When questions about your football club are raised in Westminster and the Prime Minister agrees that the situation needs investigation then you know you are in a bad way. Not because you might be investigated but because the Prime Minister actually knows what Penny Mordaunt, MP for Portsmouth North, is talking about. David Cameron has backed Ms Mordaunt’s call for HMRC to meet with Portsmouth Football club to negotiate their way around the winding up order HMRC took out against the club last month.
But would such a move be in the club’s best interests?
Pompey seem to be just over two weeks from liquidation. The winding up order is due to be heard on 20 February. The final step into oblivion is all that’s left according to some. The stranglehold of Balram Chainrai on Portsmouth FC is killing the club in painful stages. The close of the transfer window has left fans waiting for his next move, while the club seeks a court order to unfreeze bank accounts to pay players and staff for January. It may be that staving off the winding up order will just extend the misery.
It was expected that the club would sell some of the meagre squad to meet HMRC demands. The club currently owes £1.8m in unpaid tax. In the event one player with few appearances, young Ryan Williams, left for Fulham raising in total less than a third of the tax bill. Others subject to bids, mainly from Ipswich, remained with the club at the end of Tuesday’s business. The story on Tuesday night was that the club had accepted bids for two of three players but the players themselves, local boy Joel Ward and young keeper Stephen Henderson, had turned down the move. Clearly the players had been well advised – they have nothing to lose, they are in demand and if the club is liquidated they then become free agents. No need for them to take an unattractive offer from another struggling club. But the gesture and its meaning to fans is important. It says to the money-lender Chainrai that this fight is not all on his terms.
Maybe things weren’t that clear cut. The administrator, Andrew Andronikou, said the lack of transfer action left him ‘bitterly disappointed.’ However, if Paul Jewell’s story is anything to go by, Andronikou must bear some of the blame for that. Jewel talks of being passed from CEO to Administrator to agent in his attempts to sign the Pompey players. He told the Portsmouth News that he, ‘knew by 4pm on deadline day it wasn’t going to happen as I hadn’t even met or spoken to the players.’ Pompey’s manager, Michael Appleton, heard nothing at all. Of course, Ipswich’s own money worries might have put the players out of their budget, given that club’s reputed £66m debt. So whether this was player stoicism or management inefficiencies we cannot be sure. But it is worrying if the Administrator is trying to sell players that are vital to the team even fulfilling its fixtures, never mind surviving in the Championship. Fans are confused as to why Andronikou has any say at all in the players’ sale as the club itself is not in administration, just its parent company CSI. Short sighted sales to pay this month’s tax bill do nothing to meet the next set of bills. Andronikou clearly needs to buy time, having wasted the months since CSI went into administration last November by failing to realise the worth of CSI’s other assets and dissipating many weeks on negotiations over PFC with the weird bid of J. Joseph Cala. The optimists among us detect a dissenting mood emanating from within Fratton Park itself on the back of this lack of player sales.
One thing Cala’s farcical bid has told us about the sale of the club is that, as far as creditor Chainrai is concerned, it is nothing to do with the football. Nor, I suspect, was Cala’s bid. Seemingly unable to satisfy the Football League when first seeking to buy the club, Cala hoped to circumnavigate the Owners and Directors’ Test by trying to buy Chainrai’s debenture in a second attempt. However, the Football League made it clear he would still have to pass the test, causing Cala to say passing it was like trying to get into MI5. This prompted a few hollow laughs down at Pompey.
It is all about the debt. That is what Cala wanted to buy, Chainrai’s debenture for his £17m. This is the means by which Chainrai dictates terms at the club. Unless it is paid up by a purchaser, something CSI failed to do, he will continue to wield power over the destiny of PFC. The debenture not only pays him handsome interest but keeps the capital of his loan secured. This keeps the purchase price of PFC above its value as a going concern whilst Mr Chainrai clings to the hope of, ‘getting his money back.’
