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Taxing times for football's fritterers

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Matt Slater | 22:34 UK time, Thursday, 21 January 2010

If fans of Portsmouth FC have not acquainted themselves with the recent history of King's Lynn FC they might want to take a crash course now. The seemingly tenuous links between the two clubs are getting painfully close and the next three weeks could decide if they make the ultimate connection.

Non-league King's Lynn became a non-club last month when Her Majesty's Revenues and Custom (HMRC) gained a winding-up order from the High Court. The taxman was tired of IOUs and wanted his unpaid PAYE, NI and VAT - £77,000 of it.

The club, with total debts of more than £200,000, couldn't pay and that was that. 130 years after their formation, the Linnets were no more. It was a cruel end for a relatively well-supported club but it was entirely avoidable.

King's Lynn had been living considerably beyond their means for years. This was compounded by a failure (not entirely their own) to upgrade their stadium. Sound familiar?

Michael Frew of King's Lynn challenges Oldham's Neil Eardley in FA Cup action three years ago

It should, because leaving aside all the conspiracy-theory shenanigans of who actually owns the club (and why), Portsmouth's tale is straightforward. You can call it "living the dream" or you can follow Premier League chief executive Richard Scudamore and call it what it really is, "rank bad management".

The South Coast club's myriad problems, on and off the field, have been played out in public for the last six months. Keeping tabs on Pompey has become a blood sport.

The three different owners, the seven straight league defeats to start the campaign, the missing wages, the crippling debts and the withheld TV money - it has been a humiliating experience for a club that was competing with Europe's finest only 14 months ago.

And it could be about to get much, much worse.

On 10 February, Pompey's battle-weary legal team will probably be suiting up for the biggest clash in the club's 112-year history: Portsmouth v HMRC in a sudden-death VAT play-off.

I say probably because there is still a smidgen of hope Pompey can sidestep this rocket. An attempt to have the winding-up petition unwound before it got started was rejected on Wednesday by Justice Newey. But it was clearly not a straightforward decision (he described it as "difficult) as he spent two days listening to Pompey's claims of being overcharged and then another day pondering his verdict.

When that finally came, it was in HMRC's favour but Newey did grant Pompey a seven-day window to appeal. Neumans LLP, the solicitors acting for the club, said any appeal would have "a real prospect of success", although there has been no word of when that appeal will come.

Portsmouth fans should start praying the confidence of their lawyers (and they've got a few) is not just bravado. Reporters following their travails have become accustomed to hearing optimistic noises from the club only to discover the worst-case scenario has actually occurred.

Like almost everything involving the club at present, the details of the case are murky.

The taxman, who doesn't say much, is believed to be chasing almost £11m in missing payments. The club, however, says more than £4m of this has been paid since absentee landlord Ali Al Faraj took control in October and they dispute the rest. They have even suggested the club could be due a small refund.

Portsmouth chief executive Peter Storrie

This may well be true but circumstantial evidence suggests otherwise. The club has fallen behind with transfer payments to at least five different teams and failed to pay its staff on time in three of the last four months (the players are not expecting to see February's wages on schedule either).

In fact, it would be fair to say that being a bit behind with VAT is almost a default (excuse the pun) position for football clubs, particularly those further down the league ladder.

Southend United are a good recent example of this paper-shuffle approach to accounting. It took numerous trips to the High Court to persuade owner Ron Martin to finally write a cheque for £2.1m. He later admitted the club had been guilty, "almost inadvertently", of using the "HMRC Bank as a stop-gap".

Accrington Stanley have also been down this road of late and Cardiff City and Notts County have winding-up orders of their own to stew over.

Pompey's predicament is so perilous because the taxman is thoroughly fed up with football clubs and is in the mood to make an example of somebody pour encourager les autres. But nobody can say they haven't been warned.

The clubs should have got their houses in order as soon as HMRC lost its preferential status in insolvency cases in The Enterprise Act of 2002. Whereas it had once been at the front of the queue when a company went bust, it was now in the scrum with all the other creditors.

This had enormous implications for the national game because of league rules about paying all football-related debts (wages, transfer fees and so on) first and in full. At a stroke, the HMRC's indulgence of club debt was over, and who could blame it, particularly when faced with the well-intentioned but morally unjustifiable practice of putting footballers first.

This season's spate of tax crises is part of the post-2002 trend but it is also a more acute response to the global downturn and this country's ravaged finances. Every penny counts.

Pompey defender Sol CampbellFormer star Sol Campbell claims Pompey owes him £1.7m in unpaid image rights and bonus payments

It is ironic that another of Pompey's problems is a lawsuit for unpaid image-rights payments to Sol Campbell. There are many at the Treasury who feel image-rights clauses in contracts are a con to avoid tax, particularly as the cash is usually paid to off-shore accounts. One of the juicy details to emerge from the Manchester United bond prospectus is that HMRC is investigating £5m-worth of these payments at Old Trafford.

Another factor to consider is the timing of Portsmouth's hearing. HMRC knows its transfer windows and clearly feels calling in its debts whilst the indebted have a chance to do something about it is a canny move. Further player sales seem inevitable if Pompey are to avoid the fate of becoming the first Premier League to enter administration.

That, of course, would increase the likelihood of relegation, a Domesday scenario for a club as indebted as the 2008 FA Cup champions. If that happens "doing a Leeds" might be the best Pompey's blameless fans can hope for, as doing a King's Lynn is...well, let's not go there.

We should remember in all this that football is only being asked to do what the vast majority of us do as a matter of course. Former US President Franklin D. Roosevelt once said taxes "are dues we pay for the privileges of membership in an organised society". That is something Pompey, and football, should ponder.

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

Comments

  • Comment number 1.

    I just wish the premier league would take some responsibility. Their "Fit and Proper" test clearly isn't up to scratch having let 2 new owners take over Portsmouth without any finance to put into the club!

    The Premier League want shot of PFC they are withholding money from the club as they have no faith in the owners they allowed to take over. I dont think we should get any special treatment but not even letting us get in a loan or two means even if we sell our players we may not even be able to put out a full team and bench.

    The Premier League is now a joke, all of the clubs are in huge debt and Portsmouth will not be the last club to implode. Until Football clubs realise they are businesses and should be run as such the fans will be the ones who ultimately suffer.

  • Comment number 2.

    Stepping back from our love of football and our own clubs for a moment, but it is obscene that so many clubs either defer or refuse to pay basic things like their taxes.

    I understand that in business law, there are lots of ways round paying taxes and many companies do it, but if a football club portrays to be part of the community, then it's just wrong they are paying massive wages and payments to players and agents ahead of their tax responsibilities.

    I'm sure the Customs and Excise are fed up to the back teeth of giving clubs deadline after deadline and I can't blame them for now taking it to the courts.

    After all, I very much doubt the Taxman would be as easy going with you and me if we didn't pay our dues.

  • Comment number 3.

    more red tape please, if the problems have been identified as as poor financial management then develop relevant policy and training etc football is becoming a joke like the banks they've borrowed from

  • Comment number 4.

    This may surprise some but as a Leeds United supporter the Taxman is right to act in this way (and its a lot down to Mr K W Bates cavalier use of the CVA process).

    The real issue isn't tax for Portsmouth its paying fringe players like Utaka £80k a week!!

  • Comment number 5.

    Should have paid their tax on time shouldn't they - everyone else has to

  • Comment number 6.

    I might not fully get the situation, but my humble understanding is that the problem as Portsmouth was created well before the new owners took over.

    It was during Harry Rednapp's era that players were bought with massive wages (which in reality the club cannot sustain).

    So why blame the new owners. Suppose I bought a chippy. I am hoping to make £500 a week profit. But if I have to pay off £10,000 owed by previous managemnet, it doesnt make economic sense in me buying the chippy.

    I think the new owners of Portsmouth were ill advised of the club's finances when they bought the club. They didnt realise what massive debts the club was under and Portsmouth (to be honest) isnt really that much of a money making machine.

    To blame the new owners is silly. Why should they pay for other people's mistakes, especially with hard earned cash. We all know how valuable our hard earned cash is to us. We wouldnt want to waste it, why should they?

  • Comment number 7.

    Matt

    Whilst the tone of your blog is a cautionary tale, I don't think you go far enough with the responsibility of people to pay tax.

