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Portsmouth FC in crisis - Q&A

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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?

Balram ChainraiChainrai (left) has served notice that the club will go into administration unless new owners can be found by Friday

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 takes on a degree of responsibility for the company's ability to meet it debts, and businesses in administration have already 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.

Fratton ParkFratton Park - the home of Portsmouth

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.

As well as my blogs, you can follow me when I'm out and about at http://twitter.com/bbc_matt

Comments

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  • Comment number 1.

    Excellent summing up, best I've seen. This needs putting down in plain english so Pompey fans and fans of other clubs are fully aware that Administration is not a "get out of jail free card".

    As Pompey have struggled to pay their wages when they have had access to Sky money and gate receipts, I just can't see how they will carry on paying for the remainder of the season, unless someone gives them the cash.

    Matt, Is it correct that a business in administration can not open up any further lines of credit and has to settle any upcoming bills for goods or services instantly?

    Also, if the players don't get paid again, are they within their rights to claim a breach of contract from PFC and exercise their right to break contract and join another club before the end of the season as "free contracts"?

  • Comment number 2.

    Sympathy only with the fans.. none whatsoever with these clubs.. and its widely known this is the first one with many to follow.. Uefa or the Fa have to step in now and start putting in support or guidelines before many more follow..

  • Comment number 3.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 4.

    As a business, Portsmouth should have been shut down some time ago. The stay of execution from the High Court was generous to say the least, considering the ownership situation being passed from one creditor to another, and the massive debts. However, football clubs have one stakeholder to consider, and thats the biggest of all, the fans.

    Administration won't be a get out of jail free for Pompey as they'll have to sell all of their players, and then try and find some players to play for them in the Championship on next to nothing wages, while parachute payments pay off a small chunk of their debt.

    They will either be wound up (what should happen in a commercial sense), or they will fall out of the league eventually over the next few years.

    Their plans for a brand new stadium look laughable and disgraceful now in equal measure considering the circumstances. What a way to end a football club as we know it.

  • Comment number 5.

    Translation: They're boned.


    An informative read that clears up a lot of speculation from those like myself who aren't in the know about the murky affairs that some call accounting.

  • Comment number 6.

    Great blog Matt, it is very rare for an article involving insolvency procedures to be factually correct.

  • Comment number 7.

    Is It possible that Pompy could be relegated to League Two the same as Livingston were relegated to the Scottish Third Division at the begining of this season?

  • Comment number 8.

    I would hate to see another club die. Pompy fans keep your chins up, as a Boston United fan I know how you are feeling. Not only that but another of my local clubs King's Lynn Football Club closed just before Christmas.

  • Comment number 9.

    At 1:41pm on 24 Feb 2010, ChocolateBoxKid wrote:
    Excellent summing up, best I've seen. This needs putting down in plain english so Pompey fans and fans of other clubs are fully aware that Administration is not a "get out of jail free card".

    Thanks ChocolateBoxKid but I think Pompey Fans are only too aware that 'Administration is not a get out of jail free card". We have been through the administration route before and were lucky to be saved by Milan Mandaric. Though this time I fear that this is just delaying the inevitable of being wound up, I hope for 110 years of history and 32 years of supporting Pompey this is not the case.

    Great Article Matt, one of the few bloggers on the BBC that does not slant their opinion over the article. Would love to hear your views on the corruption side one day as with what has come into the club and supposedly gone out it just does not add up !!

    Trevez

  • Comment number 10.

    Without a doubt there are more questions than answers.

    However I believe Portsmouth will survive to the end of this season intact. The Premier League will be able to wash their hands of an insolvent football club. The Football League will inherit a "football club" who are heading south almost out of control and will impose a hefty punishment on whatever football club emerges into the new season.

    Next season will indoubtedly be a bigger challenge than this season, and I believe Portsmouth will endure a return to the 3rd level for the first time since 1983. A small number of clubs have "crashed" through the leagues in the last few decades, and I predict Portsmouth will be next - who knows how far they will sink?

    What does this leave for the rest of the clubs under precarious (often foreign) ownership? This is a very important question, as the future's of Man U and Liverpool are also in doubt.

  • Comment number 11.

    One of the clearest, most accurate pieces of journalism on an involved subject I've seen. Excellent.

    Is Matt a Chartered Secretary?

  • Comment number 12.

    Sympathys certainly thin on the ground around the south of England. The fact is Southampton lasted in the top flight for years with a threadbare squad and a tiny ground until they bought St.Mary's, started spending silly money and Rupert Lowe sent them under. And that's nothing compared to Bournemouth, who've been in administration since before it was cool.
    Pompey aren't that big a club, Fratton Park is a joke of a stadium, its never been big enough to generate the wages of Crouch, Defoe, Muntari, Diarra, Campbell, all at the same time no matter how many FA Cups you win. If you take over a football club, you better expect to lose money, Alan Sugar said that the other day.

    Anyway, thanks for a great article clearing up what all the financial stuff means now that a Prem club is threatened. I mean all us lower league fans need not know right?

  • Comment number 13.

    "Is this bloke a Scummer? some of his references to the club seem to be hardly neutral. PUP"

    --------------------------

    You didn't read it then? Clearly says that he supports Southend.

    I think the majority of Pompey fans must now be wise to their "owners", but it still amazes me how you hear a few who seemingly accept without question, a lot of what the likes of Peter Storrie comes out with.

    Fans always feel protective of their clubs. I hated seeing Saints being criticised during administration and getting lots of bad press, but what fans have to realise, the people who run our clubs (badly) are the ones who are ruining clubs and instead of being angry at what a Southend fan or Southampton fan says about the mess that Pompey are in... Pompey fans should be furious at being lied to time and time again by their directors.

    Is it true that Peter Storrie has still been picking up his Salary during all this?

  • Comment number 14.

    Good Blog Matt. I do feel sorry for the Portsmouth fans and the community and all the heartache they might be going through, but I do not understand how the PL and FA have let this happen.

    Firstly the senior management of the club like Storrie must put their hands up and be blamed for this. They should also be band from playing a senior role in a club for years as this keeps happening to clubs. Just look at Ken Bates and Peter Ridsdale putting clubs in and out of administration and buying them back. Also it's happened to Chester as well.

    Again how have the banks been able to let them have their debts rise beyond any control!!

    The PL and FA now must act like the Germans and the French. I believe that all those FA's make sure that all clubs break even or have debts they can control before being allowed to play the next season. Maybe Matt, you can look into this and see if that is in fact true.

    I also heard which I dislike, is the fact that all footballing creditors like other clubs get paid the full amount owed and other businesses have to accept some sort of CVA. Is this true? and if so how can this stand up in a court of law!

  • Comment number 15.

    I really feel for the Portsmouth fans especially those who will chose to travel to Burnley this weekend at there cost when the future looks as it does
    however its been a long time coming and its about time that FIFA took clubs like Manchester United and Liverpool to task on there debt too
    To pay a player £100k plus a week is disgusting there's no player on the planet worth anywhere near that sort of money and to do so by just paying the interest on your borrowings shouldt be allowed
    Well done Messers Kirby and Flood at Burnley
    We may go down with Pompey but we will be on a level footing with the rest of the Championship and will not have bet the ranch on overpriced/under performing players to have got there

  • Comment number 16.

    And as far as being treated unfairly... I wonder how Swindon fans feel seeing clubs getting points deductions when they got relegated two divisions because of the actions of a couple of directors?

  • Comment number 17.

