Port Vale: A Light At The End Of The Tunnel?

By on Jul 2, 2011 in English League Football, Finance, Latest | 4 comments

Next up in our brief series on summer take-overs, Mark Murphy has an update from Port Vale.

Port Vale have a functioning, constitutionally sound, a recently-elected board of directors, a six-figure investment deal (seven-figure, if you include various forms of sponsorship) on the table and a recently-appointed manager who masterminded a strong League Two promotion challenge before being lured away to his home-town club midway through last season. What could be better? Plenty, naturally. This is Port Vale. Since our last Valiants update, events have taken numerous twists. And the determination to ignore the results of the June 1st EGM’s board elections remained strong for much of the time. Indeed, if there was an equivalent determination to forget politics for a bit and focus on the team, Vale would have promotion clinched by Easter.

The biggest twist is that the remnants of the Vale board which survived the EGM, plus recently-appointed Chief Executive Perry Deakin, have taken a more confident public stance – aided by some ill-advised public comments from director-elect Mark Sims and, for the first time, some misjudgements by supporters group North London Valiants (NLV). Meanwhile, local entrepreneur Mo Chaudry, whose bid for control of Vale via a 51% shareholding has caused all the 2011 in-fighting, managed to shut up for a bit, before thinking out (very) loud about the prospects of overturning the EGM results through the courts. And this, in turn, woke up Robert Lee, Chief Executive of local firm Broxap, whose EGM votes won the day for the surviving incumbent directors.

Yet Chaudry’s temporary silence, and the longer-lasting mute button on Vale’s divisive chairman Bill Bratt, has left centre stage to people who at least look like they want to “forget politics for a bit and focus on the team,” though whether they will remains to be seen. As a result, the Vale headlines have focused more “on the team.” The curious EGM poll results included a vote of no confidence in the previous five-man board, but individual votes to re-elect three of them. As well as being anomalous to the point of insanity, these results left Vale a man short of a constitutionally acceptable board, because a fourth successful board candidate, local businessman Mark Sims, refused to take his seat immediately. This was silly and unproductive. However, everyone was so wrapped up in the club’s in-fighting that they failed to see how silly and unproductive it was. And although most individual shareholders voted for him to join the board, few if any would have minded him disregarding their wishes.

He wanted to undertake due diligence of the club’s finances because “I’m walking (into the boardroom) as a minority individual and I want to be satisfied with certain things.” Why he couldn’t do all this as a director wasn’t made clear, other than that he would have taken his seat “if the interim board had been elected.” He also said that “the secrets that were hidden away in the past won’t be in the future,” adding no evidence whatsoever to back up what was a quite serious accusation. In terms of starting constructive working relationships, I’ve seen better methods. But he could do none of this until he had provided proof that major shareholder, and member of popular beat combo Take That, Robbie Williams had ‘sponsored’ his board membership, as Sims was not a Vale shareholder himself and therefore needed the sponsorship of someone who was, and had a minimum £50,000 stake. A constitutional nicety this may have been. But without it, no progress could be made, although that didn’t shelter the board from accusations of stalling and “hampering” Sims.

Equally accusative were NLV, who were invited to nominate a boardroom representative of their own. Director Glenn Oliver labelled this “a gesture of sincerity and goodwill.” And whilst this comment met with collective incredulity, Oliver was right to say that the elected directors “had no compulsion to do this.” It was a welcome recognition of the strength of anti-board feeling among individual shareholders, and a success directly attributable to NLV’s clever campaigning to that point. But NLV chose not to welcome it; because while NLV and Sims contemplated their political navels, the elected directors had the reality of a non-functioning board to deal with, and proposed manager Micky Adams as a director, who was frustrated at his complete inability to prepare for the new season, and was therefore a willing candidate. NLV’s response was partly nonsensical. They effectively accused Adams of lying when he claimed his board candidacy was a “footballing decision” and asked him to “withdraw his candidacy as director and concentrate on football matters,” even though Adams could not do anything of the sort until SOMEone became a fourth director. “This is not an attempt to hinder your preparation,” NLV told Adams in an open letter. But that would have been the effect, unintended or not.

