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It's a fudge, not a fairytale

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Matt Slater | 19:36 UK time, Tuesday, 11 May 2010

Blood or money: that was the choice on offer in the Victory Lounge last week. And once all the votes had been counted, the electorate's decision was clear. They wanted both.

Portsmouth's creditors said "yes" to the offer of an investigation into the appalling mismanagement at Fratton Park in recent years, and "it's better than nothing" to the prospect of getting back at least 20% of their money.

As gatherings of people owed money go, the Pompey creditors' meeting was slightly botched, occasionally angry and often depressing.

It was also the best possible result for the club's beleaguered supporters and Avram Grant's chances of pulling off an FA Cup upset against Chelsea on Saturday.

But having sat through five hours of bickering, buck-passing and bullying, forgive me if I don't get carried away with the "romance of the Cup" this year. Some romance.

That's not to say I don't want Pompey to win. I root for the little guy in most scraps, but I'll be cheering for Grant's gang with caveats because I want football to ask itself questions that will be avoided if Chelsea prevail and Pompey are forgotten.

Is it appropriate that a bankrupt club can win our national game's most famous competition (twice)? How does a club run up debts of £135m in the world's richest football league anyway? And for how much longer can football defend a system that sees millionaire players looked after at the expense of ordinary tax-payers and local businesses?

Kanu and Tommy Smith training ahead of the FA Cup finalPortsmouth's players training for the FA Cup final aginst Chelsea at Wembley on Saturday

But I should start by explaining what I was doing at Thursday's meeting, what happened and why it matters.

First up, I was there as a creditor's proxy, which isn't as exciting as it sounds. Like many of Pompey's creditors, the firm I represented isn't owed much - not enough to want to sit in a windowless room all day anyway - so I phoned up and asked if they could help a crusader for truth in his attempt to hold the bad guys to account.

They said they had no idea what I was talking about but if it would make me go away they would sign the form and fax it to the administrators.

They weren't the first company I tried but I had my golden ticket. I also had a good idea of the kind of guesstimation that has passed for book-keeping at Pompey. Of the dozen firms I contacted most disputed the amount they were owed. For some it was too much, for others it was too little.

None of these discrepancies matter when compared to the sums claimed by Her Majesty's Revenue & Customs (HMRC) and others, but if you're looking for clues as to what has been happening this is a pretty good lead.

There are plenty more, though, and most of them got an airing on Thursday.

Which member of the Gaydamak family really owned the club between 2006 and 2009, why was Sulaiman Al-Fahim allowed in the boardroom, what does Ali Al-Faraj look like and when exactly did current owner Balram Chainrai lend him money? Good questions, all of them, and they are on joint administrator Andrew Andronikou's long to-do list.

The good news (and there is some) is that Andronikou sounded like he might actually get around to answering these questions - or perhaps it is better to say HMRC, and some of the other more blood-thirsty creditors, will keep asking them until he does. And if he can't do it then maybe the Department for Business, Innovation and Skills might try. But I'm getting ahead of myself.

The real business of the day was the procedural step of Andronikou asking creditors for permission to draft a Company Voluntary Arrangement (CVA) proposal and to appoint a creditors' committee.

A CVA is a deal that allows companies to exit administration by paying off a reduced amount of debt over a fixed period. In football's polite society, it is the preferred way to extract oneself from the temporary embarrassment of insolvency. It is also a shabby compromise that leaves innocent people out of pocket.

Joint administrator Andrew AndronikouPompey administrator Andrew Andronikou needs the support of Revenue & Customs to take his plans forward

Unlike others that day, Andronikou was given a thumping mandate to get on with the job. As this wasn't really a surprise, he was able to reveal the contents of the deal he had just been asked to draw up.

The main details have made their way into the public domain (ahem) so there is no need to dwell on them here.

Chainrai's offer to treat charities and all creditors owed less than £2,500 like, well...himself, the playing staff, football clubs and the rest of the paid-in-full family, was a nice touch, make no mistake.

Only a cynic would suggest this gesture takes 235 of the club's 422 creditors out of the equation whilst only costing £180,000 but the world is full of cynics and there were a couple in the Victory Lounge. I think they may have been on the wrong side of £2,500.

Very much on the wrong side are HMRC and a fleet of investment vehicles under the control of A Gaydamak (take your pick). Their support for the Andronikou's plan is vital if Pompey are going to line up in the Championship next year.

A CVA needs the support of 75% of the unsecured creditors (everybody apart from Chainrai, a few financial institutions and £2.5m-worth of the Gaydamak debt) and that vote is based on amounts owed.