    You say that HMRC 'doesn't say very much'. As a basic principle of taxpayer confidentiality, why should it?

    What must be remembered first and foremost is that employers/businesses such as Portsmouth are agents for the Revenue as tax collectors. The VAT, PAYE and NI is never the businesses to use and it should be handed over immediately that it is due.

    The questions I really have about the whole Portsmouth position is that it is clear to all that even if they were successful on the pitch, the structure meant that the levels of debt were not sustainable. This begs the question, who lent them the money in the first place and what measures were put in place to secure the loans.

    Have personal guarantees been put in place by individuals to financial institutions? Therefore, shouldn't these guarantees be exercised.

    Have the accounts for the company been audited and filed at Companies House? If the accounts show that the company is insolvent, what was done about it?

    If the audited accounts did not show a true and fair view, who are the auditors and are they culpable?

    If the directors have not told the truth, I hope they are barred (under the relevant laws) from holding such positions in the future.

    Most of the problem seems to be one of corporate governance rather than a football tale.

  • Comment number 8.

    Hopefully it will not come to this. But as has been said how can the "Fit and Proper" test have given the club the all clear for a new owner to take over. If the directors of the club have failed then also how come they pass a "Fit and Proper" test in running a club as well.

    The directors of clubs have to realise that they are running a business which is a football club but the fans are supporting a sporting football club. Sometimes they will have to say they can't afford to buy players or increase players wages. It must be down to whoever decides on the players and managers contracts to stay firm and within budgets.

    How much money have Portsmouth had in the transfer of players and managers coming in over the last 18 month mainly from Liverpool or Tottenham.

    I don't agree with the "league rules about paying all football-related debts (wages, transfer fees and so on) first and in full." Surely this contravenes some sort of law where all other creditors do not receive full payments as well.

    Hopefully the football and premier league will make sure they see all payments that are due to the HMRC and put either transfer embargos or withhold TV money and pay them as well.

  • Comment number 9.

    Finally !!! Praise the journo !!!!

    This blog should be put to the top of the BBC Sports Blog list ON THE FRONT PAGE. Replace the Phil McNulty 4th to 7th argument daily bulletin !!!!

    Thankyou for covering a story actually worthwhile that could have implications for EVERY team in the game ! Even my mega rich Manchester City as this story highlights the fact that the vas majority of businessmen in general are not qualified to run a going concern!

    I am an accountant (So forgive me for being very "well he should know anyway" mentality!), but THE TAXMAN IS THE FIRST CREDITOR YOU SHOULD ALWAYS MAKE SURE YOU CAN PAY !!! He will wind you up no sooner than it took G Nev to get to Tevez !!

    I applaud you Mr Slater for showing the vas majority of us that Pompey FC is in a bad way ! I know as I have a mate who is a fan and every day I get a piece on another problem that the BBC largely oversee !!!! You have brought realism to football with this blog.

    This is more serious than any race for the title of being 4th place !!!

    I seriously hope Pompey sort this mess out for the sake of the "blameless fans" as you put it.

    Play Up Pompey !!!!

  • Comment number 10.

    No9. Don't you mean PAY Up Pompey!!!!!

  • Comment number 11.

    Where is Alexandre Gaydamak ?

    This guy took his money back out of Pompey just before the "real" proverbail hit the fan (Pompey fans that is!)

    Yet the club has no cash, it is indebting itself further just to stay afloat and this cowboy is probably on an "offshore" Tax Haven living off the sale proceeds of a club that he had no right to charge even the ogligatory "Mandaric £1" gesture for!

    Absolutely ridiculous !!

  • Comment number 12.

    @ # 10

    he he he ... You spotted my typo error ! Although If that comment was aimed at the Stretford lot I would have meant the "pay" jibe !

    On a serious note.... Pompey "Pay" up ;-) !


  • Comment number 13.

    #6 said

    "I think the new owners of Portsmouth were ill advised of the club's finances when they bought the club. They didnt realise what massive debts the club was under and Portsmouth (to be honest) isnt really that much of a money making machine.

    To blame the new owners is silly. Why should they pay for other people's mistakes, especially with hard earned cash. We all know how valuable our hard earned cash is to us. We wouldnt want to waste it, why should they?"

    EXACTLY !!

    WHERE IS GAYDAMAK !!!!!!!

    Portsmouth, send out all your boats and find this CRIMINAL !!

  • Comment number 14.

    #6 and #10

    If the new owners were dumb enough to assume debts that they did not know about, then more fool them. They should have checked out properly what they were buying. It's called due diligence.

    The same thing that I think Mike Ashley didn't do properly at Newcastle I seem to recall.

  • Comment number 15.

    I think you Pomppey fans are missing the point. It doesn't matter who did or didn't put money in or take it out. The point is that you are operarting, daily, weekly, monthly beyond your means. You have to manage turnover, income v expenditure.

    You have been living a dream. It's time to wake up and realise the fact that it is over now, and it has turned from a dream to a nightmare reality. It has been happening for the last 5,6,7 years and now you have to face the consequences.

  • Comment number 16.

    # 14

    "Due Dilligence" sounds like "Fit & Proper".... get my point ?

    Both a waste of space in the footballing world !

  • Comment number 17.

    "Fit and Proper" is not the same as "not stupid". You may be dumb to buy a club like Portsmouth, but that doesn't mean you're not fit and proper.

  • Comment number 18.

    The person who should be questioned is Mandaric and his over-burdening desire to get Pompey into the premiership some years ago. It has gone on from there. Hasn't he just been found out in a similar fashion for something or another at Leicester ?

  • Comment number 19.

    With all of the money in football nowadays, it is absolute nonsense that clubs are going bust towards the top (or bottom) of the football ladder.

    The fix's are simple.

    1) Player, manager and staff salary caps. There is no justification for the outrageous wages in football today. It's time these players go back to playing for pride along with a conformable and enjoyable living, not one of three house's six cars and four boats - which they falsely believe they deserve.

    And once it all settles and the clubs start turning over massive profits, they must be forced to return the cash to the community's (with new parks, and to the locals schools, etc) to which they each claim to belong.


    2) The English Premier League and the FA must set up new branches, and place their own staff inside football clubs to ensure that they are run properly, that the method with which they are ran are a credit to, and a role-model to those who follow and support them.

    The clubs fans pay their wages, their taxes and massive amounts of money for their (season) tickets. Simply put, why should the clubs fans have to watch their clubs misuse the money they pay to their clubs? And why should the fans continue to pay these insane wages?


    3) We need a system where then clubs at the top of the ladder are support those at the bottom. Clubs going bust over 100K, while the top four have a take-in higher than this for each and every home game, it is completely unfair.



    The clubs have to shape up, they have to once again live up to serving their communities properly.
    And the EPL and FA have to step in to change football for the better.

    Stuff all of these arguments that we need the English game to act like it currently acts to the complete in Europe - we need to English game at a local level long before we need it at a European one.

    The game as a whole should come first, and it needs to be run as one complete picture.

  • Comment number 20.

    ANYWAY......

    HMRC have had much smaller companies, with much smaller debts over a much shorter space of time with less delays shut down. Portsmouth are lucky to have survived for so long. Shut them up, by shutting them down. Send out a messgae to Football clubs, that they are in the real world with the rest of the nation

  • Comment number 21.

    To try to put the blame on any of this on the Football League fit and proper persons test is ridiculous. This test will ensure owners are not bankrupt or crooks but thre is no law against bad businessmen. This is simply all at Portsmouth's door. Any business that lives above their means fails.

  • Comment number 22.

    Yes football has got away with it for too long. As a supporter of a small but well run club like Burnley I get even more angry at these clubs who just abuse the system and spend, spend spend. May be a club (no disrespect to Portsmouth) needs to go to the wall to actually act as a wake up call. Things cannot carry on the way they are going. How can a league that is the most watched and biggest money generating in the world be in such a bad financial situation?? It will all end in tears....

  • Comment number 23.

    Excellent article, and about time one like this was done and displayed prominately

  • Comment number 24.

    #16 RoqAdeTevinho 10

    "Due Dilligence" sounds like "Fit & Proper".... get my point ?

    Both a waste of space in the footballing world !
    ----------------------------------
    No, I don't get your point and I think you are missing the point.

