Pompey are huge in comparison to what they bring in, and whilst I believe Birmingham City may have found it difficult to keep cashflow going at times at least they have been responsible enough to trim the wage bill as quickly as possible and cut their cloth to their means.
I think Portsmouth’s problems though show what is currently wrong with football; in that it’s pretty damn difficult to test if any owner is “right” to own a football club. The current F&PPT has only ever been failed twice since it has come in yet we have seen problems all over the football league of clubs struggling to stay in business. Furthermore, I think it’s also evident that the Football League are a bit too laissez-faire in their approach to football club ownership – I’ve yet to see the FL say anything at all about the Pompey situation despite the fact the club could well go out of business by the end of this month.
I know that many people want to just concentrate on what is going on the pitch rather than the circus that surrounds it – and to be fair, I can completely understand that. After all, we’re football fans, we’re not supposed to be chartered accountants as well, are we? That being said, I think something really needs to change with football or we may well see these sorts of problems replicated on a larger scale.
Tags: Portsmouth FC
25 Responses to “Circling the Drain”
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Good piece Mayor.
I find it astonishing that they are not already in Administration. The fact that they have defaulted on two tax payments without prior agreement, and also have not paid their players makes this a prima facie case of trading whilst insolvent – the test is normally ‘unable to settle debts as they fall due’. the Directors will now be personally liable for any new obligations they take on.
You would also expect that any suppliers – e.g. coach companies, catering etc. would want to be paid in advance exacerbating the problem.
How on earth the FL can sit by and do nothing beggars belief!!
KRO for 3 points tonight
The reason Pompey are not in admin is that it is CSI the parent company that owes most of the debt, again Pompey are being asset stripped, last year when CSI went into admin we were told that Pompey could survive on its own income until about April, according to the chairman David Lampitt that is then suddely Andronikou the CSI administrator turns up and Pompey are owing money to HMRC. I am adding 2+2 and getting more asset stripping.
Again the only people who will get hurt in all this is us fans.
i love that phrase ‘circling the drain’ it is fabulous. And to be honest, there is not any one of the league clubs who are not as you put it circling the drain.
Everyone of them are doing the circleing. The only thing stopping some of them going down the plug hole are a handfull of wealthy investors.
There are very few clubs living within their own means and i say this to all manchester city fans.
What if Formula 1 said to them. Build me a race track in your country and we shall award you an annual formula 1 race. Their current toy that is Manchester City would be quickly thrown out of the pram. The company loans would be withdrawn to be reinvested in the race track in the middle east.
That would leave manchester city with a massive plug hole to fill and because the level of funds currently invested there. That would mean that there would be very few people in the world who could plug that level of financial gap so finding anoth replacement investor would almost be impossible.
There there wouldnt even be a blue half of manchester anymore.
As for chelsea, well they fall into the same position. The only difference being that i think Abrahamovitch converted his loans to the club into shares, which gives them a bit more stability. But still. he is in his 40s and wont continue to invest in Chelsea forever. So unless his family descendants are willing to put in the same level of investment for years to come. They too should be looking not to rely on one major source of income like they do
As for birmingham. We are at least trying to live within our means but it will take time to plug that drain which opened up when our plug was pulled out at the start of the season.
I know that B’ham Uni own the land @ Wast hills nr Alvechurch, but not many teams actually own their own training grounds. The FA own Bodymoor Heath (viles training ground) and similar can be said for much like around the country.
As for Portsmouth, they are a ship that has been torpedo’ed. They’d be best off starting anew from just below the conference and working their way up. Look at AFC Wimbledon, they’ve rejoined the league and making a decent fist at it. OK they may not make the premiership in 9 seasons like they did last time, but they will still have their fun and games, so good luck to them.
Interesting fact for you – Crystal Palace’s fans own the Palace training ground – edit, sorry will own it. I believe they’re building a new one.
Just to clarify, Portsmouth DID own their ground, but this was taken by one of the recent owners before administation, so don’t believe it can not happen to Birmingham or any other club. Next is that Pompey themselves are not in administration. Along with a number of other companies they are held under the umberella of parent company, CSI, which is in administration. i.e. Portsmouth FC are not trading whilst insolvent in any tradiditional sense of the word. Cash flow is the reason the tax was foolishly not paid but thereare no significant debts to other suppliers, etc. Because the tax authoritiesimmediately issued a winding up order for tax not paid in January, accounts are frozen, so wages, etc can not currently be paid, Looking back,perhaps the CVA set for Pompey to pay back more than 20p to the pound was too tough ( think Palace paid 1p in the pound), but the real reason for Portsmouth’s situation was suspect owners, making loans and taking huge amounts of interest, wages, expenses, etc and buying and selling players and taking huge amounts of ant profit on that action. Harry Redknapp’s case emphasise this with him taking a share of transfer profits. The CEO at the time was even on a win bonus! Please don’t simply look down on Portsmouth, Pompey fans did nothing wrong and they are the ones punished. It could happen to you just as easily.
Now Now. Harry insists they were gifts and not bonuses paid by virtue of creating transfer profits……….Hmmmm ofcourse they were Harry. it is strange that HMRC have taken Mr Redknapp to court on such a matter. i know several tax inspectors and am informed that this is quite unusual for a first offence of cheating the public revenue……….. I am assuming it was first offence
Responding to my own response. Now that it is all over, we see that there is a history of such payments being made untaxed. this verdict sends out the wrong message that football can do what it wants in avoiding paying tax in the UK
Well Said Wayne! PUP,
Living in Pompey and having to endure the fans moaning about their circumstances, is making me want them to go under more and more.