It had been feared HMRC might block a CVA on the grounds it is a bit rich to expect the public purse to take an 80% hit when clubs owed fees and players wages walk away quids in. But the taxman has used those fears to extract concessions. Other clubs teetering on the brink of administration should take note.

First, HMRC doubled its claim against Pompey. The £17m it was owed in February has grown to £35m. The additional amount comes from fines for late payment and penalties for under-payment related to the thorny issue of image rights - this is another reason why Portsmouth's case has implications for the rest of football.

Second, HMRC not only has a place on the five-strong creditors' committee that represents the interests of all those owed money during the CVA process, it almost handpicked the rest of the committee.

The "vote" to decide this would have shamed North Korea and sparked the angriest clashes of the meeting between Andronikou and his team on one side, and the other insolvency experts in the room on the other. Names were suggested from the floor only to see lawyers scurrying to ask what HMRC thought. It was like watching a Labour Party Conference from the block vote era.

Sorting it all out took over an hour but it was worth it as the committee that emerged was better than the one first proposed. A combination of HMRC, the Gaydamaks, the Professional Footballers' Association, a football agency and two local suppliers sharing a seat is a fair representation of the body of creditors.

But the final HMRC concession was by far the most important and brings me back to why some are baying for blood..

The taxman has blocked football CVAs for two reasons: one, annoyance about the football creditors rule, and two, the fact that administrators become supervisors the minute a CVA is passed and their focus turns to running the business/finding new investment. A liquidator, on the other hand, is obliged to find out what has brought a failed company to such an ugly pass.

So the proposed Pompey CVA is not your usual get-out-of-jail-almost-free card. It's a pay-out plan that starts under the existing company, Portsmouth City Football Club Ltd, but is transferred to a new company after nine months. PCFC Ltd is then liquidated (and investigated) and the new company funds the CVA for the remaining four years and three months of its term.

All goes to plan and Pompey can start next season on zero points, with something better than their academy team, creditors can look forward to seeing some of their money back and HMRC et al can enjoy seeing the club's various directors explain their recruitment and remuneration decisions over the last few years.

If the plan doesn't work...let's not go there, not during Cup final fairytale week, anyway.

That's enough for now but I'm happy to chat below. There is one moment of levity from the meeting I would like to share. A creditor, while asking a question about a slide the administrators were showing, pointed out that he supplied the projector. He hadn't been paid for it either. Come to think of it, he wasn't laughing.

As well as my blogs, you can follow me when I'm out and about at


  • Comment number 1.

    What's happened at Portsmouth is criminal, in my view there should be individuals who were in charge at the club, locked up and the key thrown away.
    This is unlikely to happen, the losers will be the Portsmouth fans.

  • Comment number 2.

    I live in the Czech Republic but I will be at Wembley on Saturday. Why? Because I am POMPEY 'til I die. It breaks my heart to see the club I LOVE in such turmoil. This club has been raped, pillaged and asset stripped by people who not only do not care about the club but about football. I would ask all genuine football fans to question what exactly is going on at their club, because although we were the first PL club to go into administration we certainly won't be the last. And yes I do remember the Ian St. John days when we were bottom of the old 4th division.

  • Comment number 3.

    With no offence to the author of this piece (who has been dogged and persevering with his Pompey-related articles this season) why is it taking a journalist to be the only one who - publicly at least - seems intent on investigating this matter and trying to get to the bottom of the who's, why's, where's & how's of this?

    Where is the Premier League & FA investigations? Their silence has been deafening and really quite alarming. Would the football authorities in this country allow if to happen if it was Manchester United or Liverpool - two 'big-name' clubs who's debts are ringing the alarm bells?

  • Comment number 4.

    Sorry but this happens every day to many business, this is only high profile because it's footy, and the premiership. A buisness is a buisness and that's what has happened at Porthmouth FC. People came bought sold, made profit, jumped ship. Nothing unusual, no matter how immoral or amoral you all think it is. You going to have to change the system entirely if you want better.

  • Comment number 5.

    Wow. What a mess. You'd think that clubs would actually have the administrative capabilities to be able to keep the books properly updated, but apparently not...

    So, just out of curiosity, how in God's name are they actually going to be able to produce these funds? And do you think that the CVA would stand up?

    Aside from this though, another good blog, which really explains everything in detail and really helps everybody see the whole picture.

  • Comment number 6.

    As a Chelsea fan I have to admit that if we lose the final on Saturday, I'd still get some satisfaction out of the result as I'll be happy for the Pompey fans. However, I also take Matt's point about how can a bankrupt club win the FA Cup. Perhaps people would have been happier if Pompey had been excluded from the competition once they went into administration?

