Often Partisan

Administration and lessons to be learned: an OP editorial

Administration claimed two teams in Blue and White this week in Rangers and Portsmouth as the taxman continues its threat to get heavy with football clubs that don’t toe the line. With Portsmouth administrator Trevor Birch stating that many Championship football clubs were overspending on wages, it’s a worrying time for all of us who support teams with less than rock solid finances.

Rangers first announced that they were making a filing to go into administration on Monday as it was rumoured that they may be up to £75million in debt if the Glasgow club failed to win its case against HMRC with regards to the “employee benefit trusts” it used to pay its employees. However, the taxman forced the club on Tuesday to confirm it was able to go into admin before a decision was reached – although Her Majesty’s Revenue and Customs were unable to force their choice of administrator on Rangers. It emerged on Tuesday that administration was sparked by a £9million debt for PAYE and VAT which was from May last year, and now the SFA are going to have an inquiry into Rangers. With talk of a £24million loan from a firm called Ticketus having gone missing, things are not good at Ibrox and it has emerged that Daniel Cousin (who was allegedly linked with a move to Blues) has had his move to Rangers blocked.

Portsmouth entered administration today for the second time in three years and the third time in fifteen years. Their situation has been compounded by the arrest of their former owner Vladimir Antonov last year and subsequent collapse into administration by his holding company Convers Sports Initiatives. With the club still owing money from its previous period of administration the taxman pressed in court for their choice of administrator (Trevor Birch of PKF) over the club’s choice (Andrew Andronikou of UHY Hacker Young), which was granted.

Of course, there is a section of Birmingham City fans who are worried that the same will happen to Blues; you only have to read the messageboards and look at things like Tuesday’s webchat with Birmingham Mail journalist Colin Tattum to see that is evident. The key thing to remember is that every situation is different, and that Rangers and Pompey are in markedly worse situations than that of Birmingham City.

Whilst there are some similarities with Portsmouth – both clubs are in hock to a Hong Kong-based businessman and have an owner that has been arrested on financial irregularities – Pompey have a much larger debt problem than Blues. Portsmouth’s issues are compounded by the fact they still haven’t resolved everything from their previous spell in administration, and as such the taxman is going for the throat. Blues might have had to to tighten their belts somewhat and cut back, but our players are still getting paid and the taxman hasn’t said anything about us that makes me worried that we’re next.

Likewise, Rangers are in a whole massive heap of debt and a bigger amount of trouble with HMRC. Whilst it was mentioned yesterday that Craig Whyte will not face criminal charges with respect to the £9million owing in PAYE and VAT, and his own protestations of innocence I suspect he’s going to be a worried man for a while – not least because it appears £24million loaned against future season ticket sales seems to have walked.

The key to it all is self-sufficiency. The fact is there are a lot of clubs that are spending all of their turnover (and in some cases more than that) on player wages alone; that is unsustainable without a sugar daddy owner and it’s imperative clubs scale back their finances to a level that can be afforded. Blues have made massive inroads into doing this already this year and I think that even if we go up we have to maintain this course of action. I believe there is a danger football could very well implode and I’d quite like it if Blues survived the fallout.

Talking Points sponsored by John Hicken Industrial roofing and cladding materials

Tags: , ,

15 Responses to “Administration and lessons to be learned: an OP editorial”

  • TonyW says:

    Good insight, after reading this I think maybe Peter Pannu is doing a good job for us,

  • Bluehobba says:

    With the sale of Beau and Ridgewell, Blues seem to be living within their means. Somebody higher up must have done their sums to allow CH to be looking at the loan option although nothing has materialised as yet. Blues have the two trialists, but I am unsure we will get anyone in on loan and as hard as the management staff are trying, I think with injuries, over the next few games we will introduce another youngster or 2 to get them game time and experience including today. Over that period we will also have King, Zigic and Ndaw back. KRO

  • mickey07 says:

    mayor when are our accounts going to come out??good blog also good luck to the tax man really hope they get these football clubs by the throat,been getting away with it for far too long….

