Who Values Pompey?

By on Oct 19, 2012 in Finance, Latest | 5 comments

The battle for the soul of football took one step in the right direction yesterday. The nomination of Pompey Supporters Trust as the preferred bidder for the club is a stunning volte-face in the negotiations to bring the club out of administration. It appears to have been done in the teeth of a vigorous campaign by three-time previous owner Portpin to gain control of the club for a fourth time. Portpin’s directors, Balram Chainrai and Levi Kushnir have been involved in the causes behind both of Pompey’s administrations in the last three years. They are seeking a fourth term of ownership in order to protect their financial involvement in the club.

The Supporters Trust have put together a community bid based on community shares and the involvement of local businessmen and wealthy Pompey fans. In the biggest fan community-based bid in the history of the Trust movement, the Trust have matched Portpin in every respect except one, the valuation of Fratton Park as an asset of the club.

Despite the preferred bidder status conferred on the Trust by the administrators, Portpin do not appear to be ready to concede gracefully. But then, there has been nothing graceful about their campaign preceding this announcement either. There really could be no more diametrically opposed opponents in the battle for ownership. Value, values and valuation have truly been the weapons of choice.

Portpin held the status of preferred bidder until a meeting with the Football League last Thursday. After that meeting the League expressed significant doubts about the suitability of Portpin as owners of the club. Much of this doubt is triggered by the ‘double jeopardy rule’ wherein directors or shadow directors responsible for two administrations of football clubs are barred from future ownership. There is significant evidence, raised by Pompey blogger Micah Hall, that suggests Portpin have been intimately involved in both of Pompey’s administrations. Portpin have described Hall’s findings as,  ‘unfounded, unsubstantiated and defamatory’. However, given the opportunity to respond, they failed to identify which parts of his revelations fit these descriptions, stating that they will not be taking legal action on the matter.

News of the ‘dissatisfaction’ of the Football League was reported by both the Guardian and the Telegraph on Friday (12 Oct). However, by Saturday (13 Oct)  Portpin were clearly in denial, according to the Mail.

In an interview with Pompey-fans.com on Sunday (14 Oct) Andrew Andronikou, administrator for CSI (Portsmouth’s parent company whose financial woes have caused the current events), confirmed Portpin’s stance. In a detailed and frank exchange Andronikou not only revealed the mechanism by which Portpin exercised control over Pompey in events leading up to administration in February 2012 but also confirmed Portpin’s stance that they would be the next owners of the club.

Andronikou appears to have little time for Supporters Trusts in general and fans who question his actions in particular (as Swindon Town’s Trust can verify). He said he had read Hall’s blogs. His opinion? ‘You’re just trying to put together a story that just doesn’t exist. It’s got no value, no value at all to anything.’ Value is an important issue to Andronikou, which you would expect given his role, but just what kind of value is he concerned with? His answers to Hall are illuminating:

‘What I’ve seen from the side-lines … which I’ve found quite amazing is actually the supporter groups … I just get the impression a lot of the supporter groups wanted the club to be relegated. Wanted it put into liquidation – to get rid of Portpin. Portpin aren’t the villains of the piece here.’ He continues, ‘And with all due respect while there lots of … reasons why the Trust should run a football club there’s lots of economic reasons why they shouldn’t. And the Trust have never been in a position to prove any funding at all whatsoever.’

It is interesting that Andronikou should be amazed at the hostility of fans’ reaction to Portpin considering the hostility Portpin’s PR has had towards the Trust since it became clear they were in direct opposition for ownership. The statement that that the Trust have been unable to prove funding has been a constant refrain, along with attempts to suggest in-fighting within the Trust and slurs cast on key players in the movement. This refrain has been carried by a number of characters who have appeared on Pompey Social Media over the last few weeks. Some new to the scene, some wishing to make a name for themselves by being oppositional and some, quite frankly, who have been totally off the wall. None in the class of Ken Bates at Leeds, but many unable to do more than chant the mantra of ‘no funding’ without any real arguments to back themselves. The Trust bid is fully funded and costed for the next 3 – 5 years. The money they plan to put into the club – much of it already in escrow – represents a fresh investment of equity to the tune of £4m. This contrasts vividly with Portpin’s bid which is funded by the transfer of up to £5m debt into the club post-administration.

To Andronikou, I suspect this difference is immaterial. The detail of Portpin’s plan to ‘save’ Pompey from administration back in January 2012 appears to have involved a way of raising cash in the short term but pushing heavier costs into the future long term. How else can you describe his championing of the deal offered by Ipswich Town to swap three of Pompey’s promising young players for two of Ipswich’s high earners plus cash? The cost of working capital does not seem to figure in his estimation of value.

