The Coventry City Debacle Makes It To Parliament
At lunchtime today the supporters of Coventry City Football Club will march again. Over the last two or three weeks or so, the penny has started to drop that this city is set to have its football club ripped from it, stolen by the sleight of hand of its owners whilst those who are charged with the job of regulating the game have stood by impotently, full of press releases that express “regret” whilst doing nothing to impose their will over the small matter of keeping a football club in its home town. As time progresses, however, it is starting to feel as if the future is nowhere near the done deal that the club’s owners would like everybody to believe. There is still something worth fighting for at Coventry City – for now, at least.
With just over two weeks left to go before the start of the new season in the Football League, season tickets went on sale for “home” matches to be played in Northampton this week, and the fact that they have been priced from just £184 – for a seat in the family area at Sixfields – may speak volumes about the volume that the club is expecting to sell. There is open revolt in the Coventry area at the moment, and whilst the number of people who will make that tortuous seventy mile round trip every other match for what are laughably described as “home” matches isn’t known, it certainly isn’t expected to be high. This, coupled with the low cost of those season tickets in the first place, can only have one effect on the club’s ability to keep itself financially afloat over the coming months.
It seems that everybody has done – or is doing – everything that they can in order to keep the club in Coventry. ACL, the stadium owners, had already agreed for the club to continue to play at The Ricoh Arena for as long as it remained in administration, and then, last week, the club’s former vice-chairman Gary Hoffman offered to pay the rent for the use of the stadium for the next three seasons and also to underwrite any compensation that would have to be paid if the club was to pull out of its agreement to ground-share with Northampton Town. SISU rejected the offer, a decision which, we might reflect, can only be interpreted as one which speaks volumes about their intentions for the club. If the matter of the rent to play at The Ricoh Arena was the real root cause of where the club finds itself today, then surely an offer to pay rent-free there for the next three seasons would be ideal for all concerned, wouldn’t it? Apparently not.
This week, further attempts to get the club back to the city of Coventry were rebuffed by the owners. Peter Knatchbull-Hugessen, a director of Ricoh Arena stadium management company ACL, told BBC Coventry & Warwickshire that he had arranged for the Football League to mediate on fresh discussions to ensure that the club stays in the city of Coventry, but that these were declined by SISU unless ACL go ahead and sign the CVA agreement which would push through the sale of the club to the SISU-owned Otium Entertainment Group. Considering that agreement to the CVA and completion of the sale of the club would end any chances of an investigation into the murkier waters of the club’s accounts in the recent past, it is hardly surprising that a growing number of Coventry supporters are now pleading with ACL to not sign the CVA, regardless of what the consequences for the club might be.
Considering these developments – an offer to use The Ricoh Arena rent-free and an attempt on the part of the owners of the stadium to mediate towards a return, the Football League, whose reputation as an organisation with any integrity whatsoever is already heading rapidly towards the gutter over this matter, need to explain now how they could have arrived at the conclusion that it was “impossible” for the club to play at The Ricoh Arena next season. If they are unable or unwilling to do so, then the Football Association, who have been utterly silent on this matter in recent months, need to intervene to assess whether they are actually up to the task of acting as a regulator in the first place. And while this might sound like hyperbole, this subject has now reached the point at which questions are being raised on the subject with government ministers in parliament, as could be seen from these exchanges on the floor of the House of Commons this week:
Bob Ainsworth (MP for Coventry North East): Does the Secretary of State have any plans to look at the Insolvency Act 1986? Hedge funds appear to have the ability to acquire companies, to empty them of their assets, to appoint administrators of their choosing and to proceed without fear of being pursued vigorously. That certainly seems to be what is happening at Coventry City football club. Will he look at the situation and the framework of the law?
Vince Cable (Secretary of State for Business, Innovations & Skills): Yes, we are doing just that. I spoke on Monday about that question in the general context of trusted business. We are, indeed, looking at the insolvency provisions. We are looking at insolvency practitioners’ fees, at some of the potential conflicts of interest that arise in that industry and at the regulatory framework.
Mr Jim Cunningham (MP for Coventry South): Will the Secretary of State get together with the Secretary of State for Culture, Media and Sport to have a look at the way in which the Football League applies its regulations to private ownership of football clubs, because there is a diabolical mess at Coventry at the moment?
Vince Cable: Coventry seems to have some problem in that area. I come from the city of York, which went through this misery, as many towns have done in the English league. I can certainly have a look at that; it is not immediately clear to me where I fit into the picture, but I am interested in football and want to see it healthy.