  • ForevertheOptimist says:

    Personally think we have some very prudent people behind the Blues. They have consistently cut the cloth accordingly and we have been able to survive upto yet ,the uncertainty surrounding our owners financial predicament !
    Also believe we have been very fortunate in getting a Manager in who is a Godsend in this current climate. NO complaints,no interviews slagging the Club off – just a decent guy who is trying his hardest to do well for the Club and consistently getting the best out of whats at his disposal.
    NO news is good news as far as I’m concerned and fair play to the club for keeping going under the tightest of conditions no doubt.Hope we get a result today – the lads deserve it. KRO4EVA

  • jeff says:

    we have to cut our cloth accordingly.if we go up we need to understand that we can.t pay out daft wages.norwich have shown this isn,t needed.the fans are key.we must lower our sights and be realistic .we are a small/medium at best club at the moment.i respect pannu for his work this year.the secret to this is that we never get into this situation again.if we do then all pannu,s effort at being prudent will count for nothing.pompey (the owners)don,t seem to have learned any lessons along the way.hope they survive for the fans.proper team and proper fans.

  • John says:

    I wouldn’t give Pannu any credit I think he’s lucky he’s not getting the stick Yeung is. the man that waved a wod of notes in portugal when fans chanted ‘wheres the money gone’.

    they have got our football club into this position so therefore had to strip the club of all it’s assets and flood the team with free transfers. Yes every club has to sell when relegated but not like we have. the problem comes from the massive inflated fee they payed for the club and as a result they were never going to make things work.

    in terms of running the club that is down to Julia Shelton who is doing a great job.

  • viperblue says:

    Can you explain the situation in respect to recent tranfers of beau & Ridgewell.
    I understood Mr Pannu said before christmas funding was in place for us to carry on until end of the season,I assumed this included the recent instalment of the parachute payments.
    But they were unaware that the two transfers would go through,so why are no funds
    available for at least “normal” loans ie paying a fee (saving on wages & transfer fees
    should have given CH a little freedom…or am I in cloud cuckoo land

  • Bluenosejohn says:

    Portsmouth and Rangers both seem to be a long way down the debt road than us. They have both carried on paying expensive players without the tax ( at last a judge has been critical of Pompey doing it ). So far there has been no suggestion of Blues not paying their bills; Portsmouth’s fans were so disgusted that the administration two years ago left the St Johns Amblulance out of pocket that they organised a Justgiving page to pay that debt. The Sullivan/Gold era was at least a solvent one for us and at least we have yet to offload the ground and the training ground a la Pompey.

    The problem and why the fans are worried is that we just don’t know where we stand. The overdue last financial report is not encouraging; there may be nothing to fear but we just don’t know.

    HMRC are determined to nail the football creditors rule and a court decision is imminent. One wonders how the football establishment was allowed to get away with it in the first place. The loss of this ludicrous rule should a court see sense is likely to see our football authorities at last take financial affairs at clubs seriously as the game will no longer be able to just stick two fingers up to the rest of the community knowing that the game gets its cash ahead of everyone else.

  • Bluenosejohn says:

    Remember Quincy Owusu-Abeyie? We signed him on loan for a season in September 2008 and stopped the loan in January 2009 when it was felt his wages would be too much for us. In January 2009 he signed on loan for Portsmouth AFTER they had gone into adminstration paying a loan fee which it was agreed to terminate a couple of months later. At least our in and outs seem to have been sensibly managed by Pannu unlike Pompeys kamikaze financial management.

  • Dirty Bertie says:

    As many have said, we need to be realistic about what the club can achieve. Don’t get over excited, don’t get over ambitious, don’t expect our current good run to last forever, it doesn’t (ask Torres), don’t make expensive gambles in search of short term glory.

    Keep pressing for the club to be transparent, honest and involved with its supporters.

    Rangers and Portsmouth teach us to be aware that: where there’s money there’s thieves (to paraphrase Willie Sutton).

  • JCL says:

    Bluenosejohn – sorry but the administration point does not remain as PFC were placed in administration by Chainrai in February 2010 as soon as the transfer window was closed.

Leave a Reply

Personalised Gifts for a Bluenose
Haircuts and League Cups
Open Tax Services
Corporate Solutions UK
PJ Planning
Rodal Heating