  • Comment number 7.

    The CVA on the face of it sounds like a good solution. Some questions:
    Will there be any re-assessment of the amounts that the administrator originally claimed were owed given that so many creditors disputing this info?
    Will it ever be clear what exactly the former owners are owed for?
    Why are the PFA on the creditors committee given that they will be paid up 100%? is this just to makesure they get a CVA attractive enough to avoid liquidation?
    The CVA seems designed to ensure Pompey can at least be competitive next year, this makes business sense but will the creditors be expecting a bit extra if the team exceeds expectations and gets back to the Premiership?
    Was the provisional CVA outlined by Andronikou base on the new improved parachute payments recently announced?

  • Comment number 8.

    I think Peter Storrie as Chief Executive has a lot of questions to answer about this situation as he was heavily involved in all the changes of ownership

  • Comment number 9.

    Great blog Matt, nice work on getting in on the biggest meeting this club has seen in current times.
    I watched the fit and proper persons test on iplayer yesterday and there were some alarming revelations in that but more alarming than any program, article or blog I have read is the question.. Are Portsmouth an attraction to investors?

    Lets say we get the CVA and our debts are squashed, would a new owner find investors in a club which has had its image destroyed by a public flogging? As soon as someone is approached with a request for investment into PFC.. surely they will have flash backs to 2009/2010 and bolt like a rat out of an aquaduct??

    I am normally a positive person but I am struggling this situation.

    I am a Portsmouth fan, I always will be. If we were liquidated then I won't support another team. Please cynics, remember this Pompey fans will only ever support pompey. If the club goes, we go.


  • Comment number 10.

    Peter Storrie has to be one of the most incompetent chief executives in the history of football. This is an absolute disgrace. Someone has to challenge this football creditors ruling all the way to the highest courts in the UK and Europe if necessary!! Maybe if the club goes down then they should take the FA, PL & FL through the courts to get their money back.

    Portsmouth should be thrown out of all the leagues and start from the very bottom southern division for what has happened.

    Matt hopefully you can speak to the PFA and other authorities in football and find out if they think it is fair that all multi millionaire football creditors get paid in full instead of the HMRC and or normal companies. I mean for all the good football clubs do do for local communities all the millions are going out of the game because of outrageous salaries that players take home and the transfers fees and agents fees as well.

    Maybe the new government can change the law to make these footballing creditors just like everyone else.

  • Comment number 11.

    Interesting blog again Matt.

    I posed a question on another football finance blog recently, don't you feel that it would be far more beneficial if the 'undisclosed' transfers were effectively banned and full amounts had to be recorded? How can clubs be transparent and open with what they owe when transfer fees are undisclosed - portsmouth is a great example as no-one knows how much they have bought and sold players for.

    Another question, you raise the possibility of another company being formed that would start afresh while the old one is liquidated - what happens to the assets like players under contract under this? surely those contracts would cease to exist?!

  • Comment number 12.

    collie21 you are right. This does happen in the real world too, but I believe this is no excuse as to why the football authorities do not regulate their own sport.

    The only reason that I disagree with Nick_Hove_Actually that Portsmouth should be thrown out of all the leagues and start from the very bottom southern division for what has happened is that there are not any clear rules with penalties that have been broken. The only penalties that apply are the points deductions. After what happened to Leeds the Premier League took little action to stop it happening again. They didn't even employ a transfer embargo when it was obvious last summer Pompey were unable to keep up with a multitude of payments.

    This should never be allowed to happen again. The people involved should never be allowed near another football club (i.e. like Ridsdale), but I very much doubt if anything significant will change.

  • Comment number 13.

    "How does a club run up debts of £135m in the world's richest football league anyway?"

    I don't know. Let's ask Chelsea, Man Utd, Liverpool, etc, ALL of whom have debts that far outstretch Pompey's. Yes I know their debts are "servicable", but only until someone pulls the plug. In our case that was the bank calling the loan in and Sasha/Arcadi Gaydamak not putting any more money in.

    Most teams will be sitting there thinking "there, but for the grace of....". We were badly managed (financially), and there are far too many questions that need answering about what went on and whether it was even legal, but no-one should feel superior to us, 'cos it could happen to anyone, anytime.

    Whether we should be at Wembley or not? Don't care - we ARE there and we will enjoy the day win or lose. Expect Pompey fans to stay behind to applaud the team, unlike the spuds.

  • Comment number 14.

