Pompey – One Step From Home

By on Nov 16, 2012 in Finance, Latest | 6 comments

Thursday 15 November 2012. Mark the date. On this day Pompey’s administrators PKF announced they had reached a conditional agreement to sell the club to the Pompey Supporters Trust. The completed deal will be unique in English football.  Its success will be a landmark victory for fan power, an endorsement of the supporters trust movement and a direct challenge to those responsible for the ills of modern football.

It has been a hard won battle. A year ago, the collapse of Bank Snoras and subsequent warrant for the arrest of Pompey owner Vladimir Antonov for fraud set off a chain of events that ended with Pompey in administration and back in the control of Portpin. Portpin who had already put the club in administration in 2010. Reporting these events on 200% at the time I said, ‘This is our club and there is a ‘diabolical collection of demons’ determined to make that clear to anyone who threatens its existence.’

The ‘diabolical demons’ are now one step away from winning the day.

The Trust has issued its community share prospectus which gives greater detail of the bid, calling in the 2,000 £1000 pledges made already by fans and opening the offer to any one who cares to contribute more. Fans can pledge as individuals or syndicates, the current number of pledges representing a far larger number of fans than 2,000 as many clubs, families, websites etc have formed syndicates. It is a mammoth effort so far but hasn’t stopped there.

The Trust’s community share initiative represents the majority of the bid, with the money raised going to the running costs of the club along with other income streams, including gate money, parachute payments, TV money and merchandising as well as other income. In effect, the balance of power will be determined by the number of community shares held by Trust members. It is intended that this element of the bid will ultimately represent at least 51% of the shareholding in the club. In effect, the balance of power will be determined by the number of community shares held by Trust members. Initially the Trust will have three representatives on the future Board of the club.

The actual purchase of the club is funded by ordinary shares bought by Pompey fans who are able to put in considerably more than £1,000. They form two groups in partnership with the Trust. Those who have put in five figure sums will have one representative on the Board, those who have put in six figure sums will have the chair and two other representatives on the Board. Money from these individuals is already in escrow and will form the money for the purchase of the club, along with input from the bid’s business partner, local property developer Stuart Robinson.

The deal with Robinson has been carefully thought out as the area of land around the club – long held by Sacha Gaydamak as ransome in his dispute with Portpin – will be acquired by him with a view to development in parallel with the development of the club. Portsmouth City Council have long made it a condition of planning permission for any such development being dependent on the continued involvement of the Football Club in those plans. To this end, Robinson will also purchase Fratton Park, lease it back to the Trust on a favourable rent with a view to the club purchasing the ground back within five years. This deal has freed up the Trust’s capital for the running of the club with the aim of turning a profit by the end of year four.

The balance of the club’s board will be made up of the future CEO and a representative from the Trust’s solicitors, Verisona.

The deal is fully funded, approved by PKF and matches that recently ‘suspended’ by Portpin in every way. All those involved, including the entire Trust Board, are ‘fit and proper’ by the standards imposed by the Football League’s Owners and Directors Test.

The final step, the conditional element of the deal, involves Portpin, of course. Portpin are not ‘fit and proper.’ They have been informed by the Football League that they have failed to satisfy the conditions of the Owners and Directors Test. As a result Portpin ‘suspended’ their bid to own the club, no doubt because that bid could not succeed due to this failure. However, Chainrai denies that this is the case and continues to maintain that his bid is the best for the club. He has turned down the Trust bid’s offer of £2.75m for the charge he holds over Fratton Park – a charge he has long maintained is worth £18m. PKF now have to ask the court’s permission to remove the charge and sell the ground at a proper market value.

The Trust is confident of winning in court, with the weight of independent evidence backing their valuation of the ground’s worth. Money is available in a fighting fund for the legal challenge to Chainrai, if needed. However, should the valuation of the court be higher than the Trust is willing to pay then they are prepared to walk away from the deal. The only result in this case will be the liquidation of the club. That Chainrai is prepared to push it to this conclusion makes his motives clear. Liquidation is now a desirable outcome for him in cash terms. The interests of the club come nowhere in his calculations.

That Pompey Trust has got to this point has taken a considerable amount of hard bargaining. But it has to be acknowledged that they were positioned to be able to bargain by the work of the fans themselves. Results of investigations into Portpin’s dealings over the last three years have been serially published on the pompey-fans website. Despite Portpin’s claims that these revelations are ‘unfounded, unsubstantiated and defamatory’ they have made no attempt to substantiate this statement themselves, despite the material being used in a number of mainstream news articles. The blogs themselves have been widely read in Football and legal circles and are thought to have influenced decisions on a number of levels – not least at the Football League. There is more to come from these investigations should the need arise.

Indeed it would already appear Portpin have much more to worry about than the redemption of their charge. At a recent hearing of the Solicitors’ Disciplinary Tribunal evidence was given as to the way in which Portpin’s solicitor, Mark Jacob and the firm of Fuglers, were complicit in breaches of a solicitor’s undertaking in their conduct of affairs at Pompey in 2009 – 10. In addition, liquidators of PCFC Ltd (the company running Pompey that Portpin put into administration in Feb 2010), Baker Tilly, have issued notices asking for the return of monies removed from the club in contravention of section 127 of the insolvency act. It is very likely Portpin have received one of those letters. There is also a lot more to come from official investigations into the way Portpin have been involved with Pompey over the last three years.