    ChocolateBoxKid, same thing happened to us (Boston United) a few years ago, we were sent down to Blue Square North after being relegated from League Two

  • Comment number 18.

    Excellent blog, clearly summing up a dire situation and putting to bed a lot of wild speculation.

    Like many others, I have a lot of sympathy for Pompey fans but none whatsoever for the club. They've lived well beyond their means for a long time and by rights they should have folded some time ago.

    Given the reported financial situation will we see United forced to sell top players again in the summer? And if they should fail to make the top 4 and lose that Champions league income, could we see Liverpool do a Leeds?

  • Comment number 19.

    There is an assumption in Matt Slaters blogg that the Premier League will allow player transfers outside of the window and advance TV money.

    This is a big assumption. The other PL clubs seemed hostile to both proposals in all the reports I've read.

  • Comment number 20.

    Interesting and informative article.
    It seems clear that there has been gross mismanagement here, probably worse than any since Leeds... but it also seems that there is a fundamental culture problem in the English Premier League.
    It seems that the league has become a football version of the South Sea bubble. A whole bunch of what are essentially moderate size provincial clubs (which make up maybe half of the EPL) have been encouraged by Sky's money and the fawning adulation of the media, to behave as if they are bigger than a whole host of genuinely "big" clubs throughout Europe... i.e. clubs with big home gates, big support internationally, big stadia and infrastructure, etc. etc.
    As a consequence they have massively overpaid the players to persuade them to come to these relatively unfashionable clubs in the EPL, and fuelled the arms race of ridiculous salaries which only a very few clubs can genuinely afford by any normal (non-football) measure. The preponderance of foreign "investors" looking for some glamour and/or a quick buck has only made all this worse.
    WHilst sad for Portsmouth fans, it is probably good for the wider health of football in Europe as well as England, if their club, and a few more besides, are forced to face up to the reality that treating football like a business requires clubs to behave in a businesslike manner, live within their means, pay their debts and invest for a sustainable future.

  • Comment number 21.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 22.

    So the skates are dying a slow death through administration. They no longer have a ground, they don't have any training facilities, soon to be relegated so no PL status and debts galore with little chance of an approved CVA. Just who is going to buy them and will the football league let them in?

    Surely the best bet for the fans is to start a phoenix club, with no history (tainted or not). Otherwise this pain is likely to go on for many years to come.

  • Comment number 23.

    Maybe Mr Portsmouth can weigh in his bell for scrap?!

    In all seriousness though, what is happening down there is disgusting.

    The F.A. must step in soon to make clubs keep control of their finances

    As a Halifax Town fan I have seen my team, and many others, go to the wall and it always seems that the only real losers are the fans. They will at some point say "enough is enough". What happens to what is left of the club then? No fans = no revenue = no club.

    Look at what happened at Chester the other week when the coach company refused to take them to an away game because they hadn't been paid.

    I feel so sorry for those fans that only want to see their team play every week.

  • Comment number 24.

    #7 - Portsmouth could well be relegated several divisions. It all depends on the FL stance. If the FL deem Portsmouth are unable to complete their fixtures next season then they have the right to withhold Pompey's share of the FL. If this was to happen then Pompey would have to apply to competitions below the FL. If this was to happen a club called Portsmouth could well end up as low as the Ryman League, if not lower.

    Although the FL tends to talk tough when it comes to clubs in administration the only penalty they usually impose is a points one, a penalty which is likely to happen to Portsmouth next year in order for them to get their share in the FL because as Matt says HMRC tend to reject CVAs and this is the only exit from administration the FL accept.

    Assuming the FL follow the precedents they have set with clubs such as Leeds, Bournemouth & Luton the points penalty is likely to be in the 15-17 point range.

  • Comment number 25.

    I fear this is only the tip of the iceberg.
    Portsmouth seem doomed. Unless a rich (most likely foreign) billionaire wants to buy into the club, which is not likely - at least not until after administration.
    The only thoughts I have are if Portsmouth take the parachute payment early, this will leave them with a shortfall over the summer and for next season. The only way to cut the wage bill will be to allow most the first team squad to leave - whether ofn free's or sold off cheaply - and then rebuild a new squad from the youth team and other players who will settle for a low wage at a former premiership club. I imagine it will take about 2 years minimum for the situation to settle down - although the debts will still be there.

  • Comment number 26.

    AFC Bournemouth; West Ham United; Southampton FC; Portsmouth FC. Weren't they all managed by Harry Redknapp?

  • Comment number 27.

    26. At 2:27pm on 24 Feb 2010, namenotinuse wrote:

    AFC Bournemouth; West Ham United; Southampton FC; Portsmouth FC. Weren't they all managed by Harry Redknapp?

    ------------------------------------------

    Managed, yes. Chairman of these clus, no. :p

  • Comment number 28.

    I also fear many other clubs in the EPL could well end up following suit, or doing a 'Leeds' or 'Southampton'.

    The finances of the big clubs are precarious enough, never mind 'aspirational' clubs.

    Man Utd have a massive and growing debt behind them thanks to the suspect Glazier take over.
    Chelsea do not make a profit and ould have to sell if/when Abramovic decides he has had enough.
    Liverpool - need I say more?
    Man City - despite having their debts recently written off, they make a huge loss and rely on their Sheik to keep them going.

    However, there are some seemingly good business models out there.

    Arsenal do seem to be living within their means - and while they may be trophyless for the last 4 years or so - they are steadily building on what they have.
    Villa seem to be doing the same and investing in a good youth system as well.

    With the collapse of English football appearing more of a when no if, youth systems will become all important again. Training players from kids and paying nothing for them will become crucial to the future of the game.

    Lets hope the debt will not claim any more clubs - and hope for Portsmouth fans that - at whatever level - their club will not die.

  • Comment number 29.

    Nick Hove

    the football creditor rule is totally immoral but it has been tested in the English Courts and upheld.

    The reasoning behind this is that the FAPL (and FL outside of the PL) can order the transfer of an insolvent club,s share / membership in the league.It ceases to be able to play and the argument is that creditors would receive nothing whereas in an administration (and continued trading / playing) they might get something

    In practice this means that other clubs and players are way ahead of other creditors -I am sure that you have read the shock /horror stories of local traders, St Johns ambulance etc

    So whilst the FAPL arrogantly feather the beds of their members the others get nowt; It should be reviewed; I cannot think of any other situation where this outright prejudice to normal creditors exists

  • Comment number 30.

    There are some small inaccuracies in the peice, although I suspect them to be a matter of grammer.

    Firstly, there is no legal requirement for the Administrator to extracate himself via a CVA. This is a requirement of the Football League. It does not have to be complied with. Not complying will increase the footballing penalty, but it does not have to be the only outcome.

    Secondly, the requirement that all football debts are should be paid is full is subject to a possible dispensation in the League rules. Non-compliance is likely to increase the footballing penalties, but this is the future of the club we are talking about. HMRC should use this case to test this arrangement, which I beleive is against the letter of the Enterprise Act.

    In my opinion, there are a few stakeholders in this mess that should be seeking to leave a Football Club behind and the proposal from the administrator should make this clear.

  • Comment number 31.

    "Is this bloke a Scummer? Some of his references to the club seem to be hardly neutral."

    ------------------------------------------------------------------------

    You mean 'Is this bloke a Southampton fan?". No. He isn't. Read it again carefully. The author of the piece is a Southend fan and has already said that he'd be a fool to gloat as Southend are not exactly out of the woods themselves as regards finances.