    Due dilligence should identify the proper position of the takeover target. Any irregularities identified can be either sorted out or relevant warranties and indemnities can be inserted into the sale and purchase agreement to cover such contingencies.

  • Comment number 25.

    The problem comes back to Redknapp's style of management. Of his previous clubs, both Bournemouth and Southampton have been in administration, West Ham got close and now Pompey. He spends money like there was no tomorrow - and then moves on when the bills start coming in. Utaka on £80K per week is quite typical - a fringe player on high wages, with very little resale value and who will not want to move on because he couldn't possibly command those sort of wages elsewhere. Therefore he'll stay there until his contract expires.

    At Southampton he had a first team squad of 46 players, without having eleven good enough to keep them in the PL.

  • Comment number 26.

    In January 2009 I wrote to my MP outlining my concern that football clubs were being treated differently to other businesses with respect to monies owed to HMRC.

    I received a reply on 19 March 2009, enclosing a letter from Stephen Timms, HM Treasury.

    "I am aware of recent media coverage of the financial affairs of football clubs and in particular their tax affairs and some assertions that HMRC treats football clubs differently that other taxpayer groups.

    I can confirm that, this is simply not the case. HMRC treats football clubs in exactly the same way it would treat any other business. They are also bound by general insolvency law, and the removal of Crown Preference was one of a number of measures introduced in the Enterprise Act 2002 to make the insolvency regime more supportive of enterprise.

    As you are aware, there are strict confidentiality rules to protect information about the tax affairs of individuals and businesses without their specific consent. For this reason neither HMRC or I can comment or disclose details of a specific and relatively small group of taxpayers."

    I did ask my MP to submit a written question, but he said he could not do so.

    Anyway, if Mr Timms is correct, I shudder to think what the monies owed and overdue to HMRC is.

  • Comment number 27.

    There have been many of us down here knowing things never added up. We were competing against the best with some of the best and you get what you pay for. Friends of mine (chartered accountants and season ticket holders)have been bewildered for years how this scenario has been played out. They simply say you dont have to be an accountant to see something would go pop.
    Gaydamak (the biggest pantomime villain in amongst many)was never going to turn loans into shares. He simply never had he clout or even looked like it.
    Our frustrations are now with the hierarchy at the PL. They are in charge of the richest sporting league in the world and yet they couldnt prevent something a child could see.
    PS Are Man Utd trading insolvently?

  • Comment number 28.

    I hate tax as a concept - i hate everything about it - i wish there was no tax and that people just all went their own way via various insurance... The only point of tax is to pay for things that you don't want and therefore wouldn't choose to pay for if given the choice... hence they make you pay for it via "tax"... i hate VAT, inheritance tax, road tax, income tax, fat cat tax.

    That said we all have to pay it and if my company didn't pay my tax bill then i would be wound up and (possibly) face prison... in addition i don't see the HMRC giving a flying fudge about all the companies that have been wound up owing my company money during this recession... my company lost over £100k in wound up companies and unpaid bills... the HMRC don't care about my company, my family, my living - or the people that i employ.... so they should not care about football clubs either.

    It disgusts me.... if i went out and employed a team of mediocre people on more money than i could afford and then couldn't afford to keep going then i would go bust and no-one on any blog/comment board would care less...

    I know this isn't a nice standpoint and "the fans don't deserve it"... but so what - i don't care - if the fans care that much then they can bail the club out - otherwise let it die and save my taxes!

    rant over

    tax.... a sore subject for me at the moment...

    ps - the person above who says the premier league should take control are absolutely right... it seems that the "fit and proper person test" basically means they say "do you want to own a football club" and if you say yes then you are fit and proper..... i'm waiting for Gary Glitter to take over somewhere - and then no doubt pick himself to play in a team full of 16 year old trainees and then peter taylor (another concept as bad as tax) will come on the tv and tell us what a great bloke glitter is and how he deserves another chance along with joey barton, lee hughes, etc, etc...

    glitter will then pay everyone in the side £100000000000000000000000 per day and when he surprisingly can't pay the bills the tax man will probably just turn a blind eye....

    also - what about the "outgoing chairman" who always are really sad to step aside because "they have the best interest of the club at heart" ..... If i was a liverpool fan i would hate Rick Parry more than Hicks and Gillett as he had the chance to protect the club and not just sell out for money... imagine the conversation now "hi Rick"... "hi americans"... "so whats your business plan Mr Hicks?" "well i'm going stuff the club, take out a £400m loan and then try and sell - no doubt making a personal profit and leaving the club in debt and pennyless"... "great idea... and what about you Mr Gillett" "well i'm a billionaire - but i actually don't even have enough money to buy a cup of coffee in the club cafe as my billions are all tied up in debts and other stuff"....

    And then there is the banks that lend this money to these "billionaires"... how on earth is that going on.... last time i wanted a mortgage i had to supply them with about 100 documents saying how much i earn etc and all my savings and outgoings...but if you say that you are a "billionaire" and want to borrow money to sign John Utaka for £80k per week - then that is clearly a sound investment!

    and then guess what - my taxes go to bailing out the banks as well... whilst the HMRC and the banks show no leniancy to my business!!!

    i have a lot of anger in me right now....

  • Comment number 29.

    The whole of football has been living in a fantasy world and now reality bites. Get over it. Why would the loss of Portsmouth FC be any different to its local community than that of King's Lynn to theirs? "Death and taxes" you cannot escape either.

  • Comment number 30.

    Crikey, glad I got what I had to say off my chest before you

  • Comment number 31.

    PS Did I tell you my mates are accountants?

  • Comment number 32.

    #21 The Premier League's fit and proper person test has passed as fit and proper: a man who owns a yacht with a military grade missile defence system and a man accused of theft, fraud and money laundering (amongst other things). Can't be THAT much of a test can it?

  • Comment number 33.

    #28 boomshakalak

    I hate tax as a concept - i hate everything about it - i wish there was no tax and that people just all went their own way via various insurance...
    ----------------------------
    Before you work yourself into a coronary, I think we should all accept that tax is part of social responsibility to help those less fortunate than us who can't help themselves.

    Tax may have been abused over the years but the idea is sound (though income tax was started as a way of paying for a war a couple of hundred years ago, but we won't go into that..)

  • Comment number 34.

    Matt,This is at least your third blog on the Pompey fiasco and it's way past high time you called a spade a spade.
    As a lifelong Pompey fan I am only too well aware that we've been badly mismanaged for at least half a century. But things went precipitously downhill with Mandaric, Storrie and Redknapp and it is no suprise that their successors, in the owner's office at least, have proved to be even worse.
    Which makes it more than a little ironic that elsewhere on this site, Leicester are called a well-managed club, and you (BBC) act as a vehicle for Redknapp to say what a good job he does, at Fratton Park especially.
    And as for Storrie, well the moderators wouldn't print what one thinks of him. But while I might think it, you can say it. Why don't you?

  • Comment number 35.

    Afternoon all, thanks for reading/commenting, some replies from me:

    - Glenn (1), I hear your pain. You have my genuine sympathy. The FAPP test is really a very, very low barrier to entry and badly needs looking at. To be fair, Premier League is in a bit of a hole and FAPP is possibly as far as they think they can go legally. A bit of moral support from Uefa and Fifa might help them go a bit further. As for the PL wanting Pompey out, you may have a point....but can you blame them?!?! Don't get me wrong, I think Pompey, at their best, bring something else to the top flight. But put yourself in the PL's shoes. Does Fratton Park scream "world's best league" to you? And this season's antics are very embarrassing. Personally, I don't think you can blame PL for withholding TV money. Your directors have been caught fibbing again. A deal clearly hasn't been sorted with Udinese...they've just complained to Court of Arbitration for Sport!

    - Chocolateboxkid (2) and John (3) Agreed. The worm has turned at the Bank of HMRC. And I think stricter regulation of football is a must.

    - Clarkeonenil (4) Good point re: Leeds and their unholy scrap with HMRC in 2008. Bates got away with it, in my opinion. £30m written off for a 15-point penalty (the 10-pointer the year before really didn't matter). I also agree about Utaka....like Scudamore said 'rank bad management'.

    - Adamspsb (5) Too true.

