Yesterday In Plymouth: A Tale Of Morals And Legalities

By on Oct 14, 2011 in English League Football, Finance, Latest | 2 comments

Yesterday in Plymouth, some people with lots of money demanded more money, some people with much less money were told they were getting no more money, until the people with lots of money got more money. This was morally indefensible. Doubtless, there will be people on hand to claim “it isn’t as simple as that.” And next-to-nothing in Plymouth Argyle’s seven-and-a-bit months in administration has been as simple as that. But on this occasion, I’m not so sure.

Argyle’s administrators, the P&A Partnership, are owed money for work undertaken, just like everybody else connected to the club and its parent company’s administration – even Peter Ridsdale, probably. In their six-monthly report to creditors, published on October the thirdrd, they noted that their fees to September the third were £675,756 but that they had ‘only’ been paid £150,000, a little more than a fifth of what they were due – in those terms, not radically different to the situation in which staff find themselves.

However, yesterday in Plymouth, P&A stepped back from a stated intention to pay staff and players a small proportion of their October salaries directly out of the gate receipts and supposedly ring-fenced season-ticket monies from last Saturday’s League Two game at Home Park against Accrington Stanley. The game was phenomenally well attended. It was the closest fixture to Argyle’s actual 125th birthday and was a ‘Fans United’ Day, organised to attract fans of other clubs, including those who weren’t playing because it was an international weekend.  As a result, the 8,013 attendance was the highest of the season, by two shy of 2,000. And, according to local press reports, staff members were led to expect about 12% of their October salary.

P&A had the money, as they are still formally running the club. But they have refused to release it, as intended, until negotiations with the club’s potential new owner James Brent over their own fees are concluded to their satisfaction. Given the relative amounts of money we are talking about here (the noughts are at the end of administrators’ money, while they have all-too-often been staffs’ money), this is the morally indefensible bit. And this moral issue galvanised Argyle supporters impressively this morning. P & A’s receptionists arrived at work to a see of e-mails urging the firm, in block capital letters both real and proverbial, to ‘PAY THE STAFF AND PLAYERS NOW.

Initiated by Argyle Fans Trust chairman Chris Webb and instigated via the Argyle fans’ website PASOTI very early this morning, fans were urged to send these e-mails to P&A’s Sheffield base. The idea was to make it clear that P&A’s treatment of staff and players – those whose patience has allowed P&A the opportunity to successfully exit Argyle from administration – was unacceptable. “The huge level of fees for P&A,” wrote Chris Webb, “is simply because they backed the wrong horse. They chose Heaney (Kevin Heaney, the much-unloved Cornish property developer), they took months to realise he was a time waster when we all knew it, they made a mistake, they should pay for it.”

He also added, correctly: “It is not the supporters’ fault, James Brent’s fault and it is certainly not the staff/players fault that they backed the wrong horse.” P&A’s response to the e-mails has, perhaps predictably, been to threaten to “resign from office on Monday… unless protesters desist.” They referenced a “risk to the wellbeing and personal safety” of P&A staff – paper cuts from printing out the e-mails, presumably. They further referenced “such foul, abusive and threatening e-mails,” while neglecting to mention “such as” what. And Guilfoyle claimed that P&A couldn’t pay the wages because “we simply don’t have the surplus after deducting the costs we have to pay for running the club”, which may suggest some some that much of the talk of ring-fencing gate receipts in order to pay staff was just that – talk.

Other issues have arisen from these events. A common criticism of the time P&A have taken over Argyle’s administration is that they have simply been racking up the bills – at an average of £279.21 per hour, why should they hurry? It is why the agreement Brent says he reached was to pay them a set “six-figure sum for the firm’s services,” a “limit” which was “agreed in March”, when Brent first sought to bid for Argyle and “re-affirmed at the beginning of September.” Brent himself has described this amount as “several hundred thousand pounds”, although it is “understood to be well below the £700,000+ racked up” by P&A – the above £650,000, plus September’s charges.So it is not clear whether the difference between them amounts to much – especially at “complex hourly rates” to P&A partners of up to £600. For reasons more connected to alphabet than arithmetic, I’d always gauged “a few” to be about four, “several” to be at least seven and “bloody hell, how much???” to be banker’s bonuses.”Several hundred thousand” and 700,000 wouldn’t appear hugely different.

But it is not unusual for administrators’ fees to, effectively, be capped. To quote from an administrators’ report dated April 30th 2010: “Since the joint administrators’ fees are capped at £500,000, until the secured debt owed to Agilo is discharged in full, the current average hourly rate…will decline further.” The eagle-eyed (pardon the pun) will have worked out that Crystal Palace were the club in this particular administration. Those with super powers of recall will…recall that the joint administrators in this particular question were Christopher Michael White, John Russell and… Brendan Ambrose Guilfoyle of the P&A Partnership.

So, they should be used to the wait. Given that P&A’s average hourly rates at Palace ‘declined further’ from “£271.76 to £220.55 per hour” (including clerks on £40-per-hour) they can surely afford the wait. And if Brent’s claims are true, what right have they to re-open negotiations? The moralities of the situation, however, can be less relevant than the legalities, if certain parties choose to make them so. Chris Webb’s point about P&A racking up fees by backing “the wrong horse” was, as a later PASOTI contributor pointed out, “morally highly relevant but technically difficult to prove,” as P&A could always claim that the “wrong horse” was the right horse for the secured creditors whose interests they were legally obliged to serve. And without precise, almost word-for-word knowledge of what was agreed in March between P&A and Brent, it is difficult to judge the legalities on the issue of administrators’ fees.

It is even more difficult to judge staff and player entitlements to a cut of last Saturday’s gate. P&A have “released” gate receipts which they said have been ring-fenced, plus 1/23rd of season-ticket income, similarly ring-fenced. But Guilfoyle now all-but-states that there has been no such ring-fencing. Either that, or when Peter Ridsdale said on September 26th that “all season-ticket money will be ring-fenced and held by the administrator,” he could only have been being deliberately or accidentally mendacious. Moralities are more usefully applicable in reputational terms. P&A might not care a jot about morals if they successfully sell Argyle. But if they don’t? The damage to their reputation should Guilfoyle and company actually resign on Monday and thereby facilitate the club’s liquidation would be immense. It would hit them in their most painful place, their bank account.
All that said, the fact still remains that, yesterday in Plymouth, people with enough money said to people without enough money, you’re not getting yours until we get ours. And whatever they are now saying, that is morally indefensible, and it as simple as that.

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    2 Comments

  1. Top article. Bang on in every detail, well researched and well written. Have added twohundredpercent to my favs tab.

    Pete

    October 15, 2011

  2. Quality article. Shocking that GullibleFail has the audacity to expect staff and fans to pay for his own utter incompetence.

    Sam

    October 16, 2011

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