Portsmouth FC in yet more trouble - administration again?

[Liam Liam Liam O]

This idea that "everything will be ok" because they are going into administration is fairly naive.

[Cronky]

Looking at the other end of the table, it seems only a matter of time before Man City establish themselves in the top four - with that bottomless pit of money, they're bound to get there at some time. In which case, one of the big four (and probably Liverpool) could be in trouble. They're all budgeting on regular CL money.

 

Unless there's a fairer distribution of TV money, this kind of situation, at both ends of the table, is bound to keep happening. For every club, it's great when the money is rolling in, but you can't carry on as though relegation or dropping out of the top four is never going to happen to you.

[Guest neesy111]

going to admin, doesn't mean they won't get wound up, it means they are most likely to!

 

it's bascially the owners trying to get as much of their investment's back, before being wound up

[LoveItIfWeBeatU]

Looking at the other end of the table, it seems only a matter of time before Man City establish themselves in the top four - with that bottomless pit of money, they're bound to get there at some time. In which case, one of the big four (and probably Liverpool) could be in trouble. They're all budgeting on regular CL money.

 

Unless there's a fairer distribution of TV money, this kind of situation, at both ends of the table, is bound to keep happening. For every club, it's great when the money is rolling in, but you can't carry on as though relegation or dropping out of the top four is never going to happen to you.

Which is why Platini at UEFA wants clubs to operate within the restraints of what they earn rather than what they may earn or can borrow. What's happening at Portsmouth and the other clubs in trouble is a wake up call. Will it be heeded?

[jdckelly]

Looking at the other end of the table, it seems only a matter of time before Man City establish themselves in the top four - with that bottomless pit of money, they're bound to get there at some time. In which case, one of the big four (and probably Liverpool) could be in trouble. They're all budgeting on regular CL money.

 

Unless there's a fairer distribution of TV money, this kind of situation, at both ends of the table, is bound to keep happening. For every club, it's great when the money is rolling in, but you can't carry on as though relegation or dropping out of the top four is never going to happen to you.

Which is why Platini at UEFA wants clubs to operate within the restraints of what they earn rather than what they may earn or can borrow. What's happening at Portsmouth and the other clubs in trouble is a wake up call. Will it be heeded?

no

[Village Idiot]

I think it's interesting how, apart from the Big 2, no other clubs have been able to use CL money to establish a true Spanish "big four". Our third and fourth spots are always pretty open, with Sevilla, Valencia, Villarreal, Atlético, Deportivo, Celta, Real Sociedad... finishing there this decade.

 

I think CL money is overrated when you operate within the margins of a high spending league like the PL or La Liga. It's an edge, yes, but I hardly think the average extra 20m Liverpool pockets per season is what makes them better than Spurs/Villa/Everton.

[Guest neesy111]

I think it's interesting how, apart from the Big 2, no other clubs have been able to use CL money to establish a true Spanish "big four". Our third and fourth spots are always pretty open, with Sevilla, Valencia, Villarreal, Atlético, Deportivo, Celta, Real Sociedad... finishing there this decade.

 

I think CL money is overrated when you operate within the margins of a high spending league like the PL or La Liga. It's an edge, yes, but I hardly think the average extra 20m Liverpool pockets per season is what makes them better than Spurs/Villa/Everton.

 

i believe it's more than 20M, if we we're to go into the champs league again, and get to the 1/4 final's we would make an extra 30M this could also go up as Uefa have for their next contract made even more than the current contract's they've got, that can buy a club 1 truly world class player! also in the day where football finances are under extreme pressure this income is vital for the top club's just to be able to compete with one-another

[Guest johnson293]

Just found this on another forum, apologies if its already been posted...

 

http://crabfootball.com/news-article/pompey-probed-by-trading-standards-over-internet-sales/

 

 

[AyeDubbleYoo]

going to admin, doesn't mean they won't get wound up, it means they are most likely to!

 

it's bascially the owners trying to get as much of their investment's back, before being wound up

 

Is that how adminstration works?

 

I thought it was a third party taking control of the business in order to get as much money for the creditors as possible? The current owners won't necessarily benefit very much, will they?

 

Don't know, just asking.

[Guest neesy111]

going to admin, doesn't mean they won't get wound up, it means they are most likely to!

 

it's bascially the owners trying to get as much of their investment's back, before being wound up

 

Is that how adminstration works?

 

I thought it was a third party taking control of the business in order to get as much money for the creditors as possible? The current owners won't necessarily benefit very much, will they?

 

Don't know, just asking.