    - arsenalforlife (6) You're right in that Pompey's problems go back a few years...and yes, the glories of the Redknapp era were built on flimsy financial foundations. But I don't think we should let the current regime off the hook so easily. You said yourself that you wouldn't buy that chippy once you found out about its debts. The same logic should apply to Al Faraj and co. It's called due diligence and Sulaiman Al Fahim paid Ernst & Young to do it for him. That was about the only sensible thing he did. Rumour has it that E&Y's report was not made available to Al Faraj. Wouldn't you look before you jumped??

    - MrBlueBurns (7) You pose all the right questions. But my comment about HMRC not saying much was related to my point about the details of the case being murky. I simply meant that HMRC give nothing away so you usually only hear one side of the argument. Nowt wrong with that at all...just makes my job harder! As for your questions, I would like answers too. I can say that Pompey results for last season are overdue and information about their current directors is opaque to say the least. The holding company is BVI-listed.

    - Nick_Hove_Actually (8) - I agree with you about the "football creditors" rule. It was brought in to ensure teams didn't gain an unfair advantage by signing/paying for players they couldn't really afford only to declare themselves bankrupt and write off the debts once the cup had been/promotion secured/relegation avoided etc etc. Off the top of my head, I think Leicester pulled this stunt a few years back. However, there are serious unintended consequences to this rule and they have become unacceptable in the modern era of enormous salaries for players. When clubs go into administration the average pay-out is 35% (I think) but can be below 10%. Local businesses are completely screwed but the players walk away quids in. I can't believe it hasn't been challenged in the courts yet.

    - RoqAdeTevinho (9 & 11) Thanks, much appreciated. As for Gaydamak, he has extricated himself from this mess at all. Not completely anyway. He is Pompey's biggest creditor and therefore stands to lose the most if HMRC forces its closure. He'll struggle to see a third of the £30m-ish he has tied up in the club.

    Right, that's enough for now. I'll pop back in later on.

  • Comment number 36.

    As a loyal fan, I find the whole debacle very depressing. Our previous owner Gaydamak seems to be escaping a lot of the blame, and somehow, we still owe him money. How can that happen after he has left us in this mess chasing a boyhood dream?

  • Comment number 37.

    #35 Matt

    Thanks for your answers. However, I guess you may have run a check at Companies House to know that the accounts are overdue. With this in mind, whilst the ultimate holding company (by virtue of a 100% shareholding) may be in the BVI, there would still be UK directors to sign the directors report and file it.

    Or maybe that's the problem; none of them want to raise their head above the parapits to sign the accounts!!!

  • Comment number 38.

    Player wages will continue to go up so long as everyone is obsessed with short term success and everyone will continue to be obsessed with short term success so long as the cost of running a football club is so high...
    It is Gamblers' Ruin writ large on a football pitch. You need player X who wants wages of £100k a week to keep your club in the top flight so that they can afford the wages for player Y on £80k a week.

  • Comment number 39.

    It may well have been in existance before the current owners stepped in but it does not discharge them of responsibility. When any person or organisation takes control of another something called due dilligence is done to find out about such risks and secondly as many have stated where is the FAs vetting process for new owners

  • Comment number 40.

    A few small points.

    Wasn't it Al the Pub Landlord who said that income tax wasn't that bad as it was to fund the war against the French.

    Should the taxman shut Pompey down and therefore only get a fraction (small) or force them to come to an agreement over time?

    Should Rednapp get the blame for buying players when at the end of the day the finances are supposed to be the boards perogrative.If the chairman had said we can't afford those wages , he would have bought somebody cheaper or the player would have settled for 3 mill a year instead of 4 mill (lets face it Utaka's agent probably couldn't believe his luck).

    Just listened to the Adam Pearson interview to his local radio (on the bbc website (http://news.bbc.co.uk/sport1/hi/football/teams/h/hull_city/8441858.stm%29 that seems a very reasonable approach and he has gone right up in my estimation.

    Good Luck to the Pompey fans .

  • Comment number 41.

    RoqAdeTevinho 10....
    Spot on about Mr MnNulty's 'blog' (if you can call stating the obvious a blog).

    Obviously I am a pompey fan, have been all my life and will be when I call it a day (hopefully before my beloved club does).

    Pompey fans will look at the situation, shrug their shoulders and say 'its pompey'. For some reason we have all kind of expected this, maybe not on the 18th may 2008 when we were coming home from Wembley but we all knew this is too good to be true.

    There is no way for us to get away from the embarassment of the situation especially when we were gloating over the demise of 'them lot down the road' so recently but all us supporters really want is to see the club alive and kicking.. whether it is in the Prem or the Blue Square.

    We would all really like to see the owners come out and tell us what is happening rather than waiting for the next article to appear on BBC Sport. It seems he is hiding from us and all we want to know is can he actually save this club from going under or not, Premiership survial is just a side show in comparison however I am not ignoring how the money from the Premier League is so darkly inter-linked with avoiding going under.

    Just have a look at the articles listed on the Portsmouth page of this website under latest audio, video and stories.. (its a horror show)http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/default.stm

    PUP.

  • Comment number 42.

    Oh should also has said that with Pearson being up front and open about Hull's finances and Gold and Sullivan doing the same at West Ham and saying how shambolically that club was being run perhaps we are seeing the Chairmen fighting back against the power of players and their agents.

  • Comment number 43.

    Ref post 40 Should Redknapp get the blame?.....If the chairman had said we can't afford those wages , he would have bought somebody cheaper...

    I am afraid that we have already seen what Redknapp would have done if the chairman said no - disappear to someone else who can finance his, generally well targetted, but very high spending. If it is now a case of chairmaen fighting back (post 42), we must remember that Redknapp is the players / agents ultimate friend. I am sure most players will never have had better deals than under Redknapp and I am also sure Spurs are now easily in the top four of the PL wage bill league. Just pray the money is there.....

    Agree with 41 - I will support PFC in any league: I am just praying that there is a PFC to support.

  • Comment number 44.

    Hi Matt, please can you explain the details of how the image rights tax avoidance scheme works. Is it to do with holding intellectual property overseas? Or just making payments to overseas bank accounts? How does this save UK tax?

  • Comment number 45.

    After reading above you can understand why Burnley did'nt want a Mark Hughes type, who would of insisted we need to spend £10 million on new players with salaries to match, to stay up. Debt is getting expensive to service and even the likes of Man Utd will struggle to get new bond holders at less than 6% return.( I would want 20% to cover the risk of default).

  • Comment number 46.

    I have a feeling spurs will be in trouble if they dont make it to the champions league. I have mentioned it yesterday as well. The chairmen has been spending money since Martin Jol days, trying to break into the top four.

    FA needs to introduce a wage cap. I dont understand why they dont do it. They have more to gain by doing it. The PL will be much more competitive. Billionaires will not be able to buy success.

    I applaud Mr Wegner, that even in this crazy times without a trophy for four years, he has refused to break the wage structure in arsenal. Because of him we are still running as a club. If it was somebody else, we would have spend X number of millions, not necessarily win anything, and would be burdened with more debts.

  • Comment number 47.

    It's about time Portsmouth were kicked out of the Premiership. Living way above their means is nothing short of cheating and they should be demoted for other clubs who manage themselves the correct way. I have sympathy for the fans who have no control over the shoddy management of their club, but have no sympathy at all for the club as a whole.

    Their FA Cup win from a season or two back should be removed from the records.

  • Comment number 48.

    BuckbyBaggie (post 47)
    It is nice to know that you really care about the high standards of the game. Pompey's debt is small compared to other Prem teams but their fundamental problem is that the previous owner wants his money back. How would Chelsea look if Abramovich did the same?
    I can't help thinking, however,that some of your bile may be derived from your semi final defeat in 2008 or do you want Pompey out of the Prem so you can get 3 up automatically (and Forest are getting a bit close if it's only two aren't they)?!

  • Comment number 49.

    I agree with Michel Platini (a first for me) that clubs should be forced to operate within an agreed amount of their turnover, i.e.110% year on year. Making a loss is acceptable, acting irresponsibly beyond your means isn't. Applied across all UEFA football associations this would level the playing field somewhat (and ensure the survival of clubs).