    He's not being biased against Portsmouth, he is spelling things out in plain English so the average fan can understand it. It's a good, clear article and the best summing up of the whole sorry Pompey mess that I have seen so far. Portsmouth are in one hell of a hole and it's not the fault of the HMRC, the media or anyone else except Portsmouth FC (or Portsmouth City FC) themselves. I can't blame the Pompey fans (although, being a Saints fan, I'd like to!) for celebrating the FA Cup win in 2008, anyone would, but was it worth it? I don't think so as that particular piece of success has come at a terrible price, most probably extinction. Portsmouth are a prime example of a club trying to punch above its weight, briefly succeeding but ultimately failing spectacularly; the other spectacular implosion was Leeds.
    Portsmouth's owners and directors are directly responsible for this mess and, as such, must carry the can for it. If I was a Pompey fan I'd feel sick, unhappy and angry and I'd be wanting the directors and owners (from Gaydamak onwards) to be held accountable for it.

    The shambles in south east Hampshire just goes to show what a mess football is in. It's hard for clubs like Portsmouth, Hull, Wolves, etc, to compete against the bigger clubs (some of whom, themselves, are probably living on borrowed time when you see the amount of debt they're in) when transfer fees and wages, etc, command such stupid figures. The sooner football gets a radical overhaul so that it is a fairer system for all, everyone can compete fairly with each other and the transfer fees and wages aren't astronomical, the better. However, once Portsmouth go into admin, are docked points and are relegated - or go bust altogether - all I can see is the Premier League shrugging its shoulders and carrying on as normal. Call me cynical, but I don't see them changing it unless they grow a pair and really have learned something from all this.

  • Comment number 32.

    > 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.

    Is it definite they will get an advance of TV money and be allowed to sell players outside the transfer window? If so, surely this also brings up issues of "special treatment" of one club over the others and effectively rewarding mis-management and financial incompetence.

    I would have thought that other Premier League clubs battling against relegation may object to this. It doesn't seem fair and it it all looks like the Premier League are shifting the goalposts.

    I certainly agree with you that this whole situation has been allowed to happen because of poor regulation by the Premier League. Of course it's Portsmouths past owners fault, but if you don't police things, then this is inevitable (e.g. recent behaviour of banks).

  • Comment number 33.

    # 28:

    "With the collapse of English football appearing more of a when no if, youth systems will become all important again. Training players from kids and paying nothing for them will become crucial to the future of the game."

    Quite.

    And will also a) even up some of the growing disparities in European club football, and b) probably be good for UK national teams in the longer term as well.

  • Comment number 34.

    Great article Matt - it's nice to read something that is so well-constructed, explains everything in laymans terms and isn't subject to the author's own personal opinion or feelings (your colleague Mr McNulty could learn a great deal from your impartiality and objectivity).

    It's a terrible shame what has happened to Portsmouth, particularly given the passion and dedication of its supporters - I hope that whatever happens to the club in the next few seasons, they are able to bounce back from all the financial mismanagement they have suffered in the last couple of years and get themselves back on a sound footing. The supporters do not deserve what they are currently being put through, and I'm sure that they will still have a club to support at the end of the season. As a Wolves fan, Pompey going into administration obviously benefits my club in the sense that we are fighting to stay in the Premier League, and one less club around us makes our fight a little easier. However, I take no personal satisfaction from this whatsoever, and I'm sure I speak for the vast majority of my fellow Wolves supporters along with fans of Burnley, Hull, Bolton etc who are all in a similar situation to us.

    I genuinely think that the people running Portsmouth FC in recent years should be subject to investigation, as surely the way they have run the club's finances is tantamount to a criminal offence? No doubt they will get off scott-free (in the same way a certain Mr Ridsdale did) and go on to cause similar problems at another club, but from a legal point of view, I think they should be held to account for what has happened. Football clubs are often the lifeblood of the supporters and the general community, therefore the people running them (who must only be viewed as custodians) should not be allowed to rip out their heart and soul...

  • Comment number 35.

    It was jolly nice to see Peter Storie leaving the ground the other day in a bran spanking new £40,000 mercedes... his own, or paid for by the club, I wonder !

  • Comment number 36.

    The FA and Premier League will never come up with the rules required to make sure clubs keep their finances in order. They know the likes of Man Utd, Arsenal, Liverpool & Chelsea would use any excuse to form their own league if any new rules meant them getting penalised.

    It's partly what happened with the forming of the Premier League, the clubs not liking the exisiting rules and being outvoted by smaller clubs and wanting more money. I'm sure Sky TV would follow the big clubs into a new league and not give a moments thought to the ones left behind. It's all about money.

    The FA & Premier League will make all sorts of noises about putting their house in order etc, but it's all talk. Legally, they don't have much power over how Limited Companies operate or finance themselves, even if those clubs want to compete in their competitions.

    Really, could you see the FA or Premier League kicking Man Utd out of the league or even deducting points if they were as much financial mess as Pompey?? Nah, me neither.

  • Comment number 37.

    26. At 2:27pm on 24 Feb 2010, namenotinuse wrote:
    AFC Bournemouth; West Ham United; Southampton FC; Portsmouth FC. Weren't they all managed by Harry Redknapp?

    -----
    Leeds, Luton, Notts County, Cardiff. None managed by Harry Redknapp. All in a similar boat though...

  • Comment number 38.

    What can you say?
    How long has this been coming? - A Premier League Team going down the toilet !
    It just proves that the bigger your debts, the safer you are!
    Was everyone as confused with the Glazer/Man Utd situation as me. A man that borrowed virtually everything to purchase the club, got himself into GBP700m worth of debt (GBP200m of it at around 14% interest), has annual interest payments that are more that Portsmouth's total debts, and no way of paying it back.
    And yet, are his creditors pushing him into the same corner?
    No - So he creates another scheme of effective borrowing with the Bond Issue that basically results in the same amount of debt, with a lower interest rate and a longer period to pay it back.
    Now I know this is very simplistic but "robbing Peter to pay Paul" springs to mind.

    Back to Pompey,
    I agree
    - Its the fans that suffer (whether they have pushed them to be too ambitious or not, they didnt get the club into the debt).
    - Its the management of the club and its finances that is at fault.
    - These people should not be allowed to take charge of a club again
    (as mentioned by one comment) Dont the FA have some sort of process
    to review new club owners ass being of a certain repute?
    well one that has performed in this way should be deemed as unfit!!

    I am sorry for the fans but they are going down for sure (I think everyone knows this even if they dont lose the 9 points for going into administration).
    There is opinion that it was going to happen to someone one day and it needs to happen to give a wake-up call to clubs.
    I am not sure that this is 100% accurate, the economy should have done this already. These are supposed to be succesful business men in the main that own clubs nowadays - How the hell did they become succesful managing their businesses like this!!

  • Comment number 39.

    Very good blog.

  • Comment number 40.

    Afternoon all, thanks for the kind words. Horrible subject, though, isn't it? Some replies from me:

    Chocolateboxkid (1) - You're testing the limits of my one-day crash course in insolvency law!!! Can anybody help answer these two questions?!? My understanding of the 'line of credit' issue is that it would depend on the administrator and the supplier. The former not only has complete authority to run the business, but he has a legal duty to run it at the least "cash neutral" and not take on any futher risk. The supplier would also be naturally cagey about extending a company in administration much in the way of credit. However, I believe if the situation settles down a tad and a way out of admin starts to emerge, lines of credit are possible. As for the players being able to break their contracts I think the answer is yes. Not being paid is a pretty fundamental breach of contract. It would, of course, throw up all manner of problems for the club as a going concern and the authorities. So my guess is that money for salaries will be a priority.