While the elected directors acted, Sims and NLV…issued press releases. They complained at not being consulted about Adams. And Sims condemned the board for adding an “insider type fourth director to the club” and accused them of ordering their finance ‘controller’ to take three weeks’ leave. “This clearly tells me there is no intention to assist me with my work,” Sims suggested, “which leaves me wondering what is hidden that the fans should not see.” For the club, enough was enough. They issued a 1200-word mix of painstaking explanation and vitriol, which revealed that the technical responsibility for the delay in Sims taking up his place on the board lay with…er…Sims himself. The statement, issued from the summit of the moral high ground, said Sims was told that “Robbie Williams’ solicitor should provide formal written confirmation of (his) sponsorship.” It continued: “Both (Sims and NLV) agreed that this was a necessary formality. Mark was further reminded on June 5th of the necessity to provide that written confirmation as a pre-requisite to admission to the board. As at close of business on Tuesday 7th June, (this) formal conformation had not been received.”

Until this was done, explained the statement, nothing else could be done, certainly not due diligence: “It is self-evidently inappropriate that someone who does not own any shares in his own right and has not yet provided proof of sponsorship, should be granted access to the club’s financial information.” It was also, the statement continued, “equally self-evidently inappropriate that someone who has not yet satisfied the Football League’s Owners and Directors Test in order to qualify as a director should be granted access.” Sims was also censured for “engaging in negative and unfounded comments about the state of the club’s finances and the completeness of the information contained therein.” And, among a list of “the other incorrect claims,” Sims was informed that “referring to Micky Adams as an ‘insider-type fourth director’ is offensive.”

Yet Sims was, initially, unabashed. “The club have not had the letter from Robbie yet, but as far as I’m concerned, that is a technicality,” he said, with Chaudry-esque arrogance. “I have the letter and I know that I have the letter but I don’t think that is the issue.” However, unless or until he produced that letter, it WAS the issue, and the elected directors were perfectly within their rights to make it so. NLV’s press release accepting the offer of a board seat was scarcely more sensible. Spokesman Malcolm Hirst was proposed, but NLV said they would only accept the offer on condition that “the board…have a clear strategy to hand over transition to a new board to an agreed timetable.” They included a call for a “complete change in the leadership of the club,” and then disingenuously labelled the offer “conditional” when they had attached all the “conditions.”

Not surprisingly, club CE Perry Deakin described the release as “containing what amounts to demands in addition to comments which are both unfounded and unhelpful.” And there the issue lay until NLV e-mailed the club last week “asking the club to confirm if there are any pre-requisites relating to the offer.” Dropping the demand for EGM-elected directors to be sacked was probably one. Meanwhile, fans’ website OVF (OneValeFan) published an open letter to Bratt asking how the elected directors intended to conduct the Adams’ shareholder poll, the letter’s tone suggesting none-too-subtly that OVF expected dodgy dealings. “As a shareholder,” wrote site moderator Rob Fielding, “I would like to know what independent vote monitoring procedures will be employed.” The answer, via club secretary Bill Lodey, was pretty much ‘come in and see for yourselves.’ And what they (Rob and his father) saw for themselves was Adams elected by a clearer, if far from overwhelming, majority than the EGM polls produced.