    If possible within commercial law (advice needed!)UEFA should state that all club purchases are made using personal fortunes only. It seems obscene that businesses who have existed for over a century and been hugely successful suddenly find themselves paying £X0,000,000 per annum in interest just to exist with no new assets to show for it. Arsenal have got a huge new debt BUT have a 60,000 seat stadium to show for it. Man Utd and Liverpool have huge new debts and have, as far as I'm aware, nothing new to show for it.

    There are a couple of things that I don't understand about Portsmouth though. I'm assuming they have creditors - they've sold enough players in the last six months and I'm sure they didn't get the money up front. How, for instance, are the repayments for Glen Johnson scheduled? Also, what were Harry Redknapp's responsibilities as the manager? Does he have a responsibility to ensure the solvency of his employers under the heading of "director or officer"? Arsene Wenger takes this responsibility very seriously, as does David Moyes. Managers have a moral responsibility to their employers but do they have a legal one?

  • Comment number 50.

    two things and let it be said I am no Pompey fan but have a tad of sympathy for the fans .
    1- I cant see them going bust , it is a community club and the government should realise that to do away with the club would be a massive blow to the area .
    2- the team of Rednapp and Storey should be ashamed of themselves , to buy a little bit of glory and leave the club in the mess they are in smacks of I am all right jack selfish attitude , although the cheif executive is still there he is hanging by a thread ,note his mate never took him to Spurs, the first time they have been parted for many moons , these two should be sued by the people and supporters of the club for misapprotiation of funds .Rednapp will crawl under his stone and claim none is down to him but he has the blood of the club on his hands

  • Comment number 51.

    football clubs are business's and should be run that way, how is it that so many run at a loss and still run....its a kick in the pants to every small bussiness.........think Platini has a point .. ..........gates ,merhandise and sponsorship should cover the cost of running a club..........premiership weekly wage are double if not tripple the average mans YEARLY INCOME

  • Comment number 52.

    #48 mrrgs9

    If Abramovich wanted out, he would have to sell his shares. With the way things are structured, if he walked away, Chelsea would have little or no debt.

  • Comment number 53.

    It is sad to see Pompey in this situation, but those who mention Mr Redknapp must be onto something, though not that he would be the only example. In the early 90's the mighty Cherris were playing near the top end of the (what is now Championship), but since he moved on have been on the slide due to one financial crisis after another. And the track record of West Ham, Portsmouth and Southampton must prove more than coincidence. Not that it is just his fault. Success (or relative success) breeds the desire from fans and owners to be more successful, so the idea of more players and better players becomes attractive and is of all our making.

    What is strange though, especially for us who support the teams in Leagues 1, 2 and Conference, is that these top leagues and teams are permitted to be run soooo badly. The Cherries have an embargo meaning they have only 17 players, have paid of a substanital portion of their debts, yet can not be allowed to sign even loan players. The overall debt is probably less than the wages of a couple of premier league substitutes for a couple of weeks. And look around the rest of the league and this is repeated numerous times, where small clubs face similar limitations, embargos or court orders.

    And the point is surely made more obvious in the week when Man Utd announce their debts are £700million...how are they not under a similar embargo? How can they continue to build debts each week that are in excess of anything any small club has accrued over many years. Or Liverpool with their 'smaller' debts or even West Ham's £100million.

    So it is very sad that Pompey may well be the first victim of this new financial tightening on football clubs, but in the same way as creditors have come out the woodwork over the last couple of weeks for Pompey, is it beyond the realms of possibility that a similar thing could happen to a team like Liverpool or Man Utd.

    Scenario - Utd have to sell Rooney in the Summer of 2010, fail to replace him with someone of sufficient quality, fail to make Champions league in 2011-2012, Fergie retires, they bring in a new manager who perhaps won a world cup but doesn't make it happen in PL, so another manager is brought in, SKY reduce money for PL coverage...Utd's debt is £1billion...could this be the day when UTD face a similar crisis to Pompey

    That must be 2012 I guess...the Cherries will still be under an embargo, down to 13 players, subs made up from the first 7 supporters to arrive, Eddie Howe will be managing Real Madrid and the PL might just be realising that money actually needs to exist!

  • Comment number 54.

    Post 50 : " I cant see them going bust , it is a community club and the government should realise that to do away with the club would be a massive blow to the area ."

    Well, this argument could be applied to thousands of businesses and it hasn' t saved them.

  • Comment number 55.

    When Portsmouth threatened to sue the Premier League over the transfer embargo situation the Premier League's Chief Exec Richard Scudamore was quoted as saying " The whole notion of suing the Premier League is interesting because you're suing yourself as a club, and the other 19 clubs,". So it seems the lunatics are running the asylum which is probably the real reason why the fit and proper persons test is a waste of time.

  • Comment number 56.

    #47. So this means that Chelsea, Man Utd and Man City should all be demoted as well as they have lived well above their means in recent years. But then you could look at a lot of clubs in all divisions doing the same.

  • Comment number 57.

    Matt, if Mr Storrie is found guilty of this tax fraud that he's up for, does the PL or FA have the right to remove him as a director for now not now passing a "Fit and Proper" test even though he had been so?

  • Comment number 58.

    MrBlueBurns

    I'm feeling a bit less stressed about the whole thing now... and i guess the tax issue is not a debate to have here... it's political not sport... so i shouldnt have brought it up - but then again it is a blog about tax...so maybe i'll forgive myself...

    however i don't think the tax paid by hard earned people should go to bail out portsmouth fc or anything football related... or pay for politicians expenses, or pay £1m salaries to NHS consultants, or pay for anything to do with any council (which are just nursing homes for people who can't be employed elsewhere), or to pay for prisons whilst people who commit crime don't pay for their own stay - bankrupt them!.. let them pay for their accomodation in the holiday park, or pay for bankers bonuses, or pay for the police to sit inside all day and not respond to any call (my wife was shot with a pellet gun and we didn't even get a response for 2 days when we called the local station), or pay for people who can't be bothered to work, or pay for the BBC (haha), or pay for anything else really....

    that said - i agree that we should look after those less fortunate - but people should decide who they deem to be worthy - if people deem portsmouth fc worthy then donate, if they deem some unemployed toerag worthy then donate... people are in the main decent and will look after others - but we shouldn't be forced... it should be against my human rights to be made to contribute to Nick Griffin and his BNP idiots - but i have to - as my taxes are used to help fund their party.... that sadi i'm sure he will form a dream team with Gary Glitter and take over Portsmouth - passing the fit and proper person test....

    i couldn't help myself.... i need to get some stress related treatment i'm sure!! haha

    Anyway - they best thing football can do is just declare that they are all going bankrupt and start again..... rip up all the contracts and start paying sensible money and balancing the books.

    death to football - death to tax - death, death, death.

    have a happy weekend people!

  • Comment number 59.

    #26 received a letter including the words "HMRC treats football clubs in exactly the same way it would treat any other business". Hmmm, so why did Kings Lynn go to the wall for 77k when so many larger teams owe millions? Yes, Mr Timms, I can see how that works!

  • Comment number 60.

    Firstly I'd like to congratulate Matt on a terrific blog.
    Couldn't agree more with #47, regardless of what #56 thinks. Nobody should be feeling sorry for Portsmouth. They are in this perilous position because for too many years they thought they were better than they actually were and started splashing the cash here, there and everywhere - most notably on garbage players' salaries. They are so far above their rightful place (League 1 at best) it was only a matter of time before something like this happened.
    Enough about the club though, I'm here to talk about their fans. Since pompey got promoted there seems to have been an unjustified media campaign which praises pompey fans to the rafters. How then, can such a loyal and wonderful support not fill a measley capacity in 'the greatest league in the world^TM'. If pompey fans were any good this is exactly the situation they need to be called upon - bums on seats = money and improved performances for the club; FACT (as rafa would say).
    Instead the home side leave their derelict changing room and come out of the tunnel to be greeted by a three-quarters empty ground and a ringing noise coming from notre dame. Oh sorry that last bit should read 'clanging sound coming from that clown's right hand.'
    It's about time the media started to criticise pompey fans as they would wigan athletic. My ears keep hearing pundits ending their sentences about Portsmouth's situation with '...and those fans really don't deserve it.'

    Well I'm sorry but they deserve everything they are about to get and more if that doesn't involve 'doing a King's Lynn'.

  • Comment number 61.

    Ref #24 MrBlueBurnes

    My point is not about what they are about it is in relation to what they mean in the dream world football has become for the select few that are in the Premier League !