As to the fans, they know they have much to put right from Pompey’s past. Their one aim in taking the club over is to move forward in a  realistic fashion, a way that makes sure the club is never in this position again. They can no longer afford to put their faith in a ‘benevolent owner’ bankrolling the business but need to ensure a sustainable, self sufficient future – for the sake of all concerned. It is a difficult fight in the prevailing financial climate of football. But the diabolical demons that are Pompey fans have defeated the attempts of Portpin to control the club. The rest of football may just have to keep one eye permanently directed over its shoulder. The imminent success of Pompey Supporters Trust clearly carries with it the message that fans can stem the tide of financial failure endemic in English football.

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

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    6 Comments

  1. I wish you and the Trust all the very best. It will not be an easy path but it is the right one. In Wales Trust involvement at Swansea, Merthyr and Wrexham has been very positive.

    Paul

    November 16, 2012

  2. These are momentous times for Pompey, with wider implications for many other clubs.

    steve woodhead

    November 16, 2012

  3. <>

    Really? Like the fact that Portsmouth cheated their way to an FA Cup and survival in the Premier League for several seasons?

    Because if you’re serious about putting that right, you will hand back the FA Cup plus tens of millions in TV revenue to the clubs relegated at Portsmouth’s expense during that period.

    I won’t hold my breath.

    As to this notion that Portsmouth are some kind of standard bearer for a new model of football club, don’t make me laugh. You happily supported what was the worst example of football cheating/mismanagement in living memory. And now you expect us to believe you when you say you’ve found the promised land?

    Frank Heaven

    November 17, 2012

  4. Frank, you should probably pay more attention. If by “cheating” you mean paying inflated wages, that charge can be levelled at most all of the Premier League clubs. Name a single club in the top divisions where the fans would rail in protest at an owner bankrolling the signing of big name players and a chase for glory.

    Second, I doubt Portsmouth fans feel they have found the “promised land”, they have a decade of recovery and rebuilding ahead of them.

    Mark

    November 17, 2012

  5. Nice article. It’s a shame though that to see that there still those who chose pedal the “cheats” accusation rather than paying any attention to the content of the article.

    Pompey have been held (quite rightly) as a prime example of how a club shouldn’t be run owing to the two administrations, and the various owners that have run the club in recent years. Even during the “good times”, questions were being asked even then about as to where the money was coming from. Ultimately though with outside owners, fans have little control over boardroom matters and we had no more control over the money being spent than we did once the money ran out and the club was spiralling towards financial disaster.

    What the whole Pompey affair highlighted for me is exactly what bankrolling a football club entails. Money put in is purely investment, not benevolence, and the one thing that seems certain is that an owner will eventually want either a return on his investment or his money back. Many clubs seem to still be run in the same manner as Pompey were back in the days of the cup win, and are maybe one unforeseen circumstance away from suffering a similar fate.

    Pompey fans aren’t proud of the mess the club is in, or the debt that has been built up by previous regimes, but the point is that at least they are now fighting back. We can’t redress the past, but can make sure the future takes a different course, and ensure that we do have control over what happens in the boardroom. As the article points out about the Trust “their one aim in taking the club over is to move forward in a realistic fashion, a way that makes sure the club is never in this position again”. By this, it means that going forward, the club will be run on a basis by which it operates within its means, spending only what it brings in from revenue, and paying its debts. And I’m sure anyone who still thinks we are cheats would prefer that option to us building up another debt mountain. Then again perhaps not, for what will they find to moan about then…?

    Matthew

    November 19, 2012

  6. How stupid can some people be?

    So Pompey cheated?

    We employed players which our then owner said we could afford until he suddenly decided he wanted his money back (mainly due to the disastrous financial economy at the time).

    Theoretically this could happen to any club which spends beyond its means, if there sugar daddy decided to walk away.

    Chelsea, Liverpool & City to name but a few couldn’t sustain their wage bill if their respective owners pulled the plug overnight, which is what happened at Pompey.

    Look at Bolton, £136m in the red but the debt is swallowed up by the owner. Did they cheat their way to mid-table obscurity?

    The bigger picture is that the game in this country is in a dire state and Financial Fair Play can’t come soon enough.

    Credit is due to clubs like Arsenal who make profit and are relatively reserved in their transfer dealings. Everton also do well on a relative shoestring.

    Our club has had it’s name dragged through the mud and it’s the supporters who are left to pick up the pieces and try and restore some pride whilst fans if other clubs continually have a dig. Their venom should be aimed at all the ******* that have used our club as a pawn over the years, not the fans who had zero say.

    It’s time ALL of us reclaimed our game and I think Community owned clubs are the future.

    Adam

    November 20, 2012

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  1. Pompey: The £800,000 question | Twohundredpercent - [...] the Trust became the preferred bidder of the club, after the previous preferred bidders Portpin failed to satisfy the …

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