No wonder Andronikou is annoyed that the club hasn’t decimated the team to pay its tax bill. The closer we get to the court hearing without a viable buyer stepping in, the more Mr Chainrai stands to lose if we are liquidated. It seems his grasp may be slipping.
So we enter the endgame. Chainrai has the option of drip feeding the club money to meet running costs until a buyer is found, possibly taking a reduced price, or letting the club go into liquidation. How much he can get for the club is a moot point. Liquidated there really is only the ground at Fratton Park. Hemmed in by housing on two sides and land owned by the owner of five moves ago, Sacha Gaydamak, on the other two, it is designated for sports use only by Portsmouth City Council and therefore has no redevelopment value. His return from liquidation would be a fraction of what he claims to be owed. Chainrai is therefore having to balance his gains against his losses. In sticking out for full repayment of his foolish ‘investment’ made in 2009 he seems to be willing to push the club to the wire before making his decision. As to putting the club into administration there is little to gain for Chainrai one way or another; the level of unsecured debt is low and the secured creditors, himself and Gaydamak, would still remain.
Currently the administrators are asking prospective purchasers to provide £12m as proof of funds, and assurances they could meet another £20m in repayments to former creditors, Balram Chainrai and Alexandre Gaydamak. Unless they are the Supporters Trust of course, who were asked to provide £100m proof of funds due, they were told, to £50m owing to creditors plus share transfer and running costs. An odd disparity. It has long been the case that the cards have been stacked against Trusts in the attempt to buy their club – but this is beyond ridiculous. Chainrai has always refused to talk to the fans, and clearly isn’t going to start now. This, and his description of dissenting fans as ‘aliens from another planet,’ justify his attitude to fans being described as contemptuous. But unless we are buying season tickets to save him putting his hand in his pocket to maintain his asset, we are of little interest to him.
Such treatment has left most fans exasperated, alienated and out of love with the club. Many were priced out of attending at the start of the season and all the pricing initiatives since – including the dropping of the spurious pay-on-the-day surcharge for the next two games – have done nothing to help. Others have vowed never to pay anything to the club whilst Chainrai has an interest. There is now a strong tide of feeling that the best thing that can happen is that PFC (2010) is liquidated and the fans put ‘Plan B’ for a Phoenix club into operation. The feeling that we need a clear break with the tangled web of the past is strong.
If he really wants to help the club Mr Cameron might be better advised to look to implementing some of the measures of his own government’s enquiry into football governance. The matter was raised again in Parliament as recently as 26 January with Minister for Sport, Hugh Roberts, reiterating the value of a licensing scheme for football clubs, exemplifying Supporters’ Direct’s proposals that were formerly launched 01 February, ‘where much more robust rules around financial sustainability, fit and proper persons and directors are laid out. We see that licensing model as the appropriate vehicle for greater supporter representation at football clubs.’ That representation he said should encompass three ways fans should be involved with their clubs, ‘The first is through fans being better informed about a club’s activities—for example, its financial standing, particularly, and the identity of its owners. Secondly, supporters ought to be represented or consulted in the club’s decision making … Thirdly, supporter and supporter-run groups ought to have a formal share or ownership in their club.’ The football authorities are due to make public their response to these proposals by the end of February.’
By then Pompey could be gone. If Cameron wants some negotiation to save us, how about getting together with the football authorities and the fans and implementing these changes now? How about looking at a really viable way of running the club for the people of Portsmouth rather than continually papering over the cracks in order to profit an inept businessman? A man who wants nothing to do with the City and people of Portsmouth?
Or Pompey fans could just pray for help instead … and hope they won’t get fooled again.
Meanwhile the Pompey Supporters Trust maintains its efforts to draw supporters together in order to maintain the fans voice at the club. The 12th Man website is aimed at collating the details of all supporters interested in aiding the survival of the club – in whatever way possible.
You can follow SJ Maskell on Twitter by clicking here.
You can follow Twohundredpercent on Twitter by clicking here.