    Mikey (2) - Agreed. There but for the grace of God etc

    Scumskate (3) - Sorry you think that and I apologise for any journalistic flourishes that may have caused offence. But I genuinely bear no ill will towards PFC; I'm just a very concerned neutral and it's the implications for football that worry me.

    Gavelaa & Starfirereturns(4 & 5) - Your bleak assessment is shared by quite a few people I have spoken to in the last few weeks. Very sad.

    Dan (6) - Thanks, I had a lot of help. I've mentioned three of them above and there were a couple more who didn't want to be namechecked....I think their firms were in the hunt for the admin job!

    Robbie Smith (7) - That's the point, we just don't really know because this is uncharted territory: a club crashing out of the PL already in admin. It really does depend on how big a pot of cash the administrator can put together to settle the debts. If it's big enough and the creditors go for it, some semblance of confidence and stability returns and somebody buys the club/takes on its remaining liabilities, then we could be looking at a fairly gentle landing in the Ch'ship. But if this drags on and no inroads are made in those debts, well, this is where you get in to Leeds/Luton territory and it really is up to the Football League. Ultimately, they can withhold the club's "golden share" (basically the right to compete as PFC in the league) if they don't like what they're seeing/hearing. Boro '86 is a good case study.

    Trevez73 (9) - I would love to say more about the shady stuff but it really is more than my job's worth. It may, however, all come out in time. Put it this way, there have been a few idiots at PFC, a few who were a bit unlucky, a few who saw a fast buck but bolted without causing too much harm and a few who should really never be allowed to be a director of a UK company again. If it gets to liquidation those people will be pursued for damages and it will get ugly.

    Elixir69 (10) - Spot on. This move has bought the club's owners 3 months. This summer will be very touch and go.

    Right, that's it for the moment. I'll be back later but before I go I should add something I missed the main piece. The little people. The blameless local builder who is still waiting for his £50K for doing out the boardrooms. The minibus company who ferry the academy kids around but haven't been paid. The 500 casual staff at FP. The catering firms owed £10K here, £5K there. And, of course, St John's Ambulance, who always get shafted. It all adds up and admin is very bad news for all of these people. They deserve much much better.

    One more thing. Here's an interesting article that explains football admin from the point of view of the administrator. It's by Brendan Guilfoyle, who is currently running Crystal Palace, and he wrote it last year for the insolvency industry's trade mag. V enlightening. Check out the bits about making sure of your fees and managing fans' expectations.

    http://www.thepandapartnership.com/Guilfoyle-Recovery-article.pdf

  • Comment number 41.

    "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."

    Really do not understand this "Player sales outside the transfer window will be permitted and TV money advanced". This has already been turned down by the PL and would make so many solicitors rich it does not bear thinking about.

  • Comment number 42.

    anirrationalhatredofwestham

    Thanks for that information. I totally agree with you that it is immoral. Luckily I don't have any business dealings with a football club but if I did I would certainly try and take that rule to the very top. Lets hope someone does try and maybe even take it to Europe to rule on.

    It seems to me that the FA, FL and PL are just making money for the boys. Lets take the money from the fans and other hard working businesses and laugh in their face when something goes wrong. I know that they are football clubs and have communities around them but surely everyone these days in the last 30 years or so has to understand that they are businesses first. Every club and fan wants success but there are only a few trophies to fight for.

  • Comment number 43.

    My sympathies go to the fans, as a Newcastle fan i slightly (emphasis on slightly!) understand what you guys are going through.

    I read an interesting article with Phil Brown that raised a few questions though. Mainly, why do Pompy deserve to get TV money early and sell players outside of the transfer window? PB said that he was after players at the start of the season that Portsmouth out bid them for and bought. Having done that, do they deserve special treatment? Or is this just unfair on other clubs near the bottom of the Premiership?

    And before Pompy fans rip into me, I am just playing Devils advocate and asking the question!

  • Comment number 44.

    I seem to remember another financial crisis at the club a few years back which was solved by a Phoenix style name change. Anyone know if there are any common denominator directors?

  • Comment number 45.

    As a Pompey fan these are painful times. All we can do is hope the club survives.

    90% of the fault lies with Storrie and Gaydamak. 10% goes to the two previous owners of the club this season who failed to bring anything to the table. Sure the PL / FA whoever need to look at how this can be stopped from happening again, but the cause of the problem lies within teh club. If anything the PL has been too easy on us. We should not have been allowed to sign players last summer and Storrie should have been looking to halve our current wage bill instead of out bidding other PL clubs for players like Dindane. Storrie should be stopped from any further involvement in football.

    Redknapp is an expensive man to have around, but all he did was build the best team he could. I don't blame him.

    I don't know what our punishment should be or what league we will end up in. It's time to take it on the chin and move on the best we can. I hope other clubs learn lessons from this as I would hate to see any other club go through this.

  • Comment number 46.

    Two quick ones from me.

    Linvoy (21) - Bang to rights! I actually deleted "...mon frere". That would have been straight to liquidation.

    Strettonbluenose (19) - You're right, it is an assumption, but not a big one. You're right, the other clubs were very reluctant to make any exceptions for a Pompey not willing to accept admin (and the 9pt pen). The PL, however, will now push through "club in crisis" measures to maintain integrity of the league. The other relegation-threatened clubs will give it the nod now that Pompey are no threat to their survival hopes and those tempted to claw back three points on rivals (Liverpool, for example) will not want to be seen to profit so cynically from another club's troubles. That's my interpretation, anyway!

  • Comment number 47.

    "AFC Bournemouth; West Ham United; Southampton FC; Portsmouth FC. Weren't they all managed by Harry Redknapp?"

    I'm sorry, but Redknapp shouldn't take the blame for Portsmouth's situation (or any other clubs). The people who run the club should ensure that a manager works within a transfer/wage budget that keeps the club going. They should have said to 'Arry that he couldn't spend all that money because it was more than the club could afford. Simple as that.

  • Comment number 48.

    AFC Bournemouth; West Ham United; Southampton FC; Portsmouth FC. Weren't they all managed by Harry Redknapp?

    ah yes 'Arry the man who has had his collar felt more times than Jordan's derriere. and his chum storrie have a very, very big shock coming there way. hmrc is all out to ave em.

    and shame on spurs board and the epl bigwigs for doing nothing when a epl manager & chairman are charged with tax evasion relating to transfer fees. Fit & proper policy? you're having a laugh epl.

    a few of those guys will be going through the squeaky botty syndrome too!

  • Comment number 49.

    When Saints went into Admin, the 10 points were not deducted till the end of the season, as we were in the relegation zone. If we had climbed out we would then have the 10 points deucted, but if we finished up in relegation zone then the 10 points were held over to the next season, and that's what happened. Why not this for Pompey? is it 'cos its Premier League not Football League? Seems unfair

  • Comment number 50.

    Thanks.

    I saw NUFC demolish Tony Adams' Portsmouth last season. Not only were they embarrassing under Adams (who chose him?), the stadium was not only a relic but seriously lacked atmosphere.

    Lets hope Spurs are next eh!

  • Comment number 51.