 

i'm not an expert... but the owner is a creditor as he has loan's which he give to the club, hence why they might put into admin to allow to gain some of this back

[brummie]

This idea that "everything will be ok" because they are going into administration is fairly naive.

 

Isn't it ten points deduced straight away then another ten if they're still in administration at the start of next season?

[geordie2000]

9 points with the premier league, don't know rules regarding next season.

 

[Stifler]

9 points with the premier league, don't know rules regarding next season.

 

 

9 points deducted this season, however if they get relegated by more then 9 points then it maybe passed on next season, if they survive by less then 9 points or are relegated by less then 9 points then the deductions will stand for this season. I'm not sure if they will recieve points deductions for every season they are in admin or not, so it is possible that next season they could be deducted 9 points, with atleast another 15 points deducted for not having a CVA, which would be a total of a minimum of 24 points deducted next season.

 

Now I wil try to explain that more simply.

 

 

* 9 points will be deducted this season, however if Portsmouth go down by more then 9 points or survive by more then 9 points then they will be deducted next season instead.

 

* Portsmouth for every season they are in adminstration or come out of adminstration but a CVA is NOT granted to them will be deducted atleast another 15 points, this is why Leeds were deducted another 15 points, because they did come out of adminstration but the courts never granted them a CVA.

 

 

So in theory it is possible for Portsmouth to be deducted another 24 points or more next season.

[LoveItIfWeBeatU]

http://www.bbc.co.uk/blogs/mattslater/2010/02/portsmouth_fc_in_crisis_qa.html

 

Portsmouth FC in crisis - Q&A

 

Post categories: Football

 

Matt Slater | 11:58 UK time, Wednesday, 24 February 2010

 

"Balram Chainrai, the owner of Portsmouth Football Club, has today served notice that the club will go into administration unless new owners can be found by Friday."

 

Make no mistake, Pompey fans, that means administration, and, as things stand, it is a best-case scenario.

 

Tuesday's announcement merely confirmed what most close watchers of Portsmouth's desperate decline have known for some time: the club is down, broke and on the verge of oblivion.

 

But what does "going into administration" mean? Is this the end of Pompey's pain? And how has this happened to a recently successful team in the world's richest football league?

 

The answers to these questions are, like everything else at Fratton Park of late, complicated, but, having asked three experts - Danny Davis of Mischon de Reya, SA Law's Guy Thomas  and Zolfo Cooper partner Simon Wilson - to explain it to me, I will attempt to shine some dim light on a dark affair.

 

Excuse the formulaic Q&A style, but it should at least provide some structure to this house of cards.

 

Q: What is administration?

 

A: It is not, as many clubs seem to believe, a get-out-of-jail-free card for those who live the dream only to wake up drenched in sweat and deep in debt.

 

It is, instead, a last resort for companies who find themselves in serious financial straits but might, just, have enough about them to avoid liquidation, which in this case would mean the end of Portsmouth FC as we know it: a fate not witnessed in professional football since Aldershot went to the wall in 1992.

 

In short, administration allows an insolvent business (one that cannot pay its debts) to carry on trading in the hope/expectation the situation will improve.

 

Q: How does it work?

 

A: In the simplest terms, the company, in this case Portsmouth City Football Club Limited, asks the high court to be placed in administration. An administrator, an insolvency practitioner, is then appointed to run the club.

 

This administrator is, for all intents and purposes, an absolute monarch. He or she will have complete control of Portsmouth's finances and their main objective, nay, duty will be to safeguard the interests of Pompey's creditors (those owed money).

 

Once in administration, the club will be hit with the Premier League's nine-point penalty (it is one point less than the Football League sanction because there are fewer clubs in the top flight) and the search for fresh investment will intensify.

 

Q: Who will be the administrator?

 

A: This is still unclear, but we know it will not be Nick O'Reilly, the man who prepared the club's recent "statement of affairs". This document was the financial reckoning Portsmouth had to submit to court last week and it would have contained all the gory details (debts of £70m, a tax bill of £12m and rising, and a see-the-season-out estimate of £20m), as well as his opinion on the outcomes, in terms of money returned to creditors, of administration and liquidation.

 

Chainrai either disliked O'Reilly's candour or he balked at his quote, which is believed to have been £1m. This may seem like another professional's attempt to wring money from the club, but it should be remembered an administrator becomes liable for the company's debts and businesses in administration have proved they are not that great at paying those.

 

To not use the expert who did your statement of affairs as your administrator is unusual and should ring alarm chimes. But then this is the club that pleaded poverty to the other 19 Premier League clubs in January shortly before signing Quincy Owusu-Abeyie and Dusko Tosic.

