Chester City: The Norwegian Connection

Chester City: The Norwegian Connection

By on Feb 3, 2010 in Finance, Latest | 7 comments

Back at home, Chester City stumble from crisis to crisis. They have a home derby match against Wrexham in a couple of weeks, and tickets have now gone on sale. However, the capacity of The Deva Stadium has already been reduced by safety issues (an impressive dereliction of duty, considering that the ground is less than twenty years old) and the majority of Chester supporters seem likely to be boycotting this match, so how many tickets will be sold for the match remains open to question. The answer to that seems likely to be around 1,000, as Wrexham’s supporters don’t seem particularly inclined to join the boycott. More ready cash for the Vaughans.

They have more pressing issues to face than the Wrexham match, however. The players had threatened to strike for last weekend’s match against Grays Athletic, but were paid one weeks’ wages in Scottish bank notes to stave it off. The Vaughans may as well have not bothered. The match was frozen off, meaning that Chester still sit miles clear at the bottom of the table on minus three points. The club is no believed to be down to nine players, with youth academy players making up the difference. More are expected to leave if the wages aren’t paid up to date. Regardless of any other considerations, what chance a youth team would have over the rest of the season is anybody’s guess.

Meanwhile, however, things are starting to move on the possible sale of the club. Never underestimate the power of the human ego and the persuasive power of just the slimmest possibility of a place in the Blue Square Premier. Groups are starting to come forward to express an interest in spending the princely sum of £1 in the club, but they should be aware of the clauses that the solicitors, Brabner Schaffer Street, have been instructed to advise prospective buyers that:

1. Proof of funding of a minimum of £500,000 cash, to both satisfy club creditors and to fund the club going forward;

2. The identity of the consortium/company behind the purchase of the club to satisfy the ‘fit and proper person test’ imposed by the league;

3. A commitment to pay the club’s legal fees; and

4. A commitment to sign a non-disclosure agreement.

must be fulfilled before any further information will given. None of these clauses are exceptionally unusual, until we take into account the extraordinary circumstances that surround the sale. The fact that “a commitment to pay the club’s legal fees” is inserted into these clauses may cause concern amongst buyers – in other words, no due diligence can be carried out until the Vaughans’ legal fees have been paid -  and how can any business ascertain whether “£500,000 cash, to both satisfy club creditors and to fund the club going forward” is an amount of money that can justifiably be promised to the club. It should also be mentioned that no blame of suspicion should be laid at the door of the solicitors. Their role is a very clear and well established one: they act under the instruction of the client – in this case, the sellers of the club.

Meanwhile, however, other groups have come forward expressing an interest in buying the club. One organisation (calling itself CZ Invest) turned up the supporters’ forum Devachat expressing their interest in buying the club. They talked much of the talk, but there was one moment that might have raised an eyebrow, when a site moderator confirmed that the original message sent came from a Swedish IP address. Nothing on the CZ Invest website (presuming these people to be one and the same) indicates an office in Sweden for them or any of their “partner” companies. Some Chester supporters have noted glumly that any businessman or businessmen would run a mile from the conditions being demanded by the Vaughans. The best that we can say about CZ Invest for now is that we don’t know anything about them.

The other group to express an interest has been a Facebook group of Norwegian students. This group already appear to have made serious enquiries to the solicitors and have been active in the Norwegian media. This translation of an interview with the Norwegian television station TV2 (which, due to the unreliable nature of Google Translate, requires a little lateral thinking) seems to give away much of their thinking behind the move and, while it would be unfair to say that their are any ulterior motives behind their interest, it is worth pointing out that there is a message on the group’s wall which speaks glowingly of the Ebbsfleet My Football Club experiment (which would effectively make Chester City FC somebody else’s play-thing), that they are seeking investment from elsewhere and that they have five weeks to raise the £500,000 required as one of the apparent stipulations to go any further with the purchase of the club. Bearing all of this in mind, the following questions are only right and proper to ask:

1. Do they have a legal contact in England, who can carry out due diligence (should it come to that), understands British contract (and, since it may be necessary, insolvency) law, understands the byzantine nature of British tax law, the vagaries of the FA and Football Conference’s rules with regard to the financial running of football clubs, knows the financial requirements and outgoings of a non-league football club and can work with the local council and the club’s supporters?

2. Why did they go public with this story in Norway without having notified Chester City supporters? Are they aware of the supporters boycott and of the work that Chester Fans United have been putting in over the last couple of months to

3. Would any offer to buy the club promise supporter representation at board level? What would their plans be if the club was relegated into the Blue Square North (or lower) at the end of this season?

4. Do they have any idea how difficult it would be to make a profit from a lower division English football club?

Chester supporters could be forgiven for being sceptical of anybody that turns up at this late juncture with a promise to turn the fortunes of their club around, and the bare truth of the matter remains that, with Chester City having been up for sale for £1 for a while now, no-one in England has dared to do so much as touch them with a ten foot long barge pole. The temptation to go for a quick fix will be tempting one, and there are, in their current desperate position, plenty of speculators that will look at their position and quite fancy a speculative punt on the possibility of a lease of The Deva Stadium and the possibility of senior non-league football. However, what may be in the best interests of any group or individual seeking control of the club may well not be in the best interests of sustainable, community-focussed football in Chester.

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    7 Comments

  1. This saga is getting better than Corrie St.

    And its great to be kept informed.

    Thank you.

    Bernard

    February 4, 2010

  2. A group of Norwegian students? Now that is proper bonkers. :)

    NottyImp

    February 4, 2010

  3. They need something to do in the dark nights up there…. I recall some Icelanders who were considering setting up a team specifically to try and get themselves into Championship Manager…

    Albert Ross

    February 4, 2010

  4. I bet there are a few people Chester fans could name that they wish were “pining for the fjords”.
    Showing my age a bit.

    alan

    February 4, 2010

  5. Hello Ian.
    My name is Håvard Rødal and I lead the group of