    Cheers Matt - can't fault the article tbh. It says it how it is. I'm sure I heard Mr Guilfoyle on drive time a few weeks ago, eloquent, intelligent and clearly understood the basics of housekeepping.....maybe when the enormous dust cloud settles Portsmouth should offer him the job of running the club. Idiots have owned our club - yes - fast buck merchants - yes and definitely some who possibly should be prosecuted.....ultimately a real tragedy for not only Portsmouth as a city and a community but football generally....I wonder if we are the first EPL domino.

  • Comment number 52.

    In this whole blog I have not read one decent thing about Pompey.. Everyone is very keen to slate us and say horrible things about us. I wish people would stop saying this is the end of us like this, becuase it is not. Don't write us off until we are gone because that is the thing that upsets the fans the most. We know what is going on - no we don't know why or who or whatever! But hearing things like this on a daily basis and hearing only the negative things you have to say about us are heartbreaking.

    ''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.''

    We are not a Championship team. Okay we may be getting relegated at the end of the season but as far as I am concerned we are still in the Premier League and should be classed as a Premier League team. Shabby stadium is just rude, our ground has nothing wrong with it. Sure its not as big as the ones up North but that ground has one of the best atmospheres in football. Our stadium has been around years yeah, my dad went to his first football game there, as did my grandad, brother and myself and neither of us would change a thing about it. Corporate seating? A proper fan is out in the stands cheering on their team. Most of the people at Portsmouth are not to blame for our finacial problems and they should stop getting a hard time for it. Avram Grant for example, one of the only people who has faith in us. After every game he is questionned about our financial problems, how would he know? He is meant to be in charge of how we play not our money. Question the right people and please think about some of the good stuff about Pompey too. We deserve that much!

    PUP

  • Comment number 53.

    Absolute spot-on summation. The fact is that no business can continue for ever and a day living beyond it's means. Personally, I am not sorry this has happened to a Premier League Club. This a wake-up call that is needed in theses times of financial gay abandon.

    I am appalled that the Football Association and the Premier League have allowed this situation to develop has far as it has. These so-called top-flight Clubs need to realise that it's not all about jam tomorrow.

    At the other end of the spectrum small clubs are going out of business because they have debts less than some Premier League players are being paid per week - how can that be justified?!!

    It is absolutely ludicrous for football to carry on in this fashion, Portsmouth won't be the first Premier League Club to fall by the wayside nor the last.

    Portsmouth and other Clubs like them have, along with the FA and the Premier League, brought the game of football into disrepute. Wake up and get your house in order!!

  • Comment number 54.

    There's not much you can do to avoid this in the current climate of football. The "big-4" in the Premier League as well as other massive clubs like Real Madrid, Inter, etc (apart from Barcelona) are all financed by wealthy businessmen. In order to compete on the big stage you're looking at spending a minumum of £30m on a "world class" player and upwards of £15m on very good players - income streams cannot afford this and they have to be subsidised. If a club chose to spend sensibly then they will lose their competitiveness (look at Arsenal).

    The only way around this continual downwards spiral on to obscurity is to introduce a salary cap akin to NFL. However, this would need to be introduced with the approval of all teams - Chelsea will refuse to spend the same amount of money on players as Hull or Stoke, etc. C'est la vie; onwards to the next similar case in 6 months. Sorry Pompey fans, my heart goes out to you...

  • Comment number 55.

    " The Premier League has rejected struggling Portsmouth's request for permission to sell players outside the transfer window.
    Fifa, which sets transfer rules, had indicated it would look favourably on Pompey, who have debts of about £60m.
    But the Premier League board has decided it would "not be appropriate" to grant the request."

    http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/8522283.stm
    on bbc website 20 Feb, good blog but not correct!

  • Comment number 56.

    I may be stating something very obvious here and also something that may happen but should clubs not produce say a report every year that says.. in total we have made this much.. and we have spent this much.. Can the FA not start looking at these clubs and say you continue to spend 40mil a year more than you make.. start proving you can pay this back??

    Surely if you are a chairman in charge of an organisation who are in turn part of a bigger organisation.. you would have to be accountable for your dealings to the guys in charge..

  • Comment number 57.

    " I may be stating something very obvious here and also something that may happen but should clubs not produce say a report every year that says.. in total we have made this much.. and we have spent this much."

    They do, they are called accounts.

  • Comment number 58.

    this is a fantastic explanation of what "might" be going on. I like most people who slow down to look at car crashes on the motorway have had a morbid curiosity by this story, and this blog at least explains some parts I did not understand.

    the basics I knew, appalling management, (financially that is) possible corruption and insane projections. sounds a bit like a certain lot in the city!

    the bit I would like to know is how as the only constant at the club, is Storrie getting away with it? ive seen some blog writers and blog readers suggesting its not his fault! what then does a chief executive do if not run the club? have I got this wrong?

    best of luck pompey just like the crash I slow down for I hope no one gets hurt....

  • Comment number 59.

    With regard to comments like;

    "What does this leave for the rest of the clubs under precarious (often foreign) ownership? This is a very important question, as the future's of Man U and Liverpool are also in doubt."

    Can anyone tell me why the big clubs are not in the same position as Pompey? Is it because they are paying HMRC?

  • Comment number 60.

    Excellent article, concise and accurate.

    However, many posts keep referring to 'TV money' being advanced whereas the articles mentions possible 'Parachute money' i.e. the money a Premier club receives when relegated, not the same thing.
    Also, many clubs managers' including mine (Wolves) have gone on record as saying that they would not be at all happy if Pompey were allowed to sell players outside the window, so.?
    As for clubs such as Wolves being talked about as being in the same boat, we are at the moment in a reasonable financial position due to prudent managing and an altruistic chairman (who tried to buy Liverpool by the way, and reckons that they would now be debt free if he had !?)We have a new ground, paid for *(and more or less full for every home game), and a wage structure that as Mick McCarthy noted recently on the Wolves' website, did not allow us to 'sign a player that we were interested in during the January window, because he had been offered more by Portsmouth'
    We have suffered the ignominy of the big drop,in the past, through all four divisions, but have come back stronger, let's hope that Pompey do......

    Wolves fan in Gosport.

  • Comment number 61.

    Can some please tell me how the Chief Executive has kept his job?

    Peter Storrie! Well he must certainly live up to his name - he tells a good tale.

    It may be my lack of knowledge (I'm not a pompey fan) but is this guy Chief Executive of (only) the Football club or is he someway involved with the holding company - I assume there is a holding company? There always seems to be!

    As I understand (from reports in the papers - and I know we can't believe all we read) he has been involved with each of the takeovers.

    You would surely think after the first owner didn't come up with the money he might have checked out the 2nd a bit more thoroughly. And, let's just assume he had a bad day and missed the 2nd owner, surely he'd have tightened things up when the 3rd one came knocking.

    Also, if he is involved with the holding company, how can his position be tenable having known about the debt to HM Revenue & Customs and continued to run the business/football club on the same basis as before.

    Surely his judgement must be called into question on a number of areas.

    As I say, I'm not a pompey fan and don't know the facts, but this just stinks!

    Well that's my rant over.
    Thanks for reading!

  • Comment number 62.

    #52 Tasha

    I think when he referred to you as a Championship team he meant your level of players, which i think if we are honest are not at Premiership par. I personally don't really have anything against Portsmouth, but I do feel they are one of the lesser teams in the league. From the team to the stadium you do not really offer much and maybe someone else is due a run in the top flight.

  • Comment number 63.

    Tasha said: In this whole blog I have not read one decent thing about Pompey
    ---------------------------------------------------

    Is it any wonder that people from outside Portsmouth say that some Pompey fans are born with a chip on each shoulder and a bit deluded!