I do feel some sympathy but they wanted to live the dream of top premier side without the revenues to support their lifestyle. Unfortunately, after the last CVA they have continued to live outside their means always I believe on the assumption that a benevolent benefactor will always chuck a bit more cash at them.
Where I do feel the system has failed is that the league continued to let them buy and loan players when they were clearly not on an even keel and this has deepened the hole somewhat.
On another point, the clubs assets have been sliced and diced with 2 former owners (Chanrai and Gaydamak) now having an unhelpful and complicating hold over the club. In my view, going forward their needs to be some way of holding a clubs assets together in trust to maintain the integrity of the club if it does run into trouble. Not sure how legally this could be framed, but having owners holding the club as a single entity may be a way forward. If they got into difficulty then forcing the sale of the club and ground as one asset rather than being able to break it up may be a way forward for preserving the life of a club within its community. Just a thought.
It is frightening to think what a parlous state most clubs are in these days,!!. The F-A, Premier league and Football league, must act in concert, Standards of ownership must be set, — I am not versed in the ways or means to implement this, but surely there must be the will to begin the process soon,?.
Peter Pannu, has been villified in the past, and whilst being a big fan of his, I take my hat off to him for holding us together so far,!!.
I would hate to see a famous old club like Portsmouth go under but BlueB is right to a certain extent. I live in the south of England and am closer than most Blues fans to Pompey’s plight than most and it is clear to me that Pompey has lived beyond its means for a long time and little has been learned from the debacle a couple of years ago. The Tax man takes no prisoners so unless the club can come up with £1.6 million pretty smartish they are destined for the flames of the phoenix I’m afraid. It may in the end be a blessing. Aldershot did it, Accrington did eventually and so have AFC Wimbledon more recently. Pompey is a far bigger club than any of those and whilst the climb back would be a painful one; I believe it to be possible with their fanatical fan base. They cannot keep going bust so something drastic is needed and if becoming a phoenix club owned by the fans is the answer; so be it. Good luck Pompey fans but not tonight! KRO SOTV
I think it is likely to be substantially more than £1.6m soon. They owe £1.6m to tax man with another month soon to come, 1 months players wages and there will £1.2m due early April for the CVA.
Whilst wayne above and the club says that this is a temporary cash flow issue I cannot see how they pull away from this without trading whilst knowingly trading whilst insolvent.
I do find it quite amazing that many fans looking at Pompey’s plight keep banging on about how we lived beyond our means, agreed we did, but 90% ot all Enlish league teams are doing the same. Pompey had what we thought to be secured financial backing with both Gaydamac and CSI no one predicted both backers demise. Before they arrived we were run by Milan Manfaric and making a profit and we had a good enough team to challenge top half premiership.
What would happen to Chelski if abramovich got bored or al fayed gave up trying for a nighthood and your selves what isf Carson Yeung pulled out of brum? hundreds of millions of pounds of debt and clubs going out of business very quickly.
Dunno if you heard mate, but our owner has been indicted on five charges of money laundering and had his bank accounts frozen. Henceforth Birmingham City rapidly got rid of it’s highest wage earners (with the exception of Zigic who no one seemed to want), and have massively scaled back the wage bill by bringing in less illustrious players.
We’re certainly not out of the crapola but we’re almost self-sufficient now I would think.
I agree that most clubs certainly do live beyond their means. However, no other club that I can think of has has gone into administration and then followed it by getting into significant financial issues within 2 years. First time was silly; second time…..!!!!!
Leeds Utd
Thought that was just one almighty fall through to league 1. Not sure they ever got themselves out of the hole to fall back in. Bates now taking the flack for not spending – when all he is making them do is live on their means and not beyond them. Happy to be corrected.
Also meant to say that I don’t think you could have been running at a profit in the prem years under Mandaric. The extent of the debt racked up could not have been done over a couple of year period in my view and so most have extended back some time
Sorry Fandago, i had to laugh at that bit about Al Fayed looking for a knighthood, If there is anyone in the world less likely to get one please point him out. I can just see him kneeling in front of the Queen muttering about her killing his son whilst She brings the sword down on his head.
The Southampton fans have been enjoying the problems of their neighbours to the full. The one fans site has a topic relating to Pompey’s financial problems that has been running since July 2009 and at the time of writing has 1040 pages and 51974 posts!! Truly revenge is a dish best served cold!
http://www.saintsweb.co.uk/showthread.php?14620-Pompey-Takeover-Saga/page1040&s=d5ca66748bf0b7edc4205e30c3ec9936
Whilst obviously hoping we win tonight, I don’t take any pleasure in Pompey’s plight (nor, for that matter, that of Hearts in the SPL). If famous old clubs like that, with great supporters, can go down the drain, we’ll all soon be looking over our shoulders. After all, we’re not in a great position ourselves. I don’t even think I’d like the Vile to vanish entirely (if only so we can all continue to laugh at them after derby wins)…
At the end of the day all owners are custodians of OUR clubs. It could be Pompey tomorrow and us the day after!
Here’s hoping Portsmouth survive and we can get rid of Carson and start again.
KRO
On a note, the BBC covered the Pompey Arab Owner and not only is he a ghost he’s an Englishman iirc. He owned Notts County for a while and tried to scam the UAE royal family. He’s currently holde up over there in a lavish hotel, venturing outside his front door would get hm arrested.
Looking at Pompey’s side yesterday with heavy earners like the Ben haim and Liam Lawrence. surely the thing to do would be offload these players and cut their cloth accordingly.