The Aldershot Phoenix Becomes Icarus As The AGM Cup Looms Again

By on May 3, 2013 in Finance, Non-League | 9 comments

In sport, as in so many other aspects of life, timing can be everything. It was, perhaps, somewhat unfortunate that Aldershot Town went into a final League Two match of the season that they needed to win against a Rotherham United side that needed a win to clinch an automatic promotion place themselves. As if that wasn’t enough, many of the other clubs involved in the desperate scramble to avoid relegation from the Football League were playing either each other or clubs whose players’ minds might already have been on their summer holidays, but a limp two-nil defeat meant that what they did or didn’t manage to achieve was irrelevant anyway. Twenty-one years after the formation of one of the original phoenix clubs, a lengthy upward ascent that started with the death of Aldershot FC, the second to last Football League club to go out of business during a season, in 1992, ended with relegation back into non-league football, which had previously been the club’s home until 2008.

In another display of less than serendipitous timing, it took only five days for this relegation in itself to be overshadowed by something altogether more troubling, as the club announced that it was to enter into administration. In the culmination of a situation that had been deteriorating for some time, the club recently confirmed that it had been unable to pay its players for the month of April, and this was followed by the resignation of the club’s former CEO, Andrew Mills, on Monday. Mills opted to go out with a bang rather than a whimper, and his parting comments confirmed rumours that have been circulating at The Recreation Ground for some time. Mills, who was only appointed into the position in January of this years, said that, “I find myself in the unenviable position of receiving no instruction advice or communication as to the alternative plan of Mr Machala,” and that, “I have absolutely no faith in his intentions to put the club’s future above that of his own personal investment.”

The “Mr Machala” referred to by Mills is Kris Machala, who took over as the majority shareholder of the club two years ago. Machala had previously claimed that he had been a reluctant investor in the club, but he had stayed around the club and in January announced that he was seeking outside investment in order to keep the Shots, who had seen declining fortunes on the pitch and declining attendances on the terraces, solvent. Machala stepped down as the club’s chairman towards the end of February but remained on the club’s board of directors, and two weeks ago he claimed to have reached an agreement with Shazid Azeem, who replaced him as chairman, who had previously been a non-executive director of the club. The transfer of the 51% share-holding that Machala held, however, was subject to receipt of proof of funds – unsurprisingly, considering its precarious immediate position – and an undertaking to secure its financial future. This, however, was not received and, as angry players took to social media to complain that they had not been paid for April, the club announced that, “An urgent meeting of the board of directors was convened this evening at which the company’s financial position was discussed.” Administration, through a Southampton-based company called Quantuma Restructuring, was confirmed just five days after the club’s relegation from the Football League.

As is so frequently the case in incidences such as these, however, entry into administration provokes more questions than it could ever hope to answer. Earlier this week, Graham Brookland, a man who has held just about every position that it is possible to hold behind the scenes at a football club and is now the honnorary president of the club’s Supporters Trust, posted a withering message on its website earlier this week which hinted at Machala being far from blameless in this mess. Brookland states that at a recent meeting of shareholders to discuss the club’s future, a request that all shareholders were notified of any further developments regarding new investment, “our Majority Shareholder, Kris Machala, opposed the motion and, after an unnecessary and embarrassing exchange of views that entered the public domain, he informed the floor that there was a potential investor in the wings and that he would be in a position to conclude matters and inform the Board the following Monday.” However, he then continued to say that:

At the meeting Kris publicly confirmed that he would take responsibility of the finances in the short and long term, if required, whilst he concluded negotiations with a proposed investor. I sent the Press Statement at just gone 1am on Friday morning explaining the situation and the guarantees Kris made. At 2.31am Kris sent me an email denying he made those comments. This is extremely alarming considering that I drafted the statement in his presence alongside the other Directors. It set alarm bells to me because it is not the first time I have had such dealings with Kris.

When we consider the above, the fact that the club was placed into administration by the estate of a former chairman of the club – which is presumably still a creditor of the club – becomes somewhat less surprising. Much of this, however, is little more conjecture. The only thing we can say for sure is that Machala is no longer in control of the club – the administrator will be running the show until a CVA can be agreed – and that there can be little doubt that there are still good people involved at Aldershot Town who went through this all in 1992. The other piece of good news for supporters is that the club doesn’t own its home, The Recreation Ground. It is owned by Rushmoor Borough Council, and as such cannot be sold as an asset of the club in order to rescue it. Even if the worst came to the worst, football would continue at some point in Aldershot, somehow.