    I hope that the people responsible for wrecking PFC are punished - I doubt they will be - it saddens me to hear people saying we should be thrown out of the league/cup etc - the fans and the team have done nothing wrong - one group has supported laudibly and the other have plyed their profession with success in one competition and at least stayed proud in the other. Neither of these groups deserve punishing - it is arguably the games administrators and our countless shady owners who should be brought to book - one for uuterly failing in it's duty of care of a member of it's organisation and the others for anything from possible fraud to downright malpractice. The Football Association and the EPL need to seriously review their roles in governance of clubs and the game - otherwise the disaster that has been our clubs demise will happen again at other clubs that are part of your life and dear to you.

  • Comment number 15.

    Fulham owe £167M, manu £700M or more, Liverpool £500M or more, and chelsea lose £80 per annum. Pompey's debt is staggering but not by any means the only one. I think it is right they go down, and will suffer, and |i for one will be happier that they are becoming an honest club and not playing 'casino' football.
    With a decent board, and the debt managed, one would expect another mandaric to appear sometime.

  • Comment number 16.

    Thanks for the info Matt, very good read. I now have a reasonable understanding of what is happening from the plain English you'e written.
    But why oh why hasn't this detail of information come out before ?

    having read all the creditors report the other week it's interesting in a ghoulish way to see the goings on of a poorly run business clearly living beyond their means.

    Interesting also for a few other clubs in the Prem abouit the speed it can all suddenly come tumbling down.

    Anyway enough doom and gloom looking forward to a good day out at wembley and with a bit more optimism for the forthcming season in the Championship.

  • Comment number 17.

    Might not watch the Cup Final this year, both clubs are the prime exemplers of the ruination of football.

  • Comment number 18.

    How can Pompey propose 20p in the pound to its creditors and yet in the same document outline a budget of 10 Million pounds per year on salaries in the Championship? That just seems like taking the mickey to me.

  • Comment number 19.

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

  • Comment number 20.

    What I don't like are Avran Grant's comments. He keeps saying that isn't fair that the team have been deducted points. He doesn't seem to care about anyone who has been left out of pocket. If it was really just about football and not money surely he and his players would have offerred to work for the minimum wage if was just about football.

  • Comment number 21.

    Given that the UK printed £900,000,000,000 to give to the banks last year to cover amounts that mysteriously disappeared, this latest nonetarism at PCFC is a drop in the ocean. Capitalism works, Nonetarism stinks.

  • Comment number 22.

    Well at least next year there will be one fewer team in the Premiership that has effectively cheated in order to try and establish itself.

    Oh no hang on, looks like Cardiff are going to be promoted. What's the situation there? HMRC have extended the deadline for winding them up, and if they reach the Premiership they will have a huge windfall and people will say that the gamble paid off for them. But isn't that a little bit unfair on the teams in the Championship who missed out on such an opportunity?

    If special circumstances should be made to prevent football clubs going to the wall, because of the impact it has on the supporters/community, surely it has to work both ways - teams spending beyond their means at the expense of others who are well managed shouldn't be allowed to get away with it.

    Someone mentioned above that the FA Cup final is an embodiment of what is wrong with football - I agree and it seems that so much happens now which suggests that clubs might as well try and bend (or break) the rules as much as they can because in the end it pays off. Portsmouth and Cardiff are examples in financial terms, but Manchester City with their 'need an extra goalkeeper' scenario is another, non-financial case.

  • Comment number 23.

    The main differences between Pompey and "Liverchester endebted" are that Pompey couldn't service the debts and they used the money to buy players. Liverchester mainly are paying for the debts their current owners incurred in buying the clubs. Not sure what my point is now. Perhaps that Chelsea and Man City are just as heavily endebted, but their "loans" come from rich people using their own money. They will want it back one day, so really it's all out of hand.

  • Comment number 24.

    In response to comment #18, the reason they have given portsmouth a wage budget of £10,000,000 p.a. is to ensure that the club remain competitive in the championship. The CVA is being paid off over 5 years if i'm not mistaken, so the club need to be earning money over that period of time. Giving them a tiny wage budget would ensure they got relegated and earned less future revenue, meaning they would have trouble financing the CVA repayments, leading to the same trouble happening over again.
    It comes back to the old adage of you have to spend money to make money (though arguably this got pompey in trouble in the first place) and this is what they have realised. By my calculations they have to pay about £27,000,000 over 5 years of their debt, money that portsmouth would struggle to earn in league one, or even possibly league two, even if you include the increased parachute payments.
    This therefore is why the club will be allowed a healthy, not huge in todays football climate (but that's another debate for another time), in order to maintain its championship, possibly higher in futuere, position and be able to pay 20p in the pound.

    p.s. Even though i think its wrong for a bankrupt club to win the FA cup, i hope they win for the players, but mainly the fans. They don't deserve what's happened to their club and i wish them all the best in future.