    I can only think of a couple of PL clubs that would interest any businessman (now I am talking strictly financially!) in their current state. I am not going to name them but their fans know who they are.

    As for "fit & Proper" all I can say and I am talking close to home here THAKSIN SHINAWATRA !!!!

    If that guy above can get control of a football club based on his media expoloits then i agree with some of the jokes on here about Gary Glitter ;-) !

    Fancy terms for us real folk and yes they have a meaning in law but for a PL Chairman/owner to be ?? Must mean somthing all the more different !

    Glad to see so many on here applauding the article above and stressing about the time it has taken to get here. Well done Matt !

  • Comment number 62.

    Here's the circle I can't square. Various reports state that monies remain outstanding for the transfer (in) of Muntari and Diarra. Yet both those players were moved on at considerable profit. I think in Muntari’s case bought 7m, sold 22m. Diarra was very similar figures, then you can add Glenn Johnsons transfer for 18m. Crouch, Defoe each 10m (with Niko Kranjcar gratis – buy two, get one free, seemingly.)'arry himself was supposed to 'cost' Spurs 5m

    How can debts still be outstanding to the likes of Arsenal and Udinese when the players have been re-sold at higher value?

    Where is that money?

  • Comment number 63.

    Evening all, some cracking comments here and I'm glad we all agree on one thing at least, this is a serious issue and football (not just the latest clubs in trouble) needs to address it.

    I haven't got time to reply to everybody but I'll pick out a few that haven't been answered already by me or other posters.

    - Griffter (18) Mandaric is an interesting character but I'm not sure the blame for Pompey's current ills can be placed at his door (unless you think it was inevitable all this would happen if they reached the PL...and then I suppose it is kind of his fault). He left behind a pretty well-run club when he sold to Gaydamak. Small operating profits, decent wages to turnover ratio, manageable debts. I guess his "failure" was making no progress on stadium development. That has been Pompey's Achilles Heel. As for his current bother with HMRC, well, I've steered clear of that because it is more of a personal issue than a club one. Can't say much more than that! Oh, and I've just thought of another long-term failing at the club, youth development. Pompey has only recently set up an academy. Pretty sure it was the only PL club without one for years.

    - nick (19) Hello comrade! When does the revolution start? Good stuff but that will never happen. Well, maybe bits of it will. A salary cap just seems like a no-brainer to me. We can argue about the details but the principle seems rock solid. Has to be at least European-wide, though. So EU and Uefa will need to get involved.

    - JLOrpington (25) OK, I know many of you feel strongly about Harry Redknapp, and he clearly divides opinion. And you're right, his CV does paint a very mixed picture: success but at a price. HOWEVER, I'm not sure a manager, any manager, can carry the can for a club's financial ruin. They are the public face of the club and the first to get the boot when the team fails to perform. Of course they are going to try to sign the best players they possibly can. It is up to the board to sanction these signings, balance the books and manage the manager. For me the real culprits here are Gaydamak and Storrie (and his other advisors/directors).

    - boomshakalak (28) I have nothing to add. I just thought you deserved a reply for making me laugh.

    - kwiniaskagolfer (34) Thanks for noticing! It's going to be my specialist subject on Mastermind. Now, about this spade business, erm....well...I think....nope. Can't do it. I think I possibly overstepped the BBC boundary in my first set of answers!

    - MrBlueBurns (37) You've given me something to look into next week. Thanks!

    - Pompeyfever (41) I agree. And I can assure you that the BBC has long-standing requests in for interviews with Al Faraj and Gaydamak.

    - mindy_c (44) I want to come back to that issue later, probably in another blog. There is a massive case about to start in Paris involving Nike and PSG. Uefa is watching closely. What I will say now is there is a body of opinion that the concept of image rights is being abused by clubs. It has become an almost automatic 'extra' to bump up players' wages, without incurring income tax and NI, regardless of whether their image rights are being exploited by club or are even worth anything.

    - nickvai (49) I agree with Platini too. He gets a very bad press in this country (usually unfairly) but his heart is very much in right place. His mistake has been to focus too much attention on PL clubs, though. He needs to widen his efforts to include all of Europe's big spenders. An acknowledgement of the Champions League's role in all this would be nice too. Uefa helped create this monster. As for a manager's liability in the case of business failure, I'm not sure but I don't think they face the same legal responsibilites as directors. They are just employees who report to the club's board.

    - cherriesforever (53) You're right. It's not fair! And I think your MU scenario is not that far-fetched. There is a big story brewing at Old Trafford and the best bit is that it all hinges on how well 11 blokes kick a ball about a park. The money men will have their say but ultimately the Glazers' business model is based on the first XI's results.

    - Nick_Hove_Actually (57) Good question. Pretty sure he would become one of the few people in football to fail the FAPP test.

    That's enough from me. Have a great weekend.


  • Comment number 64.

    In fact I would like that answered by somebody from the club. Where is the 80-90m transfer proceeds? Mr Storrie seems to be the one best placed to answer.

    Mr Storrie?


    (PS great blog indeed)

  • Comment number 65.

    I have a big question...how can the HMRC allow such massive debts to build up? Surely it's their duty as collectors of tax to ensure that the instant a problem becomes evident that they ensure it is sorted out? I mean, how many years have Pompey been allowed to avoid taxes that sees them being charged £11million?

    The clubs need to sort themselves out and sharpish. UEFA's financial eligibility rules will see the top clubs forfeit their European places which will hurt them even more. We need a 5 year (maybe a 10 if the situation is really bad) strategy put in place to get our clubs up to scratch financially in the top two divisions. If that means implementing wage caps and risking losing out on some players who would move abroad for money, then so be it. Once all the clubs are operating within their means then we should look at relaxing the rules without letting clubs overstretch.

  • Comment number 66.

    Is it just me or does a bas smell appear at a football club after a certain old 'arry Redknapp leaves ;-)

    West Ham

    Pompey

    Southampton (briefly but they are worse off now!)

    Spurs ? Doh mentioned a top 4 potential team, sorry that was meant for the McNulty Blog sorry !

    The guy is in it up to his neck too for his own personal reasons.

    But I agree with some pompey fans on here that Mr Portsmouth (Not John but Peter Storrie!) needs to answer questions as to where all that profit "CASH" has gone.

    The numbers do not stack up and I use a Calculator at work ;-) !

  • Comment number 67.

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

  • Comment number 68.

    I would like to echo previous comments about the excellence of Matt's blog. It's clarity and insight puts most other sports writers efforts to shame.
    The reality is that unless the new owners do have extremely large funds they are prepared to invest in the club then I fear for their existence. Their levels of debt appear massively greater than, say, Souhampton or Leeds when they went into administration. Neither do they have the size or quality of ground or support as these two clubs. The main asset they have is premier league status - which would almost certainly disappear if they go into administration.
    I don't believe many Pompey supporters really appreciate what could happen if the new owners dont fund the financial liabilities of the club. If it wasn't real this story would make a good soap opera - instead of 'footballers wives' it would become 'football club dies'!!

  • Comment number 69.

    The trouble with Pfc is not just their owners past and present but there fans.They honestly believe they are some massive club,sleeping giant has been mentioned but there attendance figures are consistently poor.Even in this current climate their fans still talk of a new stadium why?They rarely fill fratton and just look at their fa/league cup attendances over the last 10 years, truly appalling.

  • Comment number 70.

    lordSUPERFRED, Are you seriously suggesting that the government bails out PFC? Because of its community roots? All football clubs have strong community roots, this would open up the government for extensive pay outs to Man U and Liverpool amongst others!

    Spurs fans, i really feel for you! In 5 years you could be in the same situation! As a Saints fan and follower of Bournemouth I have seen the devestating effects of Mr Redknapp, and his Director friends! Rupert Lowe, Milan Madaric and Peter Storrie are all the same, failing to see the whole picture.

    Overall a football club is a business, and should be run accordingly. You can say what you want about the debts of other clubs but they are still paying their bills!! Man U can secure debt against future income, but where will PFC's future income come from. Relegation this year is almost certain, so any points deduction may be enforced next season, (like at Saints) where it was deemed innapropriate to enforce a pointless punishment where the club would have started with an entirely clean slate!

  • Comment number 71.

