Pompey’s Blame Game

By on Feb 15, 2012 in Finance, Latest | 5 comments

We have been waiting for this since November – but that doesn’t make it any better. The new manager, the younger team, and games like the awayday at Blackpool notwithstanding, no one has been able to fully enjoy the simplicity of Championship survival. That is because, when the first shoe hit the floor in November, we learned that ‘self-sustaining’ really meant ‘injection of a £10.5m loan from the new owner with more needed to keep the club running for the rest of the season.’

It soon became clear to those who watch such things closely that there was a internal battle-royal going on behind the closed doors of the club. With Balram Chainrai back in the frame as the controlling money-lender and Administrator Andrew Andronikou at the helm of stricken CSI there was an instant conflict of interests between the money men and the club’s executive management, led by CEO David Lampitt. The failure to cash in on players during January and the frozen bank account as a result of HMRC’s winding up order left the club’s home fixture against Ipswich on Tuesday 14 February in some doubt. Players and staff unpaid and a rumour that the electricity was about to be cut off made that clear. The next move  had to come before HMRC’s petition was heard on 20 February. Finally the second shoe dropped. On Monday afternoon (13 February) the directors of Portsmouth Football announced that they had applied for the club to go into administration. The Administrators will be appointed at a court hearing on Friday, assuming the court grants permission. It is expected that the chief Administrator will be that same Andrew Andronikou of UHY Hacker Young.

Mr Andronikou is concerned that matters have got this far. When I spoke to him he said that Balram Chainrai made a payment of £250,000 into the club in December on the understanding that there would be player sales in January to keep the club going until a buyer was found. He says that there were ‘others within the club’ that prevented the sales. It was not down to player choice. He plans to investigate how the sales failed to happen. If those sales had gone ahead the club would not now be facing administration, he said.

This does not bode well for CEO David Lampitt who has spoken in the the media of  Mr Chainrai not keeping his promise to fund the club until a buyer was found. On Express FM he said that Chainrai had not put any money at all into the club during January despite his promises, published in the the South China Post where he is quoted as saying, “Not many people would do this but we wanted to help sustain the club through this difficult period. I have happy memories of Portsmouth and don’t want to see it go under.” But Mr Andronikou seems to be saying that his offer of help was tied to conditions that would only provide a temporary stay of execution at best. Player sales at the prices bandied about would not have raised enough to cover more than the immediate outstanding bills, leaving another shortfall to find within a few weeks.

Ipswich Town manager Paul Jewel, has spoken of difficulties in getting to speak to anyone about buying players from Pompey during the transfer window. He claims to never have got close enough to a deal to actually speak to the players. There is most definitely a clash of philosophies going on here as Andronikou talks of doing his best by the creditors of CSI. By which he means Mr Chainrai’s company Portpin, jointly owned by Chainrai and Levi Kushnir, who are CSI’s chief secured creditors. They also hold a debenture over Fratton Park as security for CSI’s debt to them.  However, in footballing terms, there is no doubt that Pompey’s chances of providing a reasonable level of competitive football at Fratton Park for the rest of the season would have been severely undermined by any player sales. This, of course, is not Mr Andronikou’s problem. His problem is that Portsmouth going into administration means that Mr Chainrai stands to lose in terms of both capital and interest on his £17m loan to the club. He said that Chainrai has only ever received two interest payments on the money he initially loaned back in October 2009. Those were £2m from the sale of Youniss Kaboul to Spurs in January 2010 and a payment from CSI during their short ownership of the club. It was a failure to pay their second instalment of the interest on the loan that triggered their administration. Presumably Mr Andronikou also meant that the club will not realise the full amount that Mr Chainrai is owed if sold out of administration.

David Lampitt said the decision for administration had been made to protect the club and its creditors, by the directors of PFC under advice. As the alternative was a winding up petition he may have a point. If Mr Chainrai is unprepared to come up with funding for the club there really is no alternative. But one is tempted to feel that all this is just a matter of semantics. Whether the lack of player sales or the broken promise has led Pompey to administration the question is still, ‘what happens next?’

The suspicion is that the real issue lies in who controls the club’s finances. The club now has a week’s grace until the court hears the case for administration. Not only will administration remove the winding up order but it will also free up the Club’s frozen bank account and allow the club to trade more freely. £1m of early parachute money from the Premier League came into the account at the end of last week. It holds about £2m in all – including the gate receipts from the Cup game at Chelsea and the fees from the transfer of Ryan Williams to Fulham. In that time, Mr Lampitt told Radio Solent, the club will be applying to a separate court for a ‘validation order but of very specific amount to cover specific payments that will make sure we can carry on trading through to the administration.’ Until Friday’s hearing the control of PFC’s bank accounts lies with the club’s Directors, after the hearing control passes from the Directors to the Administrator, Andronikou. One can only hope that the Directors spend the money wisely as funding the club through administration may be an issue.