Andronikou, by his own admission, is well known in football circles. He says he is a good friend of Milan Mandaric, known to football chairman ‘up and down the country’, claiming, ‘I’ve been involved with football for 25 years, I know my way around the market … and it was very embarrassing  … the chairmen I had to deal with about the players.’ Herein lies a key to Andronikou’s values in my opinion. He sees image as very important. He seemed angry at the ‘noise’ being created around the club by fans raising questions regarding Portpin’s probity. ‘We want the club to survive, to not have all this background noise around it because the Football League are actually sick to death of the club … What we are trying to do is avoid any bad vibes so that we can try to work our way around the 10 point deduction.’

Fans agree with the substance of that. As, I suspect, would the Football League – many sources verify the suggestion that they may be ‘sick to death’ of Pompey, and rightly so. The fans have had little to do with the reasons for that over the last 20 years. The values held by the Pompey Supporters Trust suggest that the way to avoid any bad vibes is neither by slurring the opposition and belittling those that ask questions of your motives nor by loading the club with debt to the point where it sinks into administration once again, but by operating a sustainable, long term plan that roots the club in its community. A community that Portpin’s past actions suggest they feel it unnecessary to address.

It is suspected that it was the very short term nature of Portpin’s plan that may have been its downfall too, with a certain level of suspicion that they had the intention of getting out of the business before their four year plan to pay the football creditors had come to fruition; as the Telegraph today (19 Oct) verifies, ‘The Daily Telegraph understands that Portpin had not only failed to persuade the League of its suitability as a bidder but had also been unable to strike a binding agreement with the football creditors.’

However, despite this set back, it seems Portpin chose to put a positive spin on the situation choosing to present their change of status in a light that suggests they are still in the running to acquire the club, claiming, ‘Our discussions remain productive and we have been given no reason to believe that there are any remaining obstacles to our bid.’ Someone really ought to send them a copy of today’s Telegraph.

When it comes down to the value placed on promises and statements from the two bidders one is less inclined to take account of  those  that seek to deny information that is staring them directly in the face. I suspect, for all their prevarication, the Football League have done the decent thing for the soul of football in this instance.

Which brings us to the end game. Which is all about valuation. The Pompey Trust do not expect their take-over of the club to flow easily to a conclusion. The bullish mood of the Portpin camp is underlined by Andronikou’s spirited defence of those who claim to have lost money in the current scenario – although the whole issue of the validity of the debenture they hold over Fratton Park is still open to question. As detailed in another of Hall’s blogs, there is a case to be made for Pompey owing nothing at all to Portpin, or at least some very stringent questions to be asked about the way matters have been arranged. The liquidation investigation of PCFC from the 2010 administration may well have some answers these.

The valuation of Fratton Park itself is key to the Trust’s take over. Currently the Trust have a valuation of a maximum of £2.75m, arrived at by more than one independent valuer. Portpin have a scribbled biro evaluation carried out by their Financial Director on administration in February 2012. It can be found in the list of assets in the CVA document from last May. This was first presented as £7.5m and then altered to read £10m. The gap in both credibility and value is something that Mr Andronikou and Pompey fans alike may also find ‘quite amazing’. It will be interesting to see what the courts make of it, should Portpin be bold enough to wish to take it that far. Ultimately I think the whole issue may depend on how much they value what little in the way of reputation they have left.

As to who values Pompey? Take a look at Fratton Park tomorrow afternoon. Listen. Football’s coming home to Pompey.

The Pompey Supporters’ Trust is still taking pledges for community shares. Details can be found here

You can follow SJ Maskell on Twitter by clicking here.

You can follow Twohundredpercent on Twitter by clicking here.

 

 

 

 

 

 

 

 

 

 

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    5 Comments

  1. Nice article and many thanks for your efforts in saving our great club, kind regards.

    Nigel Armour

    October 19, 2012

  2. …an excellent piece and thank you. Good luck for the future.Respect.

    peter thomas

    October 19, 2012

  3. See, I read it as “We’re fans so give us what we want, how we want, when we want or waaah waaah waaah”

    Whilst the trust are clearly “the good guys”, they need to tone down the hectoring a bit or lines lines between their approach and that of Portpin will become blurred.

    Mick

    October 20, 2012

  4. “And with all due respect while there lots of … reasons why the Trust should run a football club there’s lots of economic reasons why they shouldn’t”

    I wonder how much of Portsmouth fans’ and taxpayers money he is paying himself to come up with such hopeless and ignorant drivel?

    Nathan

    October 22, 2012

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