The Inevitable Finally Happens
Portsmouth Football Club officially entered Administration this morning following months of financial turmoil at the south coast club. Mounting debts equally around £60m have finally gotten the better of them.
The decision to enter Administration has been forced upon the club due to the winding up hearing that was due in court on Monday where the club would have almost certainly been placed into Compulsory Liquidation, this would have spelt the end for the company as a whole.
Since the start of the season, the club have had four separate owners, staff wages have been paid late on numerous occasions and off the field problems have been coupled with a poor season on the field. The club are already rock bottom of the league and already 8 points adrift of safety, Administration also carries a 9 point penalty meaning relegation to the Championship is an almost certainty.
The latest owner, Balram Chainrai, had been frantically searching for another buyer before the predetermined deadline they had set for last night. Chainrai had only taken the controlling stake after previous owner Ali Al Faraj had defaulted on a loan secured against his 90% stake in the club.
It is thought there were four interested parties in talks with regards to a takeover. However, due to the dreadful recent financial history, none were keen to force a quick sale and wanted to conduct a proper investigation before agreeing to buy.
UHY Hacker Young have been appointed the job with Andrew Andronikou the Administrator. They will now begin to cut costs at the club and set about making them a more financially viable and attractive investment opportunity.
There have been numerous statements made over the last few hours from people connected in some way with the club.
Chief Executive Peter Storrie has said that he plans to resign his post once a new buyer has been found and has said, “this is a very sad day for everyone connected with the club.”
Storrie also added, "By this course of action owner Balram Chainrai has kept the club alive and given someone an exceptional opportunity to take this great club on with fresh investment to steer Portsmouth in a positive direction.
"It is my intention to work with the administrator to help sell the business and I hope that will be quick as there is already interest in acquiring the club."
Former owner and chaiman Milan Mandaric, now main man a Leicester City, has also spoken of his sadness at the news. He said, “It's really sad. It's not right. I just hope for the sake of the club, and the sporting community, and football in that city, they sort things out.
"And I think they eventually will. That club will never die. That club has a lion's heart. The fans love their club, they will always be there. Unfortunately they don't deserve these kinds of difficulties."
Accountant Nick O’Reilly, the man responsible for compiling Portsmouth’s Statement of Affairs for court has labelled the company ‘completely dysfunctional’ whilst also adding, "The next few months are crucial to the business. People will lose jobs, but hopefully the club will come out the other side."
Former manager Paul Hart, the man sacked in November believes Administration could be somewhat of a blessing in disguise and may even provide the club with a fresh start.
"I think the club can be strong again if they use some foresight and planning and adopt a restructuring programme.
"It looks like administration is necessary and hopefully will give the club a chance to recover.
"The supporters have been long suffering and there are some very good, conscientious people who work there we should be thinking about because their jobs are in a precarious position."
Meanwhile, a spokesman for owner Chainrai, Phil Hart, has been quoted as saying Administration was unavoidable.
"He (Chainrai) was given false promises when he came in. He asked the questions and was given answers and assurances that turned out not to be true," Hall said.
"Having put £17m of his own money in, unfortunately he found the club facing a winding-up order on Monday.
"He had a choice of allowing the club to go into administration, for someone to go in and try to bring it back into a stronger financial position. He feels he's a victim - the club have been overwhelmed by these debts and he is a reluctant owner.
"He wants to do what is right for the club but also to protect what money he's put in."
Administration will serve to give the club some breathing space from mounting pressure from other creditors besides HMRC, who issued the initial winding up petition.
Another former owner, Sacha Gaydamak is thought to be owed around £28m of which a deadline to pay back £9m was missed recently. The Premier League also withheld certain payments to the club from both player transfers and TV revenue in order to cover certain football debts.
Furthermore, ex-player Sol Campbell is suing the club over around £1.5m in non payments of image rights whilst he was at the club.
One slight positive from the fans point of view is entering Administration as opposed to Compulsory Liquidation, is that the company continues to trade, meaning upcoming fixtures, including an FA Cup Quarter final against Birmingham next week, can still go ahead.
Portsmouth’s downfall overall has been swift given the fact that less than 2 years ago, they were lifting the FA Cup at Wembley. Since then, revenue from player sales has hit around £95m, with the majority coming from big name sales such as Lassana Diarra and Jermaine Defoe, who accumulated £35m between them last January. This amount, in theory, should be plenty for them to maintain their operations and make a profit in that period.
This begs the question for many, where did all of that money go?
Posted at 02:39PM Feb 26, 2010 by Marc Stenton in Insolvency | Comments[0]