There are some doubts as to whether the court will allow the club to go into administration so soon after the last time. There have as yet been no payments of the CVA and local businesses will take another heavy knock if that CVA is superceded by another at a lower rate. Much depends on how the club will be funded in administration and what will happen to the parachute payments that are due later in the season. If administration is granted there are also questions as to the appointment of Andronikou, who some see as having a serious conflict of interests in serving the creditor of CSI, Chainrai, and the creditors of PFC – all those included in the current CVA. Mr Andronikou has said that there will be no problems here that he can’t manage to overcome, although he does expect opposition from HMRC. Administration with Andronikou at the helm may not be a foregone conclusion.

Both Andronikou and Lampitt agree on one thing – there are buyers out there for the club, and it will be a far better proposition once in administration than it is now. In fact one almost suspects that might be the real reason for the move but Lampitt strongly denied the notion of a pre-pack administration when asked. Given the influence of Mr Chainrai, Pompey fans are well justified in feeling a sense of foreboding as to who will be favoured in the negotiations. News has emerged today that his last choice, Vladimir Antonov, lied to the Football League when taking the Owners and Directors’ Test. The League admitted in an email to a Pompey fan that,  “The steps taken by the Football League were based upon evidence of proof of funding, together with related business plans … It appears that the evidence was at best misleading and possibly fraudulent with the league not being alone in accepting this evidence.”

Meanwhile the team and the fans stand by and watch that same Football League remove 10 hard won points from their total. It does make you wonder if selling the players may have been a better idea, or why Mr Chainrai didn’t have a bit more honour in regard to his promises, or whether the Football League should take on itself more responsibility for letting Antonov take the club on in the first place. Or better still why no one has thought to talk to the fans over the last three years. There were fans that could have told the Football League what was wrong with Antonov long before they applied their ‘Test’. Fans with access to Google who could read what the FSA said about him. Lets be clear here – the fans aren’t whining about how ‘unlucky’ they have been in their owners. There was no luck in the demise of Antonov, only a certain inevitability. There is now an open letter to the Football League asking them to take a harder line with the club in order to force it to honour the commitments it made to creditors of the parent company that went bust in 2010. It has gathered over 500 signatures in 24 hours. Yet since November Pompey Supporters’ Trust have been waiting for a meeting with Mr Andronikou to discuss the possibility of the Community being involved in rescuing the club. They have been treated with some considerable disrespect in that time. In the end, fans can only hope that administration has brought that possibility just a little bit closer to being realised, because the way recent owners have treated them and the football club in recent times has been beyond contempt.

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    5 Comments

  1. Thanks for giving us a picture of how events have unfolded towards the current unpleasant situation at Fratton Park. We are optimistic for a better club once the mess has been sorted.

    David Murdoch Chester Nova Scotia CANADA

    David Murdoch

    February 15, 2012

  2. SJMaskell is the only person posting anywhere on these boards who seems to have a real grasp of the wider picture. Please keep posting and keep challenging the various parties who definitely have a miltitude of differing underlying agendas, very few of which benefit either PFC or the fans. Thank you. PUP

    Terry

    February 15, 2012

  3. Chandari has not put 18 million into the club for a start it was money that was awarded to him from a deal with Gydamaks dad in some deal , Sasha Gydamak walked away from the club Chandari took over , He is also charging the club interest on that as well until we get shot of this crook we will always be in trouble ,

    pompeypops

    February 16, 2012

  4. It seems madness to ask for Mr. Andronikou as administrator of PFC again. He will have a massive conflict of interest ensuring that Mr. Chainrai comes out of this OK but not caring a jot about PFC.

    In the past when he was administrator for PFC he could only find dubious buyers who were later discredited or stated that they did not want to own a football club.

    More recently he has been administrator for CSI for nearly three months without being able to find a buyer for any of their assets including PFC.

    Please preserve us from Mr. Andronikou or I fear the proud history of PFC will vanish forever.

    Joe Taylor - Vancouver, Canada

    February 16, 2012

  5. News is that there will be challenges to the administration and the administrator in court on Friday 17 February (10.30am) by PFC creditors, including Portsmouth City Council. See full story: http://fansonline.net/portsmouth/article.php?id=2080

    SJMaskell

    February 16, 2012

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