Shots In The Dark: Aldershot Town’s Summer Hangover

By on Jun 17, 2013 in Finance, Latest | 2 comments

Relegation from the Football League at the end of last season was a bitter blow for the supporters of Aldershot Town Football Club, but it hasn’t taken long for it to start to feel as if even this was only the beginning of the the club’s problems. It took less than five days from this demotion being confirmed for the club to placed into administration, but the release of the administrator’s report at the end of last week by Quantuma Restructuring, the company appointed by club director Michael McGinty to manage the administration, have shown the financial condition of the club to be worse than had been widely anticipated prior to their release. It had been widely suggested that, give or take a few thousand pounds either way, Aldershot were around £1m in debt, but the accounts have confirmed that the club’s debt is actually £1.4m – considerably higher than anybody had previously anticipated.

At higher levels of the game, such figures wouldn’t cause too many people to raise their eyebrows. Consider, for example, the precipitous rate at which the debts of Portsmouth Football Club rose when the club entered into administration. For a club entering the Football Conference, however, the position is somewhat different on account of the highly stringent rules that the Conference places on its member clubs. There is no quibbling over pennies in the pound from a CVA in this league. The rules are fairly clear. Any club entering into administration but reach agreement to pay all of its creditors in full within three years, and a failure to do so means further demotion if this isn’t achieved. All of this means that, somehow or other, £1.4m is going to have to be found from somewhere if the club is to be saved playing at the level at which it will start next season.

The figures in the accounts document make for grim, if unsurprising, reading. As might have been expected, the biggest single group of creditors is former directors of the club, who are owed around £600,000, while former players’ claims amount to £325,000. The biggest single creditor is former chairman Shahid Azeem, who put £200,000 into the club last season, while Kris Machala, who took over as the majority shareholder of the club two years ago and whose dispute with Azeem over a transfer in ownership of the club has come to epitomise the behind the scenes wranglings at the club over the course of last season season, put in a little over half a million pounds by way of share purchases (which are now largely worthless due to subsequent events) and a further £160,000 in loans to the club.

At the forefront of the battle to save the club is its supporters trust, who have launched a Community Ownership Scheme with the assistance of Supporters Direct. More than seven hundred supporters pledged their support for the scheme, which planned to raise £500,000 towards saving the club, and this has resulted in the release of a pre-share offer last week. However, as this offer itself states, “We will not launch a full Community Share Offer to supporters and the Aldershot community without knowing exactly what we are buying, that we have sufficient funds plus we can ensure a financially viable and sustainable football club.” The release of the club’s accounts gives a fuller picture of exactly what it is that such an offer would be buying, and the question now, perhaps, is one of whether saving the club in its current form is something that can realistically be done.

The club has already lost most of its players for the start of next season and will be beginning life back in the Conference National on minus ten points as a result of entering into administration in the first place. As such, there is a distinct possibility that the club might spend next season battling against a second successive relegation, which would likely have a further negative effect on its financial position, and further relegation to the Conference South would make the club’s position even more tenuous. The supporters trust has a Special General Meeting planned for the twenty-seventh of June. It would be unsurprising to see this subject hogging the limelight at this event, with supporters’ concerns over whether community a buy-out may even still be feasible starting to grow. Whether a private consortium of private individuals would step in and pay this sort of money to rescue a club with no significant assets and which is unlikely to make a quick return to the Football League is not known, but it is considered by many to be unlikely.

In the case of Aldershot Town Football Club, as at so many other clubs who find themselves in this sort of position, the release of further documentation relating to the club’s financial position only adds to the sens of uncertainty that hangs over it. There are plenty of other factors that have to be weighed up with regard to any offer that is made to purchase the club. Who will pay the administrators’ fees? Can the club operate competitively in the Conference National – which remains largely a full-time division – on a break-even level with creditors having to be paid out in full? None of this is to suggest that supporters should merely give up the ghost, of course. There have been plenty of examples in the recent past of clubs that have managed to raise significant amounts of money, including FC United of Manchester, where a community share order was successful enough to prove to be the driving force behind the construction of the club’s new ground, Wrexham, where supporters rallied together to save the club when it seemed as if extinction was inevitable, and Portsmouth, where a seemingly hopeless cause was rescued by a well-organised supporters trust.

Finally, though, it may be worth asking questions of the Football Conference’s stringent rules on insolvency. We fully support the theory that football clubs should repay their creditors in full, but the Conference’s current rules make the community ownership of football clubs seem extremely difficult to attain. If we work to the assumption that the community ownership of football clubs is a good thing, and the evidence from elsewhere certainly confirms that it is, then we might assume that the Football Conference should be supporting its spread where possible. We do not believe that the Football Conference is actively seeking to make the community ownership of its clubs more difficult, but the current rules certainly seem likely to have that effect.

As things stand, if clubs do end up heavily in debt, the only escape route from administration may be the munificence of individuals with deep pockets, and this reliance on the goodwill of individuals doesn’t feel like very solid ground for the wellbeing of lower division football clubs. There would be nothing to prevent the Football Conference from amending its rulebooks to exempt organisations such as supporters trusts from the harsher extremes of their rules regarding insolvency. Such a change to the rules might even allow for greater stability of its member clubs in the future, but for now the future remains uncertain for Aldershot Town Football Club, and we will have to see how this phoenix that had its wings clipped will get to fly again.

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    2 Comments

  1. The rules are always skewed in favour of the ruling elite: i.e. businessmen.

    I can’t see the Conference voting to give those pesky supporters a(n un)fair advantage.

    Best way to do it is to start again, like Wimbledon, Chester and Alder….. oh, wait! :p

    SW19 Womble

    June 17, 2013

  2. “There would be nothing to prevent the Football Conference from amending its rulebooks to exempt organisations such as supporters trusts from the harsher extremes of their rules regarding insolvency.”

    That is hilarious. Nothing to prevent it, except the dinosaur owners and chairmen who still dominate football.

    It is probably impossible to fix the Division 4 to division 5 deflationary spiral and administration trap until the two similar traps (Prem to Div 2, Div 2 to Div 3) are fixed at the higher levels.

    Nathan

    June 19, 2013

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