Portsmouth FC in yet more trouble - administration again?

[Dave]

Who's this bloke on SSN?

[Dr.Spaceman]

Seen this wife on SSN now?

 

[afar]

What people need to a grip on is that there will still be a team in Portsmouth, it won't just disappear, just because the current Portsmouth Football Club is about to go bust (which I hugely doubt will happen). The smoggies are a prime example of this, they went out of business and a new club was formed that took it's place. Leeds too, went into administration with huge debts, were bought out by the bearded fool of a chairman and now are making a profit. Wimbledon's move to Milton Keys is another example in slightly different circumstances of a club that was not there anymore but AFC Wimbledon was born and are now only a step or two away from football league status.

 

Football clubs endure, they do not just go away, Portsmouth will be around, most probably not playing Premiership football, but really do their fans deserve that above fans of clubs such as Newcastle, Leeds, Notts Forest, Sheff Utd and West Brom ? They deserve a football club yes and they'll still bloody have one, despite their current plight, what level they'll be playing at is open to debate, but I'd be happy to go on record as saying there will be a Portsmouth in the Championship next year.

 

A entirely new club being setup with a different name, no history, different ground and not even in league Football will hardly be much solace to Portsmouth fans.

 

Didn't make a blind bit of difference to Middlesboro fans, in fact they came out of it much healthier, as did Leeds. Portsmouth won't go out of existence, I don't know why people keep saying  that. The company may be absolved but something will rise up out of it's ashes, mark my words.

[Ronaldo]

The Boro and Leeds situations were totally different. Boro were actually wound up.

[afar]

I didn't see any outpouring of love for us when we went down last season, people were positively giddy with the thought that we may go bust.

 

Surely you can see there's a bit of a difference between getting relegated and being in court facing a winding up order, though?

 

I pissed my pants the last time Birmingham got relegated, it made my season. I wouldn't want them to go out of business, though.

 

 

 

Did you read my whole comment ? Or did you only just read the first part. I saw countless messages on forums from supporters hoping Ashley "finishes off the job", I don't recall too many people feeling sorry for the fans of NUFC who went through hell last year.

 

No, I read it all.

 

I just cut out the bits I wasn't replying to rather than requote the entire thing. QUite ironic that you're going on about these people you saw begging Ashley to "finish the job off", but now you're actually sinking to their level yourself.

 

I reiterate, going through a winding up petition is a different type of hell to being relegated. Given that you've just described that as "hell", I don't know what that makes this season for them.

 

Still, as you say, they can just reform and start off in the Hampshire And District Paperboys League or some such, it's no big deal after all.

 

Incidentally, I can't believe you're citing Wimbledon and MK Dons as something even remotely positive, that's a first.

 

I don't disagree that Portsmouth fans have been through just as much and probably more hell than we did last year. But when's all said and done, the worst I think that'll happen to them is that they'll go into admin, be relegated from the PL and have to start a new in the championship.

 

To that I still say "so what", they've punched above their weight for a while now, they lived irresponsibly beyond their means, thinking everything would be fine because the had a rich sugar daddy, the fans were happy to go along for the ride, never questioned the situation and enjoyed a lot of success, winning a cup competition is something the majority of NUFC fans on this forum, have never seen in their lives.

 

It's all turned pear shape now, but really it only returns them to reality.

 

As for the MK Dons Wimbledon, thing, at the time it was devasting for the literally hundreds of Wimbledon fans, but from an owners point of view it was understandable that they moved to a bigger market and got their own stadium. It's worked out postively for the people of Milton Keynes, because they have their own football league club now and it's beginning to work out for the old Wimbledon fans who's new team is about where they have been for the majority of their existence, back at their own home, in Wimbledon. Will they win FA Cups again orfight at the top of the PL ? No probably not, but really with their fan base that was punching hugely above their weight.

 

[afar]

The Boro and Leeds situations were totally different. Boro were actually wound up.

 

True, but Pompey's fate is still not decided, they could be wound up or just go into admin like Leeds, at the end of the day though, there will still be a football club there, probably playing Championshiop football next year.

[LoveItIfWeBeatU]

http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/8527495.stm

 

16:11 GMT, Tuesday, 23 February 2010

Portsmouth move closer to entering administration

 

Portsmouth will go into administration by Friday unless a buyer is found for the Premier League's bottom club.

 

If Pompey enter administration they will be docked nine points, but the winding up order against them due to be heard on 1 March will be suspended.

 

A spokesman for Pompey owner Balram Chainrai said: "There is now only a short window of opportunity for buyers to come in with a credible offer.

 

"Having the club wound up is not an option as far as we are concerned."

 

Portsmouth have debts of £70m and the winding up order was over £7.5m owed to HM Revenue and Customs.

 

The spokesman said: "The serving of this notice [that Portsmouth intend to appoint an administrator] means the winding up order is automatically suspended.

 

"It means the club is safe, it can fulfil its fixtures and as far as is possible it is business as usual.

 

"Administration would mean the club re-emerging as a healthy financial entity.

 

"It would then become an attractive proposition for a potential buyer who could invest new funds in rebuilding the club's future.

 

"Mr Chainrai hopes the supporters will get behind the team for their Premier League match at Burnley on Saturday and the following weekend's FA Cup quarter-final at home to Birmingham.

 

"We would like to ask the fans, staff and management of Portsmouth for their support and patience should this step be taken as we believe it is the only route left open."

 

One of the parties interested in buying the troubled club has revealed he will not be able to take over the club ahead of Monday's winding up petition.

 

New Zealand-based businessman Victor Cattermole is considering buying Pompey through his investment group but told The Guardian newspaper: "In an ideal world, we would like to purchase the club before Monday, but we will not be rushed."

 

Cattermole's group is one of three potential buyers for the south coast strugglers.

 

Chainrai recently became Portsmouth's fourth owner of the season, taking 90% of the club shares after the previous owner Ali Al Faraj defaulted on loan payments due to him.

 

Eight points from top-flight safety, Pompey's financial woes have meant their players have been paid late on four occasions this season.

 

Entering administration would leave them 17 points from safety, with only 12 matches remaining to preserve their Premier League status.

 

The club are also involved in a separate dispute with former owner Sacha Gaydamak over whether they have missed a deadline in paying a £9m chunk of the £28m they owe him.

 

The Premier League recently withheld £2m of transfer payments and a £7m slice of TV revenue to divert to Chelsea and Watford for the signings of Glen Johnson and Tommy Smith respectively.

 

The Fratton Park club are also being sued by former Pompey defender Sol Campbell for £1.7m for unpaid image rights.

 

Earlier on Monday, another former owner Sulaiman Al Fahim quit as non-executive chairman and offered his 10% stake to the Pompey Supporters' Trust.

 

Ken Malley, a member of the Football Supporters' Federation who is on the PST working committee, said: "As a fan, I'd rather we didn't go into administration.

 

"There's an awful lot of small businesses that lose out terribly if we do, so I'm not happy about that side of things.

 

"I'm just anxious that sooner or later we get some owners that are transparent and attempt to work with the community and the fans.

 

"If we get owners that do then we will be more than happy to work with them.

 

"There'll always be a Portsmouth FC, whatever happens. A lot of work has gone on behind the scenes to make sure that a phoenix would rise from the ashes in time for next season."

 

I can see their players being paid late again or not being paid at all. If that's the case they can just walk can't they?

[Village Idiot]

What time is the Inter-Chelsea tomorrow? Need to make arrangements to see it.

[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.