Dundee`s CVA Passes (For Now)

Ian

Ian began writing Twohundredpercent in May 2006. He lives in Brighton. He has also written for, amongst others, Pitch Invasion, FC Business Magazine, The Score, When Saturday Comes, Stand Against Modern Football and The Football Supporter. Ian was the first winner of the Socrates Award For Not Being Dead Yet at the 2010 NOPA awards for football bloggers.

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13 Responses

  1. dan says:

    Gavin, hopefully this will all be in the past and Dundee can move forward with a supporter owned club. Hopefully the supporters will realise that their ambitions need to be curtailed and that promotion if and when it comes should be seen as a great achievement and not something that is expected.
    6p in the pound is a disgrace but its that or nothing and most of the creditors realised this it seems.You really do feel for the small local creditors who have been stung by this and certainly not those who quite rightly took a big hit like Brannan and Melville. If only there was some form of legal redress against those who created this mess.
    Regarding Harkins, I believe he is the only first team player who will still be contracted to the club come the end of the season and therefore any value will be realised then. this allows the club to raise money for the coming season allowing the supporters trust to get on an even keel and not start the season chasing their tail regarding signing players and running the club financialy. It also amazes me that folk think in hindsight that the 25 point deduction was not enough. If the club had lost a few games this would not be questioned as they would be sitting adrift at the bottom of the league. The players and team management should be praised to the roof for their performances and spirit. Remember that this is the smallest first team squad in the league and having to have the manager and a tv pundit on the bench to make up the numbers!
    How much more could be cut from the playing side without affecting the whole integrity of the league – playing 16 yr olds and possibly getting thrashed each week after taking points off of others pre administration? The players that remain have agreed to pay cuts.
    As for the debts, yes they are shocking. However, any decent administrator would take full legal advice on the structure of the Bennett/stadium rent debt. Gavin, you almost imply that he got the advice from a ‘lawyer’ in the pub on a saturday night!
    Billy Dodds has every right to vote against the cva but he is hypocritical in his attitude. He was the one who, when shown the door, said he wanted the club to survive first and foremost for the good people that worked there and then votes to close it down! He then says his concience is clear and has nothing to hide but complains that his vote was not kept annonymous. breathtaking!
    I think that it is great news that the supporters trust will be running the club and that relegation seems unlikely now, ensuring that the club should start next season in decent shape with a sensible board behind it at long long last. no more Ron Dixons, Angus Cooks, Di Steffanos etc. surely something to look forward to?

  2. DerryDode says:

    In the future don’t get your facts from P&B.

  3. Gavin says:

    dan – mostly fair points; the bit I disagree with most strongly is the Harkins / intergrity of the league stuff, what happens on the pitch should be entirely secondary to making every effort possible to pay off the debt. The integrity of the league is much more seriously affected by Dundee having a better-paid team than Stirling or Cowdenbeath even while they’re chalking off another three million worth of debt.

    DerryDode – I posted some of them on p&b myself, but I’ve been known to get stuff wrong before now and I’m happy to be corrected if I’ve done so again.

  4. Baxter Parp says:

    “all this might smack a little of sour grapes.”

    Yup.

  5. Dave says:

    Gavin, regards the Harkins situation, which you say you feel most strongly about. If Dundee were to have sacked Harkins, then yes, in the short-term post-administration, Dundee FC would have saved a little bit more on wages, than had they not kept him and kept on a lower-paid player instead. My question is, how would this have made more money available to non-football creditors, given the football creditor rules, which state we would have had to meet Harkins’ contract in full anyway. Surely it’s better for the club, as a company, to have kept one of its most valuable assets, rather than leave it by the side of the road like you suggest, to the ultimate detriment of the company, since the asset would still have had to be paid for, in full, at a future point.

    No idea what qualifications you have, but I don’t know any companies who are quite happy to dump their more valuable assets on the rubbish dump, for someone to come along and pick it up for free the next day. Do you?

    Lastly, where is the relevance in all this of Stirling Albion, Cowdenbeat et all. An administrator does not seek to damage the company he is representing, just so the ‘intergrity’ of an outside body can be upheld. The football authorities imposed what were described in the national press as ‘draconian punishment’. Whether you think these are not now enough, is also irrelevant. The spirit shown at Dens, from players, management and regular fans, is a testimony to the human spirit, and the sheer bloody-mindedness of a group of people who would not let an 118-year old institution die. Let’s all just applaud that, shall we, instead of circling like vultures over a wounded beast of burden.

