Chester City Football Club: The Death Rattle (Part 4)

Chester City Football Club: The Death Rattle (Part 4)

By on Nov 23, 2009 in Finance, Latest | 2 comments

As we mentioned on here a couple of weeks ago, it took the Insolvency Service to do what the Football League, the Football Conference and the Football Association had failed to do in spite of numerous opportunities and declare Stephen Vaughan an unfit and improper person to run a football club. Vaughan’s eleven year long ban from company directorship starts on the 25th of November and attention now turns to what will happen to his shareholding in the club. He has three weeks from the 25th to sell or otherwise offload his shareholding in the club and if current rumours are to be believed, there are unlikely to many buyers at the price that he is currently quoting. Paul Baker (who has had his own troubles at AFC Bournemouth and resigned from Dean Court during the summer) is a Chester City supporter and expressed an interest in the club, but Vaughan advised him that the asking price would be £750,000 and that, when he requested the full state of the club’s current financial position, “there was no need for us to know this information”.

In an interview on Chester’s Dee 106.3 radio station on Saturday, though, Vaughan tried some verbal sleight of hand. When questioned about the ownership of the club, he said, “The ownership of this football club remains in the name of the Vaughan family. Stephen Vaughan Junior, as we all know, is a director of Chester City Football Club and has been from the day that the club was purchased back from the administrator… he has one hundred per cent control of the club and the day to day running of this football club from the twenty-fifth of November will not involve Stephen Vaughan Senior. That has always been the case. There has never been the transfer that has been alleged in the papers. That has always been the case from day one. Chester City Football Club 2004 – Newco – it’s always been the case that Stephen Vaughan Junior is the director and one hundred per cent owner”.

This should probably be compared with an interview that Vaughan gave with BBC Radio Merseyside just over a month ago. In this interview, he said, “I stepped away as chairman, as you know, over twelve months ago, purchased the club back, I’m the one hundred per cent owner, I’m here to set the facts straight”. Of course, what Vaughan is talking about here is effectively two different entities – Chester City Football Club and Chester City Football Club (2004) Ltd. In the first interview, he is talking about control of the holding company, Chester City Football Club (2004) Ltd. With the club having exited adminsitration without having agreed a CVA, the club were in contravention of the Football Conference’s rule 2.7 on the transfer of ownership of a club from one party to another. As a quick reminder, here it is in full:

2.7 In the event that any Club which is an unincorporated association resolves to transfer its membership of the Competition to a company or in the event that a Club which is a company resolves to transfer its membership to a different company the Board will use the following minimum criteria in deciding whether to approve that transfer:2.7.1 The shareholders or members of the Club have voted to agree the transfer of the Club’s membership to the new entity

2.7.2 All Football Creditors in the Club must be satisfied in full or transferred (with the creditors’ consent) to the new entity, and evidenced as such.

2.7.3 All other creditors in the Club must be satisfied and evidenced as such.

2.7.4 The proposed new entity has provided financial forecasts showing its ability to fund the Club for the next 12 months or to the end of the Playing Season following transfer (whichever is the longer) and that evidence of funding sources has been provided.

Chester started the new season with a twenty-five point deduction after a short delay and some brinkmanship involving the FA, the Football Conference and the Football League. It was only through involvement in carousel fraud that the Insolvency Service became involved in his affairs, and this is where his eleven year long disqualification. He has to give up any shareholding in any companies that he owns within three weeks of the 25th of November, but what companies does he have shares in and the question of whether he can be  “in any way controlling a company” is the chairman/major shareholder (etc) is his son is one that really needs to be left for the Insolvency Service, or perhaps the Serious Fraud Office.

Even more pressing than resolving this matter by the middle of December is the small matter of monies owed to the Professional Footballers’ Association, Wrexham and Vauxhall Motors FC, which have to be paid in full by the 30th November. If they’re not, the club faces expulsion from the Football Conference, which will obviously render any further issues relating to his ownership of the club essentially irrelevant. Events at The Deva Stadium have now reached such farcical proportions that the only thing that we can ho hope for is the swift and painless death of Chester City Football Club. Keeping it alive for this long has been a ridiculous failure on the part of the game’s authorities. They have missed the chance to end this ludicrous situation on several occasions, though, and it is entirely plausible that they will turn a blind eye and decide that, no, there is absolutely no link whatsoever between Stephen Vaughan Senior, his son and the myriad of shell companies, “owners”, “shareholders”, “benefactors”, “investors” and goodness knows who or what else that passes for the “administration” of Chester City Football Club.

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  1. With regards to a swift and painless death, having made the decision to allow Chester to participate this season, the last thing they are likely to do is then prematurely open the trapdoor. Also they will be keen to avoid a situation similar to that of Spennymoor in the Unibond in 2004/05 which resulted in claims and counter claims from clubs who’s position would have been higher had records been expunged.

    Sean of the Shed

    November 24, 2009

  2. The other clubs will not vote to expunge Chester, it would be like turkeys voting for a second Christmas. The club seems to limp on and on, and for me the biggest question must remain what Vaughans motive is for keeping the Club?

    He is self admittedly losing money every week (or, more likely, accruing more creditors week on week), his two sons are no longer playing for the Club, and he is clearly not welcomed by the supporters.

    Is he keeping it for vanity reasons, in which case sooner or later the club will end up in liquidation?

    Is he keeping it because it is not his to sell? Whose is it then?

    Is he keeping it because there are holes in the accounts?

    As you can probably tell, the whole thing just doesn’t seem to end, and the longer it drags on, the less the likelihood of any resurrection or phoenix club.

    Maybe that is the reason?

    Martyn Blue

    November 24, 2009

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