    Tasha, it's clear from your response that you are missing the point completely.

    YOUR club has been ruined by a small group of people and yet you still seem more worried about what fans are saying about you and your ground! If Pompey fans really are as passionate as they want the world to believe, then I'm amazed they have literally let your "owners" get away with football club murder.

    I'm sure I'd get a hot reception in Portsmouth if I wore a Saints shirt around the city. And yet the very people who have ruined your club come and go as they please!

    Time to wake up.

  • Comment number 64.

    #52 Tasha

    Does PUP mean Pay Up Pompey!!!!

  • Comment number 65.

    Thanks Matt - I genuinely appreciate the round up (that's round up, not wound up!).

    I would echo a couple of the other comments about it being a bit too anti-Portsmouth (phrases like "the next idiot production line", "an indebted Championship team in a shabby stadium" [is Corporate seating the be all and end all of a stadium?!], "arrogant belief", and "naked greed") but either these are the journalistic flourishes to speak of or they simply make for better reading than 'global recession' and 'owner running out of money'!

    But, perhaps that's just a Portsmouth fan being a bit too defensive about his club - after all, I can't help but read articles these days that talk about the club as if it's something you stepped in and can't get off your shoe.

    All that said, at least it gives some further insight as to what is going on, and what is likely to happen next, so that much is appreciated!

  • Comment number 66.

    N1 Matt excellent breakdown of facts.I think we are all agreed on most things(after reading comments).

    DREAMWORLD with total disregard for business and standard British ethics is what all the people "involved" in PFC's demise are in !

    Taking into account recent exposures of salary,wages,bonuses,number of houses owned,rip offs etc regarding Politician,Bankers,Councillors,Executives,Players,Managers,TV presenters and all the others,i am amazed that noone sees the truth right in front of their eyes.

    The working person/fan on an hourly wage of £6 to £10 if lucky enough to have a job! has been totally ripped off by these idiots.But all in the above list are alright jack coz they all have taken their slice.

    The owners are not fans but idiot business men looking for a quick buck along with sitting in directors boxes thinking they are special.

    I think the new stadium was 1 of the biggest dreamworld examples.They must have been sat in luxury laughing hysterically.(I would have done you a picture for £100 lunch and free ticket to game)

    Alas there is no Pompey fan billionairre to the rescue so PFC is dooomed.

    Yes in conclusion it is everyones fault for sitting there whilst they knew it was burning.(accounts are published yearly)

  • Comment number 67.

    First of all, this is a superb blog, providing the kind of no-nonsense factual information that is so lacking in so much other coverage of the Portsmouth situation in particular and football finance more generally.

    I think that we need to distinguish between the club and the business. If the business goes into administration, the administrator has a balance sheet in two columns - assets and liabilities. The club is an asset, whilst creditors, which include the banks, HMRC - and, potentially, the players - are the liabilities.

    His or her task is to divest the assets (essentially, the football club) and to pay out the proceeds to the creditors. In principle, if the club can sold for half of the value of the liabilities, each creditor gets 50p for each £1 that he is owed. In practice, it doesn't work out like that, because some creditors rank above others. The football authorities say that football creditors rank above all others, but it might be argued that this is unrealistic, and it could be hard to defend in practice.

    A key issue here is the difference between insolvency (when debts exceed assets) and liquidity (when not enough cash is coming in to pay day-to-day outgoings). If I understand the Portsmouth situation correctly, the business is insolvent (debts exceed assets) but not yet illiquid (cash coming in just about meets outgoings). Illiquidity could occur at the end of the season, when revenue falls but outgoings remain high.

    On this basis, the club, as a club, can survive if someone purchases it from the administrator. But the club will only be purchased if its ongoing finances look sustainable. Unless it can slash its wage bill, this isn't going to happen.

    A couple of years ago, someone sent me a ranked list of the 100 highest-paid players in the EPL. If asked to guess, I would have expected the upper echelons to be dominated by the big stars at Chelsea and Manchester United. In fact, and to my surprise, Portsmouth was heavily represented at the top of the leader-board. This club seems to have been over-paying for years. That problem won't automatically go away with administration. In any case, no Championship club can remotely afford Portsmouth's wage bill. So this is where action is needed.

    And this raises a broader question - are excessive wage bills going to drag many more clubs into the same mire? It's high time that football as a whole found ways to slash its wage bill. How to do it is, shall we say, an extremely tricky question, but that doesn't mean that football can duck the wage issue and carry on regardless.

  • Comment number 68.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 69.

    boredfootballfan you are right. We should not get special treatment and we should not have been allowed to bring in any players over the summer, in January or since the transfer window shut. We were able to do this with a winding up order over our heads. That is just ridiculous. If the PL were unsure of our position they should have demanded we have an independent statement produced along the lines of the one demanded by the High Court.

    Tasha there isn't a great deal of good things to say about Pompey at the moment. In many ways I would not be sad to see us go into liquidation and come back at whatever level as a club owned and run by a supporter's trust. A team that was owned by our city and played for our city, with strong links in teh community. This may be a somewhat romantic notion and we may never get above league 2, but all I want is a club we could all be proud of instead of what we have now.

  • Comment number 70.

    "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."

    As the taxman is owed less than 20% of the overall debt is it likely that the other creditors agree a CVA, accept a reduced pay off and then some new buyer "miraculously" appears and picks up the club on the cheap? One of the current creditors even.
    Indeed, a get out of jail card.

  • Comment number 71.

    " You're right, it is an assumption, but not a big one. You're right, the other clubs were very reluctant to make any exceptions for a Pompey not willing to accept admin (and the 9pt pen). The PL, however, will now push through "club in crisis" measures to maintain integrity of the league. The other relegation-threatened clubs will give it the nod now that Pompey are no threat to their survival hopes and those tempted to claw back three points on rivals (Liverpool, for example) will not want to be seen to profit so cynically from another club's troubles. That's my interpretation, anyway!"

    Take Liverpool’s loss to Pompey and say for example they miss out on the CL spot to a club yet to play Pompey at Fratton, but subsequently win. Just how can you square that when £10M's are involved and there is no way you can categorically state this action has no impact? This is in effect a reverse Tevez, where a precedent has already been set? There are so many possible pitfalls here that only a 100% agreement from all Premier clubs would be needed to carry this through. It is not only Liverpool being able to profit from such “cynical” action, but a competitor of Liverpool gaining points which may not have been possible without the team being weakened.

  • Comment number 72.

    Good blog, Matt. As always, the supporters are paying the price when clubs are run as badly as in this case.

    The level of debts accumulated in recent years is breathtaking. Some clubs have lost any sense of realtity and I fear as long as the PL and FL aren´t stepping in or a couple of bigger clubs are wound up, nothing will change.

    With the next contract for the PL oversea rights in the pipeline and surely much higher revenues, clubs will be tempted to spend even more cash and to lend even more money.

    Unless harsh legislation is brought in by the respectives leagues, nothing will change to the better. To get tough legislation would require enough votes and by those who`re running up those huge debts.

    I´d hate so see FIFA and UEFA getting involved to force those required changes to be made, but at things are standing at the moment, this seems to be the only realistic hope to get anything done.

    How arrogant and selfish the PL is was shown last month when the next TV instalment for Pompey was withend and other PL clubs were paid off, while neither the tax man nor foreign clubs received anything at all.

  • Comment number 73.