  • Comment number 25.

    Portsmouth's actions when they had their transfer embargo lifted in January should be investigated too.

    When lifted, they brought in even more players on loan (Abeyie, O'Hara, Rocha, Tosic) - and this was after they were declared insolvent by the Statement of Affairs produced at the High Court.

    You would think they would be wanting to reduce their outgoings..

    If the Administrator has to 'cut the club's cloth' now, why has he appointed a new CEO to replace the one still employed as a consultant?

    Until a new owner is located, surely the CEO position is covered by the Administrator?

    Still, I hope the fans have a good day out on Saturday - many are embarrassed by the way their club has been run. They didn't ask for this to happen.

    As far as their future is concerned?

    Pompey starting the 2010-11 season on nil points in the Championship, without further punishment and with much lower debts and a squad with a playing budget of £10M following a FA Cup Final appearance?

    I used to believe the term 'cheats never prosper'..

  • Comment number 26.

    I'm sure I'm not the only one surprised by how the level of debt has ballooned! From original estimated of c. £80M (£17M owed to HMRC) to £135M.

    That (very efficiently) reduced HMRC's level of debt from a tad over 21% to under 13%.
    21% = very close to the limit that could prevent a CVA, 13% = miles away!!

    QUOTE - Of the dozen firms I contacted most disputed the amount they were owed. For some it was too much, for others it was too little - UNQUOTE

    Methinks there may still be the odour of book soup coming from the Fratton Kitchens!

    The big 4 (and I exclude Liverpool from that as they only scraped into Europe due to this debacle) continue to manage to service their debt but if one sugar daddy pulls out more will and where then for the richest league in the world??

    Whilst it is absolutely criminal (and hopefully there'll be some convictions to prove it), I'm looking forward to the final with the same trepidation I looked forward to the semi (friend Stelling had that down as 4-0 Spurs!!).
    Come on pompey, lets have this for the fans, Avram and the players.

    Ohh, and I wonder if the Glazers will be able to continue to service the debt on the red side of Merseyside without Champions League dosh? (and retain their big name players (both of them))

  • Comment number 27.

    Best blogger on the beeb........thanks Matt for making the effort.
    I just want to place in perspective Saturday's match with the amount of hostility still shown in some quarters about Pompey maiking it that far. Firstly, the directors who brought such shame on my club will not be there. They have gone. These are the people who should be punished and I doubt a) whether they care or not if Pompey are at the final and b)and if they will ever be punished. Secondly, please remember Pompey lost the first seven games this season whilst they scratching around trying to find a side. All of the stars, Johnson, Diarra, Crouch, Defoe, Muntari had been sold. The current bunch are an honest bunch of pros who have been bought on the cheap, on loan or unwanted. This is the team that started the cup run whilst stuck at the bottom of the league. This is not the superstar mob that was bought with money we never had in 2008.
    So in many ways despite all the troubles it is a remarkable achievement made by a team that no one would have backed in january to get there.
    It is a day out that we will will be our last for a long long time. That is our punishment.

  • Comment number 28.

    It's more of a nightmare than a fairytale.... BUT is it any more of a 'Fudge' than Ken Bates buying Chelsea for a £1 or the similar antics at Leeds ?

    Some people have very short memories and are only too quick to jump on Pompey. Yes it's a disgrace and as a supporter, I am sickened by the whole financial mis-management... but please no more articles that suggest this is 'exceptional'. Many Chelsea supporters will rememeber that without Roman Abramovich, then they could be in a worse situation. Chelsea may be the Fairytale .... but only thanks to the their particular rich benefactor.

    Let's just hope this Pompey fairy tale ends happily ever after and we rise like a Phoenix from the flames. PUP PPU !

  • Comment number 29.

    So a bankrupt club's in the final. So what? Chelski aren't making money. If they traded without their sugar daddy they'd be in a worse state than we are. The rich will get bored with soccer. All the top clubs will be in trouble. The league knows it's heading for the abyss but doesn't care as it's enjoying the ride.

  • Comment number 30.

