Pound falls after weak GDP growth figures
The pound has fallen against the dollar and the euro after disappointing figures showed the UK economy grew just 0.1% in the last three months of 2009.
Although the figures confirmed the UK's exit from an 18-month long recession, analysts had hoped for stronger growth.
The pound dropped a cent, or 0.6%, against the dollar, to $1.614. Against the euro, it slipped to 1.146 euros.
The Office for National Statistics figures also showed that GDP fell by a record 4.8% in 2009.
The UK is the last major economy to exit recession. France and Germany both began growing again between April and June last year, while the US and Japan also emerged from recession last year.
The preliminary GDP estimate could be revised down, or up, in the coming months.
Posted at 09:03PM Jan 27, 2010 by Kelly Board in The Economy | Comments[0]
Insolvency In Football
British football clubs are continuing to struggle financially despite the UK finally leaving recession, with Crystal Palace the latest club to bite the bullet and enter Administration.
Palace follow in the footsteps of clubs such as Leeds United, Bradford City and Luton Town. Debts totalling £30 million and severe cash flow problems have resulted in players not being paid twice in the last few months. Lacks of investment propositions and severe creditor pressure from HM Revenue & Customs and the Landlord of Selhurst Park have finally pushed the club over the edge.
Football league rules state that any club entering Administration will receive a 10 point deduction and also state that a minimum further 15 point penalty will be incurred if the club do not exit Administration via a Company Voluntary Arrangement (“CVA”).
In order for a Company to enter a CVA, 75% of voting Creditors must agree to the proposal. However, the Football League insists that all football related debts should have “Super Preferential status” meaning that they get paid before other Creditors.
Despite the football creditors rule appearing to contradict insolvency laws, when legally contested in Inland Revenue Commissioners v Wimbledon FC in 2004, they lost the case and the ruling continues to operate. As a result, HMRC have insisted that they will vote against any CVA proposal where football related debts have been settled ahead of their claim.
What does this mean for Crystal Palace?
Despite certain sections of the press claiming that Crystal Palace should be deducted more than 10 points due to the fact they also entered Administration just 10 years ago, this is unlikely to happen. Crystal Palace will almost certainly be deducted the mandatory 10 points.
However, if the debt outstanding to HMRC equates to more than 25% of the Creditor vote that is unlikely to be the end of the matter. HMRC will most likely reject any CVA proposal that falls short of paying the Creditors 100p in the £ (which it surely will). Should any CVA proposal be rejected Crystal Palace will receive a further point deduction of at least 15 points under Football League rules. The further points deduction could take place either this season or next season depending on the timing of the CVA proposal and the discretion of The Football League.
Therefore, the information that will be crucial is what percentage of the total clubs debt is represented by HMRC? Of course it should also be remembered that Creditors other than HMRC could also reject any CVA proposal. No doubt the Administrators will make an announcement soon
Posted at 04:59PM Jan 27, 2010 by Kris Wigfield in Sport Finance | Comments[0]
Crystal Palace enter Administration
Football League Championship play-off hopefuls Crystal Palace have revealed that they have slipped into Administration following a season blighted by financial problems with debts now reported to be up to around £30 million.
Under Football League rules, the administration will result in a 10 point deduction that will see Palace plummet down the league table, dropping 11 places to 20th. Sheffield based insolvency company The P & A Partnership have been appointed as Administrators on the case.
Chairman Simon Jordan has been looking for new investors in the club following his announcement last year that he is looking to sell due to the rising debt. Officials from the club are also due in court on Wednesday to face a winding-up order from HM Revenue and Customs.
The Palace players will now no doubt be anxious about their futures after already being paid late on a number of occasions over the past few months after being told by Jordan that he had ‘cash flow’ problems in November.
The clubs financial woes had been somewhat masked by a mini revival from the team, the Eagles were just two points outside the play-off position heading into Wednesday night’s game with league pace setters Newcastle United, however that game now promises to be far tougher than previous expected as Palace will now enter the relegation dogfight.
"The lads are obviously all terribly disappointed and the Newcastle game will be one of the toughest they have ever played, but I can promise the supporters who are coming that we will be focused on the match," the manager Neil Warnock told the Croydon Advertiser.
Further problems for the team will come from the almost inevitable sale of prize assets such as teenage striker Victor Moses, whilst this will bolster to clubs finances as they try to get out of Administration, it may cause more on the field problems as the team weakens.
"Our role is to find a buyer quickly to provide certainty for the future," said Administrator Brendan Guilfoyle of P & A. “This club has been in the spotlight with creditors pressing for payments and players anxious about wages. We are hoping our appointment will be short-lived as we understand there are many interested buyers."
As it stands, the club sit ninth in the league as the 10 point deduction will not take effect until the football league is formally informed. This will be expected to take place over the coming days.
Posted at 03:22PM Jan 27, 2010 by Kris Wigfield in Sport Finance | Comments[0]