    .... John Utaka has an assist in an FA cup final to his name - priceless. When Kanu - scored a winner in a FA Cup final - gets back from Africa, watch us rise ... pheonix like.

  • Comment number 72.

    // To blame the new owners is silly. Why should they pay for other people's mistakes, especially with hard earned cash. We all know how valuable our hard earned cash is to us. We wouldnt want to waste it, why should they? //

    So you would just buy businesses without finding out all the debts and having legal clauses that hold previous owners liable if they lie? The two new owners haven't made a pip about getting hoodwinked, so I highly doubt they didn't know what they were getting into. And don't get me started with the PL. They made a big deal of updating the "Fit & Proper" test, but guess what, it means nothing at all. Where's all the money these owners supposedly would bring?

    It's all a house of cards, that's why they wanted 39th game. They needed it. I'm just glad my club never paid big transfer fees or took on huge debts to buy itself.

  • Comment number 73.

    Can someone tell me why

    i. Rich people (like Football clubs) are allowed to move money to tax havens in order to avoid paying up

    Whilst

    ii. Some ordinary people who fiddle the dole of a few thou end up in The Daily Mail and/or jail.

    FACT is, the cheating done by one rich person = the cheating done by many hundreds of ordinary people.

    So why dont the tax offices/Daily Mail/establishment hound that one rich person instead of the poorest?














  • Comment number 74.

    Matt
    Nice blog and interesting stuff but your response to No 4 betrays a bit of reflex Leeds-bashing which seemed so much fun a few years back. However it raises issues which should be of interest to Portsmouth who, even if they dodge the winding-up bullet, look very likely to be relegated and go into administration to escape their creditors.
    Under FL rules ten points deduction is for going INTO administration. At the time of the Leeds fiasco these were deducted in the current season, even if a team was effectively down (as Leeds were). Mawhinney and his mates left a "Get out of Jail Free" card on the floor and Bates picked it up. Wouldn't you? Since then the rules have been changed and Pompey will probably have it assessed on next season
    The further fifteen points deduction is at the discretion of an EGM of other clubs and is for "coming out of adminstration without a CVA in place". It is not specifically for dodging £30m of debt as you imply, even if this is the practical effect. The CVA is an agreement with creditors to write off/defer some of the debt and needs to have the agreement of 75 percent (by value) of creditors. Or, to cut it the other way, any 25.001 percent can frustrate any CVA. Thus if HMRC hold a quarter of the debt (or can form alliances to that amount) they will frustrate any CVA as a protest against the taxpayer getting peanuts while Sol Campbell is paid in full. The only likely outcome for any team is to be sold by the adminstrators, which means they have come out of adminstration without a CVA.
    It was at this point that Mawhinney stuck the boot into Leeds and demanded a fifteen point penalty. Most of the hands went up, the turkeys not realising at the time that they were voting for Christmas. Since then it has applied to a few other clubs and it would now difficult to argue that it is not the de facto tariff. So it looks very likely that Pompey will start 2010-11 on minus 25 unless they can square the taxman away. It's not much fun, I can assure you, Matt - even though you imply it was an easy or dodgy way out. There are now so many clubs who are sweating on £30 million and more of indebtedness you should be surprised there's not a queue to take the hit and clear their debts
    Where does it all end, we may ask. The villain of the piece must surely be the ECL and it's untold riches from TV and global spinoff. Unfortunatley only four can play and the self-proclaimed "Big Four" have business models which depend entirely on qualification for next year's ECL. Any failure would be cataclysmic. Like the banks, they're too big to be allowed to fail. So the remaining Prem clubs spend themselves into poverty in a big game of poker which they cannot be allowed to win because the teams they seek to displace cannot afford to lose. Apart from Platini's plan, the only possible end to this in England is an owner with a couple of billion to spare who can, over a couple of years, outspend the Big Four. Then pity the one who falls by the wayside.
    Could be interesting.

  • Comment number 75.

    #6 there is a process called "due diligence" which any prospective purchaser of a major business like a premier league football club will go through. If they didn't, then serve them right.

  • Comment number 76.

    When AC Milan were playing Portsmouth in the Uefa Cup, i posted on the BBC website, highlighting that a fierce rival of Portsmouth was only a few seasons ago playing UEFA cup football and competing in the Premier League.Within a few years they found themselves facing administration, which then led to relegation and a 10 point penalty.

    I really fear for Portsmouth, although I support Southampton and always like to see Pompey lose, I would hate to see us lose our closest rivals for good. The football team really helps make the city and you can't take away how passionate the fans are, even if they expect way too much sometimes.

    I just hope they can resolve the financial issue, as for a football fan uncertainty is almost worse than losing or relegation. I enjoy following Southampton, more now we are in League 1 but are a stable club than I did when we were struggling in the premier league and financially because now we have hope!

    Perhaps we will be playing each other in the Championship next year.. a fixture to look forward to!

  • Comment number 77.

    Whilst I can follow Matt .Slater explanation I still find it a mystery why the directors continud to dig the hole for themselves and the club so deep. For the ignorant masses there is some small excuse for the rush to get themselves up to there eyes in debt with their credit card. Most of therm were too stupid to know any better.
    These Owners and directors have no such excuse Their behavior is in my view criminal and as such should receave a prison sentence
    As a young lad and ever since I've been a follower of Portsmouth Football Club In the early days I could watch a game for the equivalet of 10p but gread and dishonesty has put the price beyond the pockets of the lower working classes Gread and averice have not only stolen the peoples momey but they have stolen the games its self I just hope they will get the judgement they deserve

  • Comment number 78.

    What is most concerning to me, is that two seasons ago, the TV money increased very significantly for all clubs. Now they're pretty well all, worse off than they were before that. The Glazeir and the Liverpool situation may be somewhat different, but look at Hull for example, who now have 35 million of additional revenue, but who can't stay in business if they continue to pay the staff what they do. Clearly, the additional revenue has gone straight to players. Hull and Burnley, whose revenues must have increased by at least 30 million, can't afford their squads or can't buy.

    Something has to somehow deflate the earnings, because if income increases, history says it will go to the players, making failure or mediocrity even more severe, and when incomes do reduce, which they will, we might not be left with a national game !

    What the Glaziers and the Liverpool bunch are doing, is quite frankly funny, for most of us. What's happening to Hull isn't. What's happening to Portsmouth is not surprising. I wouldn't blame the owners. A certain Mr Redknapp has now managed all 3 Hampshire/Dorset clubs, and shortly after he's left they've all been in major financial crisis, really only comparable to Leeds. Coincidence I think not !

    The players salaries are so obscene that they should be as derided as investment bankers. I'm sure fans will soon express their anger at them.

  • Comment number 79.

    Heh Matt,

    Thanks for the interesting details on image rights, but I really don't understand the tax technical analysis. How does one avoid income tax by having image rights? I think my image is better than Sol Campbell's but I pay income tax! If a player misbehaves, for example, he is found in a Casa di X, would he pay less tax due to his tarnished image?

  • Comment number 80.

    The difference between us and other clubs is quite simply that our backer (Gaydamak) has walked away. I'm absolutely behind our massive spending to get success, for what it's worth. The Premier League and the level of spending it has allowed the top clubs to make relative to the rest has made what we did the only logical way for any club to get success. People often flag up Burnley as being well run, but in the current system, relegation either this season or next is the most likely outcome with their levels of spending.

    If it means oblivion, so be it, I'm happy to start from the bottom or wherever if PFC survives and that's what's needed. While we're guilty of financial mismanagement and should take full responsibility for it, the way football is funded and the lack of oversight with respect to spending of all clubs is damaging football in this country. Making Portsmouth a pariah seems to be exactly what some want, as it diverts attention from the real problem in football, which is simply that if you want success, aren't a big club, you have to spend ridiculous sums of money. It has made financial recklessness perfectly logical.

    I just find articles going on about bad management and not paying tax to just be missing the point. To compete in modern English football, it requires spending way beyond your means unless you are one of the very biggest clubs. Accept it or try to change it.

  • Comment number 81.

    80. So financial mismanagement is inevitable if you want to compete and you're not in the top 4. The top 4 would be nowhere if they didn't have the others. But I suppose they could play eachother, Real Madrid and Barcelona.

  • Comment number 82.

