Farnborough FC Takes Just Six Years To Hit Administration Again

By on Apr 26, 2013 in Finance, Latest, Non-League | 2 comments

It was in March 1992 that Aldershot Football Club became the first Football League club since Accrington Stanley in 1962 to close its doors in the middle of a season, and now the man that was responsible for that is involved at another club that is set to enter into administration. He was known as Spencer Trethewy at the time and made enough headlines when, in 1990, he took control of the Shots at just nineteen years of age on the back of a £200,000 signed affidavit. However, his time on the board of directors at the club lasted just three months after it became apparent that he didn’t have the funds back up his bold claims, and two years later the club was dead. Trethewy would later be imprisoned for fraud, and in 1998 changed his name to Spencer Day before getting back involved in football at Chertsey Town, before going on to join Farnborough FC as their manager in November 2011. Eighteen months later, Farnborough themselves are in administration and facing the prospect of expulsion from the Football Conference.

The irony to be layered upon this is, of course, that football in Farnborough has been here before. Farnborough Town Football Club closed as recently as 2007 and Farnborough FC was its replacement, climbing as high as the Blue Square Bet South before this week’s news. This, however, has come at a cost. The club’s Cherrywood Road ground has undergone significant renovation and the club has racked up an astonishing – for this level of the game, at least – £2m of debt, of which just over £1m is made up of loans put into the club by its directors and £300,000 is unsecured debt. It has been strongly suggested that the club has found new investors that wish to put money into it, but that they do not wish to clear its historical debts, but a club statement issued yesterday stated that, “The Club view this as a positive move which will ensure a far greater result for all parties as opposed to any other action,” a statement which demonstrates hints at possibly the key to the disgruntlement that so many feel at football clubs that declare insolvency.

Much as the club may be trying to put a positive spin on such a dismal story, though, this isn’t just a matter of the club getting a ten point deduction, wiping its debts and carrying on. The Football Conference has strict rules in place with regard to insolvency events at its member clubs, far more strict than any other league, and its rules on the matter say the following:

14.B.1 In the event of a Club entering an Insolvency Event between the end of the AGM and start of the AGM immediately following thereafter (‘the next AGM’) then it shall automatically be relegated by one Step at the next AGM, unless one of the following requirements has been met, namely (i) Prior to the next AGM it has Paid in Full all its creditors (including but not limited to Football Creditors); or (ii) Prior to the next AGM it has Paid in Full its Football Creditors and entered a CVA to have Paid in Full its other creditors over an agreed period not extending more than three years following the date of the approval of the CVA. This sanction shall apply in addition to any Club being relegated pursuant to its playing record in the same period namely that in the event of the Club having already been relegated by one Step it shall be relegated two Steps.

In other words, the club has until the Football Conference’s AGM in June to pay its creditors in full or agree a CVA to pay them in full over three years or face expulsion and demotion back to either the Southern or Isthmian Football Leagues, although the Football Conference has, it has to be said, been known to make up the rules as it goes along. Day, meanwhile, has been pleading the club’s innocence with regard to the position in which it finds itself today:

In short, we can’t keep dealing with these historic debts coming out of the woodwork. It’s relentless and we need to draw a line under it now if we are to take this club forward. The figures may looking damning but only a small fraction of the £2m quoted is unsecured debt. I’m proud of the way we have run this club since I’ve been here, on very limited and restricted cash-flows, and we are not talking about big money debts here.

There is also something that leaves a bitter taste in the mouth about comments of this nature. Referring to “historic debts” when Farnborough Football Club was only founded in the summer of 2007 borders on being misleading, while there is little to be “proud of” in racking up a debt of this size, whether secured or unsecured, regardless of the limited playing budget that he has had at his disposal since he has been the manager of the club. In addition to this, there has clearly been serial maladministration at the club over the last couple of years. Last season, the club was docked five points for financial irregularities after failing to complete financial documentation correctly and bouncing a cheque to HMRC in November of the previous year, whilst at the start of this season it was docked a further four points after failing to secure the correct international clearance for former Congolese midfielder Medi Abalimba.