    Many thanks.

  6. Woodstein says:

    Interesting point of view, but as with so many other versions, accuracy has been sacrificed for the benefit of effect, for example…

    Harkins was not sold because the club received no offers for him. He is the only other asset (after Griffiths) with a market value as he is the only player not out of contract in summer.

    The Melville donation/loan question is easily answered by looking atvthe club accounts to July 2009. His initial input was donated, but when his other business issues arose, after July 2009, subsequent input appears to have been loans. This is auditable.

    It would be interesting to see the accounts of all SFL clubs presented an a comparable format, clearly showing the level to which almost all of them are living beyond their operating income (aka “cheating” in media & fans language) and benefitting from donations, loans, and guarantees to support bank debt from directors or other benefactors.

    Why are football Limited Companies seen to be “cheating” by seeking investment or backing in order to attempt to grow their business, or to quite literally move up to a higher “league”, when this is common business practice in every other industry? Why is it so scandalous when a football company enters administration, yet it is not if it is an engineering company, a bus company, a computer games company?

    This is what bodies like the SFL/SFA ought to be reviewing, before they are forced to deal with multiple administration cases, and the resulting demise of the SFL structure, which appears bereft of any sponsorship of media input which can help the member clubs?

    Regarding the statement from Mr Dodds about the “leak” of confidentiality re his cva vote, there is a publicly available interview with Mr Jackson where he states that creditors leaving the meeting told the waiting reporters who had voted against the cva. is Mr Dodds complaining thatvthe creditors were told, or that the media were told? His Sunday Herald column is unclear on this.

  7. Gavin says:

    Woodstein – I’m pretty sure I’ve never used the “cheating” word, and while I can’t cover all the sins of Scottish football in one article, anyone who follows this site regularly will know (hopefully) that we want to encourage greater financial responsibility across the game. So I’m not suggesting anyone turns a blind eye to other clubs storing up trouble, but it’s more serious when a club has already defaulted on its debt. (And, in fact, that’s all the more reason why the league rules need to be fair to those clubs who aren’t doing so.)

    Dave – again, several fair points there:
    The Harkins situation was chosen only as an example (the most obvious one) of the more general point – that Dundee have still retained a pretty decent, and decently-paid team.

    >>how would this have made more money available to non-football creditors, given the football creditor rules, which state we would have had to meet Harkins’ contract in full anyway< <

    If that were a consideration, why were any cutbacks made at all? The company has to be put on an even keel first. (My understanding is that you trying to reach agreement to pay less than the full amounts to former players anyway.)

    >>I don’t know any companies who are quite happy to dump their more valuable assets on the rubbish dump, for someone to come along and pick it up for free the next day. Do you?< <

    Not if it's a saleable asset, no, the administrator would cash in on it instead - but you can't have it both ways there.

    >>An administrator does not seek to damage the company he is representing<<

    He doesn’t work for the company, he works for the creditors. In this case he took a calculated gamble that continuing with a decent team was the best way to serve their interests – and again I’m not suggesting he’s done anything untoward, Melville’s extra £200K gave him that option – but it’s also right and proper that the SFL take a dim view of it, particularly if it continues to give them sporting advantage over teams who aren’t defaulting on debts.

    The 25 point penalty I’ve covered in a previous article – I don’t believe, as some did, that automatic relegaton was feasible; I thought a 25 point penalty was about right and therefore I still do. That it’s turned out – imho – to be insufficient is unfortunate but obviously you can’t make decisions by hindsight.

    And yes, I do acknowledge what’s been achieved by the players in adversity, and again as mentioned in previous articles I applaud the fan’s fundraising efforts and I hope it goes well for them in the future. Courtesy of my best mate, who’s a Dee, I’ve been at dozens of Dundee games over the past few years quite apart from those against my own club, they’ve given me quite a few good memories and I hope there are many more to come. I do appreciate that most fans have been able to distinguish between my criticism over the current situation and any ill-feeling towards the club.