 

Q: Why has this happened now?

 

A: Because Pompey, and all its owners and ex-owners, have run out of more attractive options. The "next idiot" production line is on the blink.

 

It takes weeks to buy something as complicated as a football club (and that is just the solvent ones) as any prospective new owner would want to know exactly what he or she is buying. In Pompey's case, it is an indebted Championship team in a shabby stadium with almost no corporate seating, a battered credit rating and a murky recent ownership structure. Do not be fooled by talk of talks.

 

Chainrai, who became a secured creditor when he loaned former owner Ali Al Faraj £17m mortgaged against the ground, has filed form 2.5b with the high court, an intention to appoint an administrator. He has done this because he needs to give two full working days' notice to the other secured creditors (the banks, Barclays and Coutts) as their debts are senior to his in terms of chronology.

 

Given a choice of purgatory or hell, Chainrai has opted for purgatory. His hand has been forced by HM Revenue and Customs (HMRC). Whereas most other "crisis clubs" have had an element of control about their move into administration, Pompey have been coerced by HMRC's winding-up petition, which was set to be heard again on Monday but should now be dismissed either on Friday or Monday itself.

 

This does not mean it goes away, though, but I will get back to that.

 

Q: So this is all the taxman's fault?

 

A: Erm, well, only if you think paying VAT, PAYE and National Insurance is optional.

 

The truth of it is the taxman has been pushed around by football clubs for years and is now pushing back. Never happy about clubs' habit of using it as an interest-free overdraft, HMRC lost its "preferred creditor" status with the introduction of the 2002 Enterprise Act.

 

This law, among other things, enshrined administration as a safety net for temporarily stricken businesses. But it also meant HMRC had to join the scrum behind "football creditors" when a club went bust. This principle is not company law but is a football rule and it means millionaire players and other clubs get paid first, the taxman joins the queue.

 

Throw this country's worst recession since the 1930s into the mix and you have a government agency suddenly very aggressive about being paid its dues. How Pompey got itself into such a hole with HMRC is another question.

 

Q: OK then, how did that happen?

 

A: How long have you got? The short answer is a shocking disregard for basic housekeeping: do not spend more money than you actually have. Portsmouth have been ignoring this one for at least four years.

 

The slightly longer answer is appalling mismanagement, combined with an arrogant belief that the usual rules do not apply, naked greed and a failure on the part of the authorities to regulate the industry properly.

 

Some will want to add corruption to this cocktail (and I may, one day, be able to say something about this), but if we are going to go down that road we should also remember our own guilt as co-conspirators: we have all demanded more "ambition" from our clubs but have rarely cared about the cost.

 

Q: So it's administration, then. It can't get any worse, right?

 

A: Au contraire, it can still get much worse.

 

Going into administration means the club is unlikely to face a winding-up petition on Monday. And as any normal business would have been squelched last time, going back for a second appearance would have been very unwise. So this is good news.

 

But going into administration is one thing; getting out of it is the trick.

 

Pompey, given the Premier League's fervent desire to avoid any further embarrassment (or the need to remove the club's results from this season's competition), should be able to complete the season. Player sales outside the transfer window will be permitted and TV money advanced. In the parlance, the company should be "cash positive" for the next few months.

 

The crunch, however, arrives this summer when the wage bill keeps coming (£3m a month, including tax...and Pompey will have to start paying that) but the gate receipts are not.

 

Without outside investment - in the form of a new owner - the administrator will find it hard to look the Football League in the eye and say: "Yes, we can fulfil next season's fixtures."

 

The administrator will also be expected to extricate himself via a "company voluntary arrangement" (CVA). As the name suggests, this is a deal between the creditors to accept a new schedule of payments and less money.

 

A CVA requires the backing of 75% of the creditors, based on amounts owed, and usually run for one to five years. This places a huge burden on the business, but a failure to agree one will see further point-penalties from the Football League. Oh, and HMRC almost always votes against them in football cases.

 

So I'm sorry to be the bearer of sad tidings (I'm a Southend United fan, so I would be a fool to gloat), but I thought somebody should tell you straight.

 

If you want to get into more detail about all this - "floating charges", misfeasance, the Insolvency Act 1986, Leeds United/Luton Town and so on - I'm happy to dig out my notes and try to answer your questions. But let's be honest about this, the people who really know what's happening/happened at Pompey aren't talking yet. Until they do (if they do), it's educated guesswork.