In a further twist of fate, all of this is happening at Farnborough whilst Aldershot Town, the club that replaced Aldershot FC in 1992 by the man now going under the name of Spencer Day, is suffering severe financial difficulties of its own. The club goes into its final match of the season at Rotherham United tomorrow afternoon all but mathematically relegated from the Football League, and the club’s supporters trust, The Shots Trust, issued a statement this week which stated that:

It is fair to say that the club is at a very critical time in its history and the events that will unfold in the next few days will very clearly shape the future direction of our club… the Trust President Graham Brookland has been involved in extensive efforts to assist with regards to the future operation of our football club. During this period Graham, and indeed the Trust Board have been made aware of matters that have provided extreme concern. There is no disputing that it has been a nightmare of a season but the main concern now is for the future of the club.

The histories of Aldershot Town and Farnborough FC have become entwined in recent years, both through personnel and coincidence. Both are clubs that were the result of failed clubs, and both ended up back at the level at which the original clubs were at the point at which they folded. If Aldershot can get the investment that they need to clear up any cash-flow problems that the club has at present, then there is no reason why it shouldn’t be able to continue at the level that it is currently at. Farnborough FC, however, is a subtly different matter. What is clear is that six years between formation and entering into administration is clearly an unacceptable state of affairs, and that the timbre of Spencer Day’s comments on the subject have thus far fallen somewhere between ill-advised and downright insulting to the club’s creditors, which will doubtlessly, as always seems to happen in these cases, include small businesses that can ill-afford to lose out on the money that a CVA will cost them. And perhaps the ultimate, uncomfortable question that need to be asked is this: will anybody learn anything from another points deduction and a one division demotion? There is, frankly, little evidence to suggest that they will.

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    2 Comments

  1. Farnborough’s debts are historic in the sense they were mainly incurred before Spencer Day had any involvement with Farnborough. The previous owner, Simon Hollis, went on a spending spree that turned out to be mostly unfunded and he was eventually declared bankrupt, along with his wife Amanda. Hollis’s motivation had been to get one over Woking, a club he had supported as a boy, who he thought had shafted his step-father. This motive coloured his decisions somewhat, resulting in some ridiculous outlays, particularly when it became clear that his main line of business, in property development, was imploding due to the recession, unwise investments and high-gearing.

    Day arrived at the club in 2011, initially as manager and later as owner, with his reputation seemingly restored after a successful and trouble-free spell at Chertsey Town. At the time he also had acquired significant personal wealth from his activities as managing partner of HH Finance. This changed in summer 2012 when he admitted in a fans; forum that a significant sum, rumoured to be £9M, was tied up in an offshore account which he could no longer access due to a dispute of some kind. Since then, outgoings have been stripped to the bone, with the intention of running the club on a break even basis whilst resolving his personal financial issue/seeking new investment/negotiating settlements with historic creditors. The signing of Reece Connolly, a reserve team striker at Aldershot, for £12,000 last autumn looks anomalous – however the club maintains that the fee was funded by a third-party potential investor with strict conditions attached. The idea was to help Reece make his mark in first team football and to sell him on at a profit.

    The pressure has built up since then, with revenues falling short of expectations leading to further cost cutting while potential investors are scared off by the historic debt. In the latter part of Simon Hollis’s ownership, after the resignation of his brother Neale Dent as Finance Director, the bookkeeping deteriorated to such an extent that the club has been unable to submit accounts to Companies House for that period. This is why Day, in public interviews, talks about the club being hit with new claims that he wasn’t aware of.

    The contrast with Aldershot is clear. The new Aldershot club was set up on a firm financial footing and their problems only started once they had moved up the leagues only to find their revenue streams were not increasing in line with expenses. John McGinty generously supported the Shots for a time, but since his death the problems have mounted.

    On the other hand, the new Farnborough club embarked on a risky and ambitious plan that worked for 18 months or so before the cracks started appearing. Latterly the club has been run much more sensibly, but it’s too late now. There is no realistic prospect of paying down the debts incurred so administration is the inevitable outcome.

    Nigel L

    April 27, 2013

  2. A correction – in your piece you say “The Football Conference has strict rules in place with regard to insolvency events at its member clubs, far more strict than any other league”.

    They’re not ‘far more strict than any other league’. The FA have Standardised Rules for the leagues in the National League System. The rule you quote is the same throughout the pyramid at steps 1 to 6.

    VP

    May 4, 2013

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