  8. BILL JAMIESON says:

    Dress this up with fiction and figures all you like but this was clearly written by a man who’s team were beaten on Saturday. If his teams benefactor walked away this week, could his club pay it’s creditors or it’s players? No. Without their benefactors money, are they living within their means? No. Dundee’s board made the mistake of accepting Calum Melville’s word and their mistake was to not get guarantees. Do Raith have the money in the bank as we speak to pay their players up to the remainder of their contracts, I doubt it.The whole of Scottish football is in a mess, Dundee were just the first to get caught living above their means, they will not be the last. I cannot think of any team in the First Division that does not operate at a loss, including Raith.

  9. derryrhumba says:

    Dry your eyes mate.

  10. >>If that were a consideration, why were any cutbacks made at all?<<

    Cash flow. That's why. That was the immediate pressing problem when the club went into administration.

    The debts, cash flow, the administration regulations, the football creditors rule and "sporting integrity" were all exerting different pressures on the administrator.

    The SFL are responsible for some of these incentives and pressures. I don't think they've managed them well. They've given no indication that they have any grasp on how Scottish football finances should be governed, and in the circumstances I'm not inclined to treat any SFL criticism of the administrator with any great respect.

    It is quite possible that the balance that Bryan Jackson struck was the best available to the general creditors. Sacking Harkins and Griffiths would have improved the cash flow, but not the debt position. It would also have removed the chance to earn a transfer fee, and it would have seriously weakened the team, with a knock-on impact on fans' morale, attendances and fund-raising. The obvious, brutal option was to sack the higher earners with no sale value in order to try to ensure there would be enough cash to get the club through to a transfer window.

    Personally, I'm reluctant to state with any confidence whether decisions were correct without access to the detailed information.

    By the way, if you set aside Harkins and Griffiths, every single one of the players who remained was on a cheaper contract than every single one of the players who left. Clearly wages were a very important factor in deciding who should go. It is certainly possible that some players opted to take a cut to stay at Dens, and that was rumoured to be the case with Douglas, but I don't think you could justify the claim that Dundee kept on higher earners with no resale value.

  11. Dave says:

    Gavin, in general cases of administration, it’s certainly true to say that the administrator would work solely for the creditors, to maximise their returns, whilst trying to save the company on an ongoing basis. Would you not think that’s just a wee bit different when it comes to football clubs, that the focus changes slightly away from the creditors, towards the club and its community. Not officially, of course. Just an after-thought…

  12. Gavin says:

    James: “cashflow” – yes indeed, that is the point. Having something as an historic debt as opposed to an ongoing liability is a very different thing. An administrators first job is to tackle the latter, and get the business running on break-even.

    “Sacking Harkins and Griffiths would have improved the cash flow, but not the debt position. It would also have removed the chance to earn a transfer fee, and it would have seriously weakened the team, with a knock-on impact on fans’ morale, attendances and fund-raising.”

    Yup, that’s the crux of it. I’ve no problem with retaining players in order to sell them (though that argument goes out the window if you don’t do so); the more interesting question is the latter part of it. In Dundee’s case Jackson never did get the business back on break-even in respect of operating income – Melville’s final £200K gave him another option, and he chose to gamble that by sustaining further losses in the short-term in the hope that enough interest could thereby be generated to gain other income by the time that money ran out. It’s understandable, and once again I’m not accusing anyone of doing anything illegitimate with respect to business law.

    It’s also understandable, however, if the league feel (as I do) that it gives them a continuing advantage which is unfair on other, more prudently run, clubs in the league, and the rules and the sanctions should be strict enough (imho) to ensure that any such advantage is at least cancelled out.

    Dave: “Would you not think that’s just a wee bit different when it comes to football clubs, that the focus changes slightly away from the creditors, towards the club and its community. Not officially, of course. Just an after-thought…”

    I don’t have enough experience of administration in the wider world to draw such a general conclusion, but my impression is that you’re probably right there. The higher profile and the loyalty of fans (which has few parallels in terms of customer brand-loyalty in the rest of the commercial world) does make football a bit of a special case, and it may well be that they’re that bit more determined for the company to survive than they would be in other scenarios. PKF / Jackson are, comparatively, not being all that well paid for this job (£60K flat fee, I believe), but it’s good publicity for them – dependent on the club’s survival.

  1. February 25, 2011

    […] Dundee’s CVA Passes (For Now) Two Hundred Percent […]

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