    Re "club in crisis" measures by PL - the other clubs in the relegation battle are not so bothered about Portsmouth - everyone knew they were down already - it is their rivals obtaining an advantage through somebody currently with Portsmouth moving and having an effect on relegation battle - that fear will astill remain - can't see any of the clubs at the bottom being happy about extending the transfer window for Portsmouth and weould expect them to vote against.

    Once they are in administration though I think the other clubs would be prepared to advance the parachute payment - that only affects Portsmouth finances and NOT the football results.

    So parachute payments yes - transfers before the end of the season no. that would be my guess

  • Comment number 74.

    How will the league structure cope with there being 1 less team in the league will there just be an extra team missing in the championship or will there be a cascading extra promotion through each league down to the bottom?

  • Comment number 75.

    #57 thats my point.. it may have not been picked up on with my tongue placed in my cheek.. they produce accounts.. why can't the governing body check these annually and try to reign in spending money that isnt there... at the end of the day their product will be affected by teams goin into administration.. be proactive and stop it.

  • Comment number 76.

    A thought following antisback's point (74).
    If Pompey do go to the wall (which let's face it is unlikely - huge egg on face for the premiership and the football association if it does happen)
    Then could this be a natural way of reducing the premiership by one team.
    Lots of people say playing less games would be good all round.
    This achieves a reduction of 2 games per team without having to put any other teams nose out of joint.
    Keepo the same relegation/promotion format but with one less team in the Premiership.
    Who knows, with all the skeletons in other club's closets, we may get down to 18 clubs in the near future.

  • Comment number 77.

    It is a terrible event for the fans, and I have complete sympathy for them, the thought of my club going under is a nightmare I hope to never see.

    However, lets not forget, that by not paying 12million quid in tax, Pompey have been cheating, not obeying rules that other clubs follow. Is it fair to clubs who obey the rules and finish below them in previous seasons? If Usain Bolt was found to have taken HGH he would be banned and stripped of his medals and records, Pompey have been taking performance enhancing money cuts by not paying their tax bill. It is cheating and it shouldn't be allowed. The FA need to make failure to pay a tax bill on time an offence in the league that see's a harsh points deduction immediately, no waiting for administration to kick in.

  • Comment number 78.

    ~74, at present 2 teams drop out the FL into the Blue Square Premier. If Pompey got to the wall, normal promotion occurs with one less relegation per league (a repreive for the team in 18th place in the premiership (etc)

    This situation has been occuring for a few seasons now in the BSP due to the issues at Kings Lynn etc. All that happens is that the one less relegation filters down to the lowest level of football where an extra team can maybe be added in.

    Recently, teams going bust have reformed in Tier 10 of the Pyramid, (Halifax, Scarborough, Telford) the level were FC United of Manchester began (North West Counties Div 1 for FCUM); its not inconcievable that AFC Pompey could form down there, if the supportters trust wanted to.

    Isolated premiership fans need only look at lower leagues to see what could be next for Pompey

  • Comment number 79.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 80.

    During the 70's I recall Pompey being in dire financial straits and eventually landing in the fourth tier of English football, only to rise to get back to one season in the top flight in the 80's, and steady the ship as a popular second tier club. Assuming that one derogatory comment has been removed, this is one Southampton fan who wishes the very best for the future for Portsmouth, whatever form it takes post-administration.

  • Comment number 81.

    At the risk of being accused of elitism, Pompey going (further) south - with the risk of other "smaller" clubs to follow - will hopefully lead to a strengthening of the Premier League brand, and the delivery of something more akin to the original vision of a Premier League.

    Setting the Premier League contingent at 20 has encouraged too many small, provincial teams to spend beyond their means to attain a status they neither warranted, nor have been able to maintain. Small-time businessmen have equated their success at running a local building supplies company, with their fitness to run a complex (national/European/global - delete as appropriate according to size of fanbase) commercial enterprise. Their only purpose in the League has been to provide an assurance of survival for the bigger clubs (unless the club concerned is Newcastle, in which case see earlier comment re small-time local businessmen lacking in commercial expertise).

    Its time to reduce the Premier League to 16 clubs - Portsmouth v Burnley, Hull v Wigan, etc, just can't be termed "Premier" level encounters in any context - and accept the harsh realities that come with it. Yes, it will be tough for the fans, but they arguably need to wake up and smell the coffee as much as their local building-supplies-magnates-turned-football-chairmen - i.e. their team is unlikely to ever have a sufficiently large fanbase to support Premier status. If its the football that matters first and foremost, some need accept it will only ever be the Championship at best, and live with it.

  • Comment number 82.

    Just echoing what others have said. It's the fans that get kicked in the teeth all the time. The people who run football need to sort the whole sorry mess out with better regulation - if they can't then someone else should force them to - the law, govt? The state football is in at the moment can't continue. There needs to be a wages cap for a start and some sort of limit on transfer fees. The whole thing stinks.
    Hope everything works out for Pompey fans but it doesn't look good.
    GREAT BLOG!

  • Comment number 83.

    This is one of the best articles on the BBC. Haven't read the other comments but just had to say a very informative, unbiased well written report.

  • Comment number 84.

    I'm a Leicester city fan, when this happened to us many moons ago we had to rely on ex-city stars who loved the club to help us out, amongst many other loyal fans.

    Hopefully Portsmouth have some equally generous fans to get them out of this situation, however i dont think our debts were anywhere near this level, which makes it a toughy.

    Losing clubs out of our top division is not what english football needs right now.

  • Comment number 85.

    #52

    Tasha, can you hear that?

    That is the worlds smallest violin playing the saddest song just for you!

  • Comment number 86.

    Really good blog by Matt.

    Few points,
    "Right, that's it for the moment. I'll be back later but before I go I should add something I missed the main piece. The little people. The blameless local builder who is still waiting for his £50K for doing out the boardrooms. The minibus company who ferry the academy kids around but haven't been paid. The 500 casual staff at FP. The catering firms owed £10K here, £5K there. And, of course, St John's Ambulance, who always get shafted. It all adds up and admin is very bad news for all of these people. They deserve much much better"

    Absolutely agree, but if they go into administration, it's my understanding that those people would not receive all of the money that they are owed, but a proportion of it, i.e. 20p in the £1 as an example, so that a building firm owed £100,000 by the club would only receive £20,000 and would lose the other £80,000. Does the building firm have any come back on this missing money in the future or is it gone forever? I ask because in the past there have been other clubs that have gone into administration, paid out low amounts on money they owe and then a short time later splashed out large amounts on transfers, which just seems immoral.

    Secondly at what point are the amounts stopped? I.e. a lot of Portsmouth's debts must be continuing to accrue, e.g. tax, electricity, printing etc. Interest on loans etc will be continuing to add up.

    Thirdly as I understand it some of the people that are owed the most are owners or former owners - in other cases this hasn't been the case.

    For a few people who were complaining about Portsmouth being able to sell players when the transfer window has ended, well thats not an exception - I think any club can sell any player they want outside of the window to anyone, it's just a question of whether the buying club can play them - premiership teams wouldn't be able to until next season.

    Portsmouth's major trouble is that they don't have playing assets though - the vast majority of their squad is made up by loan players.