    Evening all, just back from watching Atletico v Fulham at the pub so perhaps now isn't best time to get into some serious insolvency chat but there are some excellent points/questions here that deserve answers, I'll do that tomorrow morning. I'll be blogging on my "audience" with Aston Villa owner Randy Lerner, too. Interesting bloke and pretty pertinent to this discussion too, as you could argue he is a just a wealthier Sacha Gaydamak. You could argue it but you'd be wrong.

    Anyway, there are couple of good links that I meant to flag up in the piece above but forgot. The first is a nice blog from an insolvency expert who has been following the Pompey debacle from afar:

    And the second is for those of you with a tad more time. It's BBC South's excellent "Fit & Proper?" documentary on Portsmouth's season. You get most of the main players, lots of moody shots of Fratton Park, that infamous Al-Faraj snapshot and judicious use of Moby's "God Moving Over the Face of the Waters" (a sports doc favourite):

    Until tomorrow


  • Comment number 31.

    The situation at my club is dire and a lot of heads need to roll: but what is the point of HMRC being able to double its debt against the club with punitive measures? This is worse than banks charging you £30 to say that you have gone over your over draft limit - and that has been stopped.
    Surely HMRC should not have the power to crucify an already impoverished club and make it even more difficult to resolve their situation and, in the process, make the CVA far less helpful to far more deserving creditors. Make no mistake about it, every £ in fines and extortionate charges levied by HMRC is a £ not available to a different creditor.

  • Comment number 32.

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

  • Comment number 33.

    Someone made a good point - if you are Preston or Watford why not also go crazy and buy half the England team, get to a couple of FA Cup finals etc. Then in 5 years just start back in the Championship on Zero points.

  • Comment number 34.

    Followed the link as Matt suggested. I thought the points at the bottom were interesting that the level of debt at Crystal Palace has not risen since the administrators were appointed. The Pompey situation seems to be a complete circus with the administrator loving his time on the big stage. There also appears to be a level of colussion going on that even HMRC are involved in.

    As mentioned above it is very strange that someone has given up a job elsewhere to take the role of Chief Executive with supposedly no buyer in sight.

    Is it all one big con? If so to what end?

    Just maybe Mr Chainrai will end up as the new owner after the debts have been massively reduced. He has made statements that he does not want to buy the club, but as last summer he was part of a consortium that tried to take over the club I'm not entirely convinced.

  • Comment number 35.

    "HMRC et al can enjoy seeing the club's various directors explain their recruitment and remuneration decisions over the last few years"

    Well Arkadi Gaydamak is now a fugitive from the Israeli courts somewhere in Russia.

    Storrie and Redknapp should be quite easy to find and indict, but the latter is a popular and successful football manager apparently...

    It's just a shame Chelsea and Portsmouth can't both lose :(

  • Comment number 36.

    "Make no mistake about it, every £ in fines and extortionate charges levied by HMRC is a £ not available to a different creditor."

    Are you *seriously* saying that you think HMRC are the fraudulent ones here?!?

    You must be mad.

    All these image rights payments are just another tax dodge and should rightly be clamped down on.

  • Comment number 37.

    I think that the whole scenario around finance and the premiere league is a reflection of the Western economies as a whole.Portsmouth are effectively the Greece of the Premier League,they have spent far more money that than they could generate and borrowed cash when credit was freely available.Yes there are clubs who owe more,but technicaly they can service there debt and have assets,much like the the larger countries of the E.U.

    The amazing things is that its taken till now for clubs to realise that you cannot indefinetly rely on credit and and spend beyond your means indefinetly.The credit crisis and the banking collapse had already hit the economies of the world and economic armageddon was a real possibility.And yet football club boards seem to have been oblivious to what was going on around them.

    Its often stated that businesmen don't understand football,I think its true to say that football doesnt understand business in the modern world,which is a real problem as the amount of money involved in the game generated through business has risen dramaticaly,you cannot have a "jumpers for goalposts"mentality when it comes to vast amounts of money.We al want our clubs to do well but there has to be a sense of reality when it comes to finance.

    Personally I think that there people who should consider themselves very lucky that they havent been before a judge in regards to the tax issues.If this had been any other industry (and like it or not football is big business)I sure the taxman would have have them before the courts in double quick time.Football no longer should be seen as a special case,its not an amateur sport any more in the 4 divisions they are professional,and should act and be run as such.If clubs spend so much money (that they havent got) that they end insolvent then effectively they should cease trading and playing,be they Aldershot or Man Utd.Harsh? Possibly,but if you are going to play with the big boys of business and finance you have to abide to the rules that apply to every business in the country.

  • Comment number 38.