    I work in tax & VAT(not for HMRC) and if I did not pay my company's bill on time we would be shut down! As for football clubs now the problem is that Southend Utd settled their bill at the last minute to stay in business; as a result HMRC will now have to press all clubs the same way!! If they don't they are not doing their job. Football clubs unfortunately are not outside the law. If a club has a huge tax bill outstanding then they have somewhere along the line mis-used funds and possibily acted illegally-they are tied together believe me. Much as I would hate it to happen to my club, I believe that a big failure will perhaps focus some minds-hopefully. In reality I doubt it will.

  • Comment number 83.

    Speaking from the inside out as it were there has always been a reluctance in HMRC to go for the jugular where football clubs tax debts are concerned for fear of irritating the wider football fan base across the nation who are committed supporters in the first instance and reluctant tax payers in the second.

    But quite rightly the gloves are now off and some clubs are going to get a wake up call in the not to distant future....it may be Pompey are the first but they sure as certain will not be the last

    Blame Jimmy Hill who in his capacity of cheif negotiator for the player's union negotiated a decent wage for footballers back in the 1960's and their pay just went from decent to stratastropic. They are greedy people, most lack morals, few show committment to club over taking the "BIG BUCK". Time to re-negotiate every manager/players contract downward and let those who do not like it just s*d off!

  • Comment number 84.

    @ 63 Matt Slater

    Haha, you almost are enticing me to start rambling about my political views too!

    Well, the revolution as you call it, rather than where it will start, I think we should first address where it wont start, and I can't see UEFA starting this.

    It is a no brainer, but the world is based on greed, and the first few steps will be very hard to take, as those taking them will have to stare greed in the face. In my opinion UEFA need somebody else to take these brave steps.

    I'm pretty sure if someone else, like and an alliance of national FA's were to start it, UEFA would quickly jump aboard and give it the weight it needs to become a reality. Platini seems to be a good man surrounded by utter idiots however, he needs some allies at national level around Europe.

    I also think a great place to go for support are the club owners, I'm sure a hell of a lot of them would love to see salary caps brought into check.


    I know a lot of my idea's would never happen, greed being one of the main reasons. However it's an example of how 'communist' idea's can work in a 'capitalist' world.
    It's about time we stopped looking at and categorising the world as left, or right wing and just used common sense and equality from time to time.

  • Comment number 85.

    Unfortunately, this is a dose of reality for us Pompey fans, and is the future for a number of other clubs. Pompey has been in and out of the mire for 30 years plus. Remember Martin Gregory and the Venables debacle. Pompey were losing £50k a week when Mandaric came in, a huge amount then. At least he stabalised the club. He drip fed money to keep it going and gradually turned it around. What then happened in the short term with Redknapp coming in was a period of significant improvement built on some experienced players brought in who actually seemed to care, and put the effort in to achieve, De Zeuww, Stone, etc, combined with some youth. However, success breeds greed. Redknapp, seemingly being an expert in this particular arena, got carried away. Out went our "passion", O'Neill, Taylor etc, and in came the mercenaries. Overpaid and not really caring if they won or lost. Crowds had gone from 13,000 to 20,000 when we got promoted, where were they before? Guydamak got greedy, egged on by Redknapp. The season we won the FA Cup we were garbage. Living in N.Wales, I go to away games in the North West. I didn't know why I bothered. The FA Cup win (a very lucky campaign in reality), hid the issues. We were full of players who were overpaid, protected by Redknapp's blinded loyalty to their ridiculous transfer fees.
    A few weeks before the cup final I was at an away game, Wigan I think. Sat next to a chap who told me he had been in a supporters club meeting with Storrie before the game. Storrie told them he didn't care if we lost all 8 league games before the final (a feat we all but managed), so long as we won it. What sort of message does that give to the players and Redknapp, as well as the silly idoits like me who paid good money to go and watch them...
    A house built on very shaky grounds, both financially and from a football position.
    Well, Redknapp saw that what he had built had run its course, and was about to come crashing down, so he did a runner (again).
    Guydamak got out while he still could. I have no idea why Al Fahim and Al Faraj bought the club, if they have any money, or if they had any idea what they were getting into. Or for that matter, what they have planned. Some communication to the fans might help.
    No doubt we will be relegated, if we still exist. The crowds will go back to 12-13,000.
    At least we will be forced to get rid of the over-paid, under performing prima-donas we are forced to watch if we fork out our hard earned £30 or £40.
    Football has lost it's roots. An honest game,played by a fortunate few, for the enjoyment of the honest fan. The "johnny come lately" glory supporters are, and will continue, to disappear.
    Hopefully Portsmouth won't, even if we end up in League 1 or 2.
    It's a wake up call for Football. Hopefully the league, owners, managers, and players see it.

  • Comment number 86.

    Poster # 83 : " Blame Jimmy Hill who in his capacity of cheif negotiator for the player's union negotiated a decent wage for footballers back in the 1960's and their pay just went from decent to stratastropic. They are greedy people, most lack morals, few show committment to club over taking the "BIG BUCK". Time to re-negotiate every manager/players contract downward and let those who do not like it just s*d off! "

    Blame The Chin ? That's a bit harsh. He was right to negotiate proper wages for players. They were absurdly underpaid. Now they are undoubtedly absurdly overpaid - think how much Robinho gets for just sitting on a bench - but that is hardly Hill's fault

  • Comment number 87.

    Salary caps work in closed markets eg Rugby League, American Football,Baseball etc where possibilities for income generation and expenditure are similar, income is redistributed among teams and "extras" such as the rugby league play offs or NFL post season don't offer opportunities for huge amounts of differential in income. Champions League doesn't meet any of these criteria, financially doping the qualifiers to the point that the market is completely distorted. Platini's proposal would destroy domestic competition as, say, 60% of CL qualifying teams turnover would be much greater than their domestic rivals.

    Turkeys have been voting for christmas since 1980's when greed drove the big clubs to vote for stopping sharing gate monies with away sides then creating Champions League and then EPL. The only logical step if we are looking at salary caps etc is a fully fledged closed European League. I for one would love to be able to turn the clock back to more sharing and equal days but the political will is not there, Platini's proposals are only there to protect the rich and the status quo. Quelle Surprise

  • Comment number 88.

    The first change of rules should be this:

    1. No football club may pay its players wages more than is consistent with meeting its obligations to HMRC and other creditors.
    2. Any wages bill in excess of 70% of T/O are subordinate to all creditors, football- or non-football on a quarterly basis.
    3. A club may not issue contracts to footballers which include a guaranteed sum of >45% of guaranteed T/O (as defined by income streams contractually guaranteed by the media and long-term season-ticket sale means/commercial income from club shops etc)
    4. All other contractually agreed sums must be contingent upon defined additional income streams including image rights, commercial endorsements and performance-related income streams such as prize money/additonal gate money due to performance on the pitch.
    5. No club may start a new season without payment of dues to HMRC for years past.
    6. No club may start a new season with outstanding debts to police/fire/ambulance organisations.
    7. Agents are not to be paid until HMRC and other non-footballing creditors are paid off in full.

    That would be in-your-face, wouldn't it?

    Quite frankly, that is extremely mild and restrained.

    I could suggest something considerably MORE draconian if I woke up tomorrow in a bad mood.........

  • Comment number 89.

    Just spare a thought for us poor fans in all of this. Remember, it's not our fault. We don't choose our clubs; they choose us and it's for life (or should be).

  • Comment number 90.

    We have no choice but to pay tax, most of us would be quick to complain, particularly these days, if we suffered a reduction in amenities, no health service, armed forces etc. However, it seems that some organisations are hell bent on avoiding paying their correct portion. I fill in my tax return every year, and I pay tax on the amount of income I receive. If I, and millions of other individuals have to operate under these constraints, why should others have the right to avoid them? That said, as a Portsmouth resident (and Chelsea fan) I wish Pompey well. The basic problem does appear to be over-ambition linked to poor financial management. You can not spend more than you earn for very long, before the business starts to fail. With regard to the outrageous wages for players etc, Strong will is required to deal with this issue before it brings the whole of football to it's knees. Wake up please clubs. You are guilty of fuelling this gravy train, and you need to apply the brakes before it ruins the entire game!

  • Comment number 91.

    No mon, no fun!

 

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