[Nobody]

Cheers for posting that, good article

[ikri]

http://www.bbc.co.uk/blogs/mattslater/2010/02/portsmouth_fc_in_crisis_qa.html

 

Good article, lots of good info.

 

A lot is now going to depend on whether or not Portsmouth are able to sell players which a few clubs and managers have already complained about (they don't want relegation or European places potentially decided by a player sold outside the transfer window).  If they can't sell the players then even with the parachute payments being paid early they'll still have to pay those players and won't have a positive cash flow until the close season which would mean they'd still be haemorrhaging cash and would still have trouble paying their creditors.  Basically, they'd still be in administration over the summer and would potentially be looking at a 24 point deduction at the start of next season (9 point deduction carried over from this season and an extra 15 points for not having a CVA).

 

Add to that the fact that Chainrai now owns the freehold to Fratton Park and Sasha Gaydamak owns the offices that the club use they could be looking at starting next season without a stadium and without offices.  They may have left it too late for administration to help them.

[Teasy]

They will be able to sell players, I don't think that's even a question once they've gone into administration.

[Exiled in Texas]

They will be able to sell players, I don't think that's even a question once they've gone into administration.

 

Selling is not the problem, but can the buying club register the player for this season - or are you buying said player at the knock-down bargain price only to "loan" them to Pompey for the rest of the season, and then they join the buying club in the summer?

 

Or are the FA granting exemptions to allow clubs to register ex-Pompey players outside of the window.

[Guest johnson293]

They will be able to sell players, I don't think that's even a question once they've gone into administration.

 

Selling is not the problem, but can the buying club register the player for this season - or are you buying said player at the knock-down bargain price only to "loan" them to Pompey for the rest of the season, and then they join the buying club in the summer?

 

Or are the FA granting exemptions to allow clubs to register ex-Pompey players outside of the window.

 

http://en.wikipedia.org/wiki/Darren_Ambrose

 

When we signed Darren Ambrose form Ipswich in similar circumstances, he signed in March and made his debut for us in May, so there wasn't a problem playing him the same season, even though we'd signed him outside of the Transfer Window.

 

I think there was an initial intention ot Loan him straight back to Ipswich, but not sure why that didn't happen.

[AyeDubbleYoo]

I wonder if Newcastle and Ipswich being in different divisions made a difference?

 

I can't see teams at the bottom of the league being happy if the concede goals to teams featuring ex-Pompey players and get relegated because of it. There'd be court cases going on everywhere.

[afar]

As Exiled says the problem is not in them being able to selling their assets but in registration rules.

 

There is no way in hell the PL or FIFA are able to bypass the laws of the land and block the selling of assets (players) by the the clubs.

 

They can however implement a system that does not allow buyers to register those players with the league they administer.

 

It would be interesting though to see someone like Pompey challenge that through EU law of free movement of goods and people. Football is a special case in some laws, but you never know they could win a case the makes transfer windows illegal, that would really open up a hornets nest. I doubt though pompey have the time and money necessary to pursue that course of action.

 

Oh and the other isssue they have is finding a buyer for these players, they need the money right now, most clubs have spent their budgets now for the year and pompey don't have that many really saleable assets. Can't see too many clubs being prepared to pay them up front for players they may not be able to register until next season.

[Exiled in Texas]

Although we call it the "Transfer Window" it's really better defined as the "player registration window".  Premier League and Football League already have rules on this (as do other countries hence how players can sign for teams from other counties outside of our window).

 

As for finding buyers....that all depends on how good the bargains are

[Teasy]

They will be able to sell players, I don't think that's even a question once they've gone into administration.

 

Selling is not the problem, but can the buying club register the player for this season - or are you buying said player at the knock-down bargain price only to "loan" them to Pompey for the rest of the season, and then they join the buying club in the summer?

 

Or are the FA granting exemptions to allow clubs to register ex-Pompey players outside of the window.

 

What I'm talking about about is a full transfer with the buying club being able to field the player competitively straight away.  Once a club goes into administration they can invoke a crysis clause to allow them to sell their players outside the transfer window with the transfer going through immediately.  The Premier League/FA wouldn't allow them to do it last time they made the request because tney weren't in admin and therefore not officially in a crisis as far as the Premier League/FA were concerned.

[geordie_b]

Portsmounth now 1000/1 ON to get relegated

[Liam Liam Liam O]

Portsmounth now 1000/1 ON to get relegated

 

17 points clear of safety with 12 games remaining, having only collected 16 points in their 26 games so far.

 

If they lose 9 points tomorrow, their maximum possible points will be 43 if they win all of their remaining games.