    Hello all, I'll try to race through some replies now (in reverse order):

    Itsonlymyopinion (34) - Palace situation does make an interesting contrast but for lots of different reasons. While you could argue that Palace went into administration in better shape in terms of money owed, they lack that all-important asset that most clubs have on their books, a ground. And the situation has become even more complex as the company that ownes Selhurst Park is also now in admin...largely in debt to a state-owned bank that can get a better return from a supermarket than a Championship football team operating under a CVA. Big problem that. Their pre-CVA meeting is next week and they badly need to convince creditors that there is some fresh investment out there.

    hudjer (33) - Indeed. And to prevent that would be the best (only?) defence of the football creditors rule. I just think there are better/fairer ways of doing it. I should also point out that Pompey haven't kicked off in Ch'ship on level footing yet...and they will be operating under serious constraints for some time. I'd say it's 50/50 that they'll be relegated again next year or year after. Plenty of precedents.

    Tyto alba (31) - Fair point but don't forget that HMRC's money is our money. It's money that gets spent on hospitals, schools, police, wars etc etc The other thing to remember is that HMRC is making an example of Pompey because it has been messed about by football clubs for years now. The opportunity to really punish a Premier League club - one that had been cavalier in its tax dealings too - was too good to pass up.

    martinpcarter (28) & pompeypaul (29) - You're right. Pompey's "benefactor" model is the dominant business model in British football and has been for years. Chelsea & Abramovich/Harding, Man City & Abu Dhabi, Blackburn Rovers & Walker, Wolves & Hayward etc etc Take the sugar daddy away and you'll left with a business in freefall. That's basically what happened at Pompey when the Gaydamaks ran into legal/financial difficulties. But Pompey's problems have been exacerbated by fundamental weaknesses (the stadium), the haste of Gaydamaks' departure & the sheer scale of the over-spending relative to income. Throw in the confusion of the last 12 months and you've got a full-blown crisis.

    sunnypompey (27) - Wise words and I do wish you well on Saturday. But keep an eye on that Royal Box/the posh seats. I think there will be a few old "directors" there.

    Cidermonster (26) - Can't possibly comment! But the late revisions upwards provoked considerable comment from the floor last week. I got the impression that HMRC thought "fine, two can play at that game" and hit the club with a load of fines they had been holding back as leverage. I'm sure they could do something fairly similar with most failed companies if they wanted. But then most failed companies don't treat one group of wealthy creditors as special beings that must be paid first and in full while everybody else waits for what's left.

    saintly (25) - You're right to bring that up. The timings of various actions by the board is of utmost interest to HMRC et al. Who did what and when, will be a major part of any investigation. The January loan signings issue is very thorny, particularly the last two as they came after the club passed up the chance to sell players (and therefore alleviate debt) during the transfer window. A lot of goodwill within football disappeared at that point.

    LeeTUFC (24) - Nicely explained. I think that £10m wage bill is a target, though. For 2 reasons. One, it assumes they can offload enough of their current squad to get close to it by next season. And two, it assumes that once they are that figure they can actually afford it going forward. Fans tend not to watch struggling football teams in such great number. They also spend less money on merchandise. And CVAs are a terrible burden on even the most fundamentally sound businesses. It's going to be hard times at Fratton Park for some time.....unless they can find a real billionaire to make it all fine again.

    Sorry, run out of time. I'll post a few more this evening.

  • Comment number 39.

    Excellent summary Matt.

    It is just a shame that we will have to wait at least nine months for a proper investigation by the liquidators of the old company, and then *only* if creditors agree to this CVA.

    All the while someone is living the life of Riley on Sandbanks...

  • Comment number 40.

    Reading some of the comments here, it's clear that people misunderstand types of 'debt' or are trying to muddy the waters.

    The debt of Liverpool and Man Utd is leveraged debt from the loans their owners have taken to buy the clubs. It's an unpleasant situation and their fans aren't happy but it's a different kind of debt to Portsmouth. Also their income far outstrips Portsmouth.

    Portsmouth owe tax, they owe money to clubs for buying players, they owe money to one player for image rights. Portsmouth got into their debt by over-spending on players. it's not the same kind of debt as that reported by the leveraged loans on Utd and Liverpool. it's also being called in- now.

  • Comment number 41.

    A few late replies from me, this time from the top:

    Wolfie (1) - I guess we'll just have to wait and see. But I think actual jail time for anybody involved is very very unlikely. If, and it's a still a biggish if at this stage, something is uncovered in an investigation, I think we're looking at fines, bans from football, bans from being a director...that kind of thing.