Meanwhile, Bob Ainsworth has being continuing his campaign for answers over events of the last few months with fresh series of Early Day Motions in the House of Commons, the first of which read:
This house notes that Companies House has written to the directors of Coventry City Football Club (Holdings) Ltd warning them that they may face criminal proceedings if their overdue accounts are not filed; that in the accounts for year ending May 31, 2011 of CCFC Ltd, the company now in administration, 108 players, football staff and employees were registered; that the joint administrator Mr Appleton has been asked to check whether these accounts were signed off as correct by the company auditors BDO and claims he has been unable to get an answer, believes that the issue of when and how assets assigned to CCFC Ltd were transferred elsewhere goes to the heart of whether there has been a conspiracy to defraud and calls upon BDO to say whether they have been asked this question, if so when and whether they have provided an answer and whether indeed they signed off the accounts; calls upon the club’s directors to give a full explanation of when and how those assets were moved; and calls upon them to file the long overdue company accounts 2012 for CCFC (Holdings) without further delay.
A further two have since raised questions about the company structure of the club and the role of company secretary Adam Bradley, whilst also asking that the government reviews the law in relation to the role company secretaries. Appleton’s response has been as bullish as we have come to expect in recent months:
Unfortunately, this particular EDM is littered with factual inaccuracies and betrays a complete and comprehensive misunderstanding of the facts and the process. To state that I have not used the powers vested in me by the Insolvency Act is simply wrong. I have used those powers available to gain answers and information, and I have used those same powers against several of the parties involved in the process. Indeed, it is my use of those powers that has resulted in the delivery of a significant amount of information which is assisting me going forward.
It would perhaps be appropriate to remind Mr Ainsworth that all the main bidders have acknowledged that myself and my team have carried out an open and transparent sale process. We have sold the right, title and interest of the various assets within Limited having made extensive enquiries into those assets. This has been carried out within a time-frame which will allow the football club to meet its obligations under the rules of the Football League and Football Association.
Otium Entertainment’s bid offered the deal that allowed, in our opinion, for the purpose of the Administration to be achieved and gave the greatest return to creditors. Put simply, it was the best offer received. Obviously, we have liaised closely with the Football League who have been happy with the way the process has been carried out.
Where Mr Ainsworth seems most confused is between the sale of the business and assets and my ongoing investigation. The investigation is a totally separate issue and could still take some time to finalise. However, I’m happy to report that our thorough and deep-rooted investigation – as demanded by the main creditors, which would, in any event, be carried out – is now making excellent progress.
As I have stated before, my reporting of this contentious matter will be done via the provisions of the Insolvency Act 1986 and not through the media. We are in constant dialogue with all the stakeholders and, as I’m sure Mr Ainsworth would acknowledge, have written to him directly answering any questions he has raised, as well as having met with him personally. Perhaps he would have been better served in requesting another meeting with me rather than publicly betraying his lack of understanding of the process.
The problem that Appleton has is that practically nobody believes him any more. Nobody really believes that he is an independent administrator, and nobody believes that his decision to make the Otium Entertainment Group was a decision made that will best secure the future of the club. Whether he is technically or even broadly right has become an irrelevance in some respects. His appointment as Joint Administrator of this car crash of a football club has resulted in his name being associated with the phrase “conspiracy to defraud” by a Member of Parliament on the floor of the House of Commons.
There are several actions which must now follow the events of the last few months with regard to the debacle that Coventry City Football Club has become. ACL must reject the CVA proposal put forward, if for no other reason than to keep alive the chance an independent and thorough investigation into what has been going on at the club in recent years. The Football League must be called to account over their role in facilitating a ground-share which they stated was agreed because there was “no prospect of an agreement being reached between Otium and ACL” (as per their statement made on the eighth of July) when ACL have explicitly offered talks mediated by the Football League, and made to explain what they are doing to enforce their comment that – as per the same statement – “I urge both Otium and ACL to continue to explore every possible opportunity to resolve this dispute.”
If they can’t get a satisfactory answer to the question of why Coventry City Football Club are moving to Northampton when it is perfectly evident that the club could continue to play in Coventry, the Football League should veto their earlier decision and tell SISU that they must return to The Ricoh Arena or face an investigation over whether the club should be allowed to participate in this season’s Football League competition. SISU have played – and been allowed to play – their games and issued their threats for far too long. It is about time somebody stood up to them and said “no more,” and the fact that other parties are starting to become dragged into this matter means that the likelihood of this happening can only increase. It’s not much, but it’s a start.
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