Chaudry, inevitably, had his oar to stick in. His takeover dreams dissolved, temporarily at least, by the EGM vote retaining the rule barring individual shareholdings over 24.9%, he insisted there had been skulduggery behind a late, significant change in the casting of the 4.2% shareholding belonging to club sponsors Broxap. Publishing extracts from e-mail correspondence with Lee, Chaudry attempted to show that Broxap’s chief had reneged on a legally-binding agreement to vote out the incumbent board. Pre-EGM publicity suggested such an agreement was in place in principle. But Lee changed the direction of Broxap’s vote when “un-named” board representatives unconditionally offered to meet their demands for £50,000 for the shares. And none of the published e-mails revealed any written agreement. They revealed that Lee had contradicted himself on plenty of issues, including expressing wildly contrasting opinions of Chaudry himself. But they also revealed that Chaudry’s offer was more complex and conditional than the board’s straight fifty grand.

Lee responded with a curious reference to a “Black PR-campaign… in the form of e-mails from more than 19 of Mr Chaudry’s disciples” (presumably 20?). But he added, more pertinently, that “if Broxap’s shares were so pivotal, why didn’t Mr Chaudry execute the deal properly and make the agreement either irrevocable or for a fixed period? I thought that was very sloppy.” Chaudry has taken legal advice and believes “a court could switch the direction of Broxap’s shares.” However, Chaudry is a side-issue, for now anyway. Sims has, at last, provided the required paperwork confirming his sponsorship by Williams. Deakin claimed that he was “delighted everything is now in place and we can move forward,” putting the same “week-to-ten-days” timescale as Sims on the latter’s due diligence. And the offer to Hirst to join the board remains on the table.

So Vale can prepare for the new season, with Adams furiously busy in the transfer market this week, a board with their focus similarly directed – provided Sims and NLV make best use of their directorships – and with Sims’ due diligence hopefully revealing Vale’s true finances, rather than a politically-motivated interpretation of them. And this has happened while Chaudry and Bratt have kept out of the way. There may be a clue in there somewhere.

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    4 Comments

  1. I think you criticism of Mark Sims’ stance is a little unfair. Once he accepts the role of director he will have to take considerable financial guarantees. I don’t think it’s unreasonable to ask for a look at the club’s financial health before he does so. I advise you to keep your eyes on Vale Park and watch what excuses the Board come up with for failing to let Sims see the financial information he wants.

    You also failed to mention that Sims had sponsorship for his director’s role sorted long before the EGM, only to have it withdrawn at the last minute when his sponsor switched sides on the morning of the meeting – that is a can of worms you may wish to investigate as well.

    Mark Sims has actually put about twice as much money into Vale in terms of sponsorship in recent years than all of the three remaining Board members have invested in total. He deserves more respect than he is being shown at the moment by the rump Board who only kept their seats because of their own personal shares. In each case, their majority in the vote was less than their own shareholding.

    You might also like to have a look at the process by which Micky Adams was elected to the Board. The voting papers were a total sham – no address, no details of shareholding, just a name had to be written on them. Think about that one as well!!

    Valiant

    July 2, 2011

  2. So Robbie Williams has sponsored Sims in order to get him onto the Board, which implicitly suggests Sims hasn’t the wonga to be a director. Why, then, is Sims faced with upholding financial guarantees? Shouldn’t that responsibility fall on his sponsor?

    Confused.com

    July 3, 2011

  3. Valiant,
    I haven’t criticised Sims for wanting to look at the books. Quite the opposite. As I’ve emphasised in two articles now, Sims’ due diligence is the key to Vale solving their problems, both financial and political.
    My criticism is of his disregard for the formalities, which gave the current regime an excuse – and a valid one – to hold matters up. As you rightly suggest, they don’t need an excuse.
    My understanding of Sims original sponsorship was that it part of Lee’s late change of mind. That morally stank but legally?
    Re: your last paragraph, did the independent observers have anything formally to say about this, other than that they were happy with the count?

    Confused.com: In my limited experience of such matters, directors are ultimately responsible for meeting guarantees however they see fit.

    Mark Murphy

    July 7, 2011

  4. Good reporting well done. Its great to see an unbiassed take on the facts which cuts throiugh all of the nonsense which is spoken about current Vale events. Please keep it up.

    Vale_For_real

    July 10, 2011

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