    Mark Dorrington (2) - I hear your pain, Mark, and sympathise. It's horrible really and it's going to be bad for a lot longer. So enjoy Wembley for what it is and get yourself ready for the long haul back to sustainable success and respectability.

    WeAreTheMags (3) - Thanks. It's become a bit of a crusade now. I was given the job to "keep an eye on Pompey" when Al-Fahim appeared on the scene. We remembered he was good value at Man City and thought there could be a decent story in his takeover of Pompey. He didn't disappoint. As for the football authorities' part in all this, well, let's just say it's been too little, too late. And the two organisations you name are now keen to wipe their hands of this problem and leave it up to the law of the jungle, the Football League and possibly the courts to deal with.

    collie21 - You're right, this does happen with depressing regularity to normal, everyday businesses. But are football clubs just businesses? I think the differences between clubs and corner shops are greater than just one having a higher profile than the other. So while it would be nice to change the entire system to prevent this kind of thing from happening, I think that's going to be tricky. Changing football's system shouldn't be so difficult, though. But enough people have got to want it to happen.

    Tree (5) - They say they can make this CVA work EVEN IF they fail to find a buyer to replace Balram Chainrai as Pompey owner. It all depends on parachute payments. So Pompey should be especially grateful that those payments have just been doubled. Great timing.

    Blue Baby (6) - Interesting one that. Might be hard to get past the lawyers and I can foresee strong arguments about kicking a man when he's down/preventing them from helping themselves etc But it's exactly the kind of thing I'd like football to consider/debate. You wouldn't have the same "integrity of the competition" headaches you get from kicking somebody out of a league that has already commenced. You just give the club playing the club in administration a bye.

    Southseasaint (7) - Are you an insolvency practitioner?! I'll try to answer as best I can:
    - All creditors have to show the administrators they are owed the figures they claim and some readjustments (often up) are pretty common at this stage. This does take a bit of time and we may well see another revision of the unsecured debt total (the bit covered by a CVA) when the actual vote on the deal takes place next month. At that point, the creditors list and total is supposed to be locked.
    - Good question and I'm not entirely convinced we ever will get to the bottom of this. A few creditors at the meeting were vociferous in their claims that the Gaydamaks aren't really owed any money at all. This is not an uncommon position amongst Pompey fans close to the situation and is certainly the view of at least 2 recent directors of the club. I know this because they told me. Andronikou, however, said he was pretty satisfied with the Gaydamak debt. He is looking hard at the smaller sums owed to Al-Fahim and Al-Faraj, though.
    - I guess they're there as representatives of the numerous players still owed money, but you're right, it does seem a little strange given their super-creditor status. I think the creditors' committee is supposed to be a broad church, though, and your point about liquidation being a risk (and no good to anybody) is a good one.
    - Andronikou was pretty clear on this. He has to make sure Pompey field a reasonable team next season to make them attractive to potential buyers and safeguard the interests of the existing creditors. And yes, IF Pompey are promoted to the PL at the first attempt an extra percent or two will be added to the pot, although he didn't make it clear if this would be a £5m sweetener from a new owner or a bonus from Chainrai.
    - Yes, very much so. He had been on the phone to double-check Pompey would be eligible for the proposed new package (it was going up anway but the £48m super-duper package is still subject to a's a formality). And I think the PL has already advanced some cash to see the club through to the end of the season.

    Right, that's it. Thanks for reading. Here's to a decent game on Saturday.

  • Comment number 42.

    Matt, thanks for all of the responses. Too many journos don't respond to the comments left so your efforts are much appreciated.

  • Comment number 43.

    Portsmouth fans want to enjoy good results, like the FA cup win a couple of years ago, and disclaim all responsibility for the financial misdeeds that financed those results. But the two go together.

    The proper thing for a fan to do is to withdraw support from a team that has stolen its success. Yes, I know that a true fan can't switch allegiance. But imagine if your wife stole large sums of money. Would you applaud her as she paraded the bling she'd bought with it? I disagree with Matt and everyone else who wished Portsmouth all the best for the FA Cup Final. They deserved to lose.

    The PL and the FL need to take responsibility too. The priorities should be to stop leveraged buyouts and to stop uncontrolled debts to HMRC. So there should be a rule to stop any team starting a season in the leagues with debts above a certain proportion of their turnover. And a rule to stop any team starting a season in the leagues owing payments to HMRC that are more than 3 months overdue. There would have to be an exception to the first rule allowing teams with large pre-existing debts to continue, subject to a stringent agreed schedule of repayments.

    The leagues were quick enough to bring in the rule about footballing creditors. So why are they sitting on their hands regarding the other financial problems hurting football?

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