For now, however, it might not even necessarily be wise to suggest that anybody knows for certain in which division the club would start next season, even if it were to be saved. The Football Conference has harsh rules on insolvency, and member clubs that enter into administration during the season are required to pay their creditors in full or have agreed to a CVA that will pay them in full by the time of the league’s AGM, which is held in June or face expulsion from the league and a two division relegation. As a club relegated from the Football League, Aldershot Town are exempted from the absolute worst of this (relegation to the Premier Division of either the Southern or Isthmian leagues), as this excerpt from the Football Conference’s rules:

14.B.6 In the event of any Club entering the Competition from the Football League whilst subject to any Insolvency Event, then that Club shall be eligible for membership of the Competition and the provisions of Clause 14.B.1 will not apply to it until the date of the second AGM following its entry into the Competition.

Elsewhere in the rules, however, “The Competition” (as referred to above) is defined as, “The Football Conference comprising Conference Premier, Conference North and Conference South,” which might have been interpreted to mean that Aldershot could be demoted into the Conference South immediately upon their admittance into the league. This scenario – which could only be avoided if the club was to pay its creditors in full or agree a CVA to pay them in full in the next few weeks or so, which is highly unlikely if not impossible – would have provided a reprieve for Stockport County, who finished in fourth from bottom place in the Blue Square Bet Premier table at the end of last season, which means that supporters of that club are now also following this story with considerable interest. The most obvious recent parallel to this situation, however, that of Boston United (who were demoted upon relegation in 2007), came about prior to the introduction of the current rules. It is highly likely, if for no other reason that the current rules were put in place following the mildly chaotic events which followed the relegation of Chester City in 2009 and what followed that, that the club will play next season in the Conference Premier.

Aldershot Town may not be the last club to find themselves in this predicament over the next few weeks, with others, such as Ebbsfleet United, also rumoured to be teetering on the brink of insolvency. There is a best case scenario in this case, though, that those who will be left when the dust has settled at The Recreation Ground will be those that care about the long-term well-being of the club, and that its Supporters Trust can be rallied to give a viable alternative to the boardroom head-butting of Machala and Azeem. It has been proved this year in the very same county as Aldershot, at Portsmouth, that there is another way and Portsmouth supporters won their battle under circumstances that frequently seemed insurmountable. There are good people at Aldershot Town who are still very close to the heart of the club, and while it is disappointing to see it floundering just twenty-one years after its resurrection, there is still hope that this phoenix can recover its poise.

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    9 Comments

  1. Aldershot were doomed before they travelled to Rotherham.

    Even if they had won there they depended on some rather unlikely results elsewhere too.

    Nathan

    May 3, 2013

  2. Portsmouth and its trust have “proved” nothing yet.

    The blame for Aldershot’s current status lies squarely with the same good people who reformed the club but then allowed it to become the play-thing of the usual clueless and dishonest local “businessmen”.

    Nathan

    May 3, 2013

  3. As a Stockport County supporter I feel for you guys and no County fan I have spoken to would want a reprieve at the cost of another club that has been treated the way we were. So no we don’t want Aldershot to drop another division. Good Luck.

    Andy

    May 3, 2013

  4. Is it me or are a lot of ‘football clubs’ increasingly vehicles for fraud?

    mr x

    May 4, 2013

  5. And again clubs who have kept their books balanced such as Bishop’s Stortford will suffer for the vanity of others. If Aldershot go into administration then for the third year running (Rushden, Kettering and now Aldershot) Stortford (within 2 miles of Londons third Airport) will be forced to play in the North.

    Walden Blue

    May 4, 2013

  6. Whichever way this pans out, I wish the best of luck to the fans of Aldershot’s football club.

    SW19 Womble

    May 5, 2013

  7. Mr X – as a result of the top clubs hoarding the gold that comes into the game, keeping it away from those at the foundations that their competition depends on,
    the financial model of lower league football is unsustainable in it’s own right. Most clubs need the help of a benefactor. The small number of these benefactors can mean clubs get desperate, and allow people into positions of power who frankly don’t deserve to be there.

    David Stringer

    May 5, 2013

  8. Walden, perhaps it’s easier to “keep the books balanced” when you run illegal airport car parks?

    Nathan

    May 8, 2013

  9. Nathan – that was history, and we paid all the fines anyhow.

    Walden Blue

    May 8, 2013

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