  • Comment number 87.

    i think a note to be added as a reality check for all pompey fans, and others (CARDIFF). when the current major shareholder chanarai says "liquidation is not an option" what he means is he hopes to hell to find some other mug punter stupid enough to throw millions down a dark hole and at best give him some cash back in his pocket. ot at worst shoulder some of the reduced debts going forward. which will still be tens of millions.
    dont think for one minute he is doing it for the fans.

    also the guy offering his 10% stake to the supporters trust. he is just spitting out his dummy cause he knows any chance he had of getting money out of PFC just ended.

    ask yourself this. who is going to buy a club with after administration a £45 - £65million debt to be paid to the creditors over five years.

    oh yes there will be no end of schisters hoping to make a fast buck a la southampton last year, trying to rope in old legends (le tiss) for an attempt at a bit of credibility. but as always the one thing the will be lacking is liquidity.
    seriously i can't think of one relevant business reason why an individual or group would take it on. no doubt we'll see a few more fake sheiks come the summer!

  • Comment number 88.

    81. At 4:31pm on 24 Feb 2010, GlennHoddle wrote:
    At the risk of being accused of elitism, Pompey going (further) south - with the risk of other "smaller" clubs to follow - will hopefully lead to a strengthening of the Premier League brand, and the delivery of something more akin to the original vision of a Premier League.

    i quite like the moral high ground taking here! if as your name suggests you follow the north london club that doesnt play in red then you should start looking for a new manager now!
    why?
    because he stands a better than 50-50 chance of receiving a custodial sentence if proven guilty. the hmrc are cock-a-hoop they've finnaly got him.

  • Comment number 89.

    Easily one of the most interesting and insightful blogs I've read on the BBC.

  • Comment number 90.

    Well that is my opinion, deluded? No i just disagree that we should be spoken about as basically liquidated. We are still a club and deserve respect for that. if i wore a Pompey shirt in Southampton i wouldn't get a hot reception either and i would be quite stupid to do that, whats that got to do with my comment?

    Thats your opinion that you don't think our players are good enough. But i watch them play every other week and I think they are good footballers. They deserve more credit than they get, on the pitch it tends to be the luck we lack to be honest.

    Yes, PUP means Play Up Pompey.

    Well anyway that is my opinion and I'm pretty sure I am not the only Pompey fan who would say that.

  • Comment number 91.

    Well summed up Matt, made for an interesting read. 5*.

    I hope the boys in blue can sort this mess out, long live Pompey (did I just say that?) and I look forward to our next match.

  • Comment number 92.

    # 88.

    i quite like the moral high ground taking here! if as your name suggests you follow the north london club that doesnt play in red then you should start looking for a new manager now!
    why?
    because he stands a better than 50-50 chance of receiving a custodial sentence if proven guilty. the hmrc are cock-a-hoop they've finnaly got him

    ===================================

    Love it! Whenever I see old Harry I can't help thinking of Arfur Daley.

  • Comment number 93.

    PORTSMOUTH HAVE OVER SPENT OVER THE LAST 3-4 YEARS & WAS WINNING THE FA CUP REALY WORTH THE POSSABILITY OF THE CLUB GOING BUST YOU HAVE TO LIVE BY YOUR MEANS AND A GATE OF JUST OVER 21K JUST DON'T PAY THE BILLS WITHOUT A MAJOR SPONSER. BUT GOOD LUCK ANY WAY

  • Comment number 94.

    Matt do you know the debt percentage or amounts that previous owners of PFC have over the club? Surely if PFC goes into administration then someone who would want to buy it would tell the previous owners to just walk away with nothing and let the club survive. I don't know how so many previous owners can have so much debt owed to them.

  • Comment number 95.

    52 Tasha, please allow me to add my little share of the bile being spread your way.

    The comment re even if you are relegated you will still be in the Premier League is a farcical comment that has had the derision it deserves.

    There are a considerable number of clubs outside of the Premier League that would have as good as if not a better argument to being a Premier League club than Pompey by means of support; history and quality of ground amongst other means.

    Pompey lived beyond their means for a number of years and now the chickens are coming home to roost. It really is as simple as that. Ask anyine who have over borrowed on their mortgage or has racked up huge credit card debts.

    Several have asked re Liverpool and Manchester United and why they haven't been put in the same position. There is a very simple reason and it is two fold.

    1) They have paid their tax bills on time. In the real non football world everyone appreciates that if you can only pay one bill make sure it is the taxman / VAT. Football clubs cannot continue to use them as interest free loans like Matt says in the blog.

    2) The people that lent the current owners of both Liverpool and Man United see their current income and likely resale value as good security for the debt. As long as people keep up the repayments and look likely to do so creditors are normally quite happy.

    Sadly over a number of months and a number of different owners Pompey have proved unable to pay the tax man and pay their staff and others on time. The point has come where when you run out of confidence in the ability of the debtor to pay you have to call in the debt.

    It may seem harsh to you but it is something everyone else seems to appreciate.

  • Comment number 96.

    Watching SSN, I've mixed emotions, I'm pleased that administration means that supporters will still be able to watch their team, however the fact that unsecured creditors that rely on money from Pompey will be hit in the pocket means that Pompey do, pretty much, get out of jail free.

  • Comment number 97.

    94. At 5:09pm on 24 Feb 2010, Nick_Hove_Actually wrote:
    Matt do you know the debt percentage or amounts that previous owners of PFC have over the club? Surely if PFC goes into administration then someone who would want to buy it would tell the previous owners to just walk away with nothing and let the club survive. I don't know how so many previous owners can have so much debt owed to them.

    nick i am sure Matt will answer if he has the detail. but unfortunately if your a pompey fan then you are going to be in for an extended period of lying, deceit, lack of co-operation etc between all the current/previous and undisclosed owners/shareholders.

    they will be the major stumbling block to agreeing any deals to deal with the creditors as they will wnat their stake out first. equally imagine the difficulties for the administrator trying to work with them, and anyone crazy enough to wish to invest?

    sorry bud it's only just started, and there will be no end of rubbish written and claimed over the next few months.

  • Comment number 98.

    It's a miracle that it's taken so long for them to go into administration. I think it's evident that the club's been trading while insolvent for a very long time now... aren't people supposed to be called to account for that kind of thing? The question I'd like to hear an answer to is:

    Will anyone be punished (legally) for such irresponsible conduct?

  • Comment number 99.

    I'll be glad when the whole rotten, money obsessed PL comes crashing down - at least we will be able to get back to the real world, not this glitzy fantasy that has been shoved down our throats by Sky and the media for the last 10 yrs.

  • Comment number 100.

    Tasha I think the Pompey fans should sing PAY Up Pompey not Play Up Pompey. Or the directors should.

    I know you said earlier that your ground was a real and proper one. One that doesn't have any corporate boxes and you were happy with that. Well that is the problem you have as companies pay a lot of money for these things. I believe that at Arsenal they have to pay £25k and then also £25k a year for some sort of corporate box/hospitality. Your owners and directors failed the supporters and community big time by not trying to get some sort of thing happening there.

    I believe you when you say the atmosphere of the supporters is one of the best as I have often heard away managers stating that fact but you need a team and a club to support.

    It's just like West Ham and their previous owners buying players in some case at the end of their career paying over the odds in transfers and then doubling their salaries. Just look at Freddie Ljungberg from Arsenal in the summer of 2007.

    ("He was purchased for about £3.5m on a four-year contract when they could have got him for nothing if they had waited for a few weeks," commented Gold. "They paid him £80,000 a week when he could have been got for half that." )

    A lot of lower PL teams have to learn to live within their means. I heard that Hull were living beyond their means last season and this season and the new owner/chairman has started to reduce outgoings. Football clubs are not like banks and the governments national or local are not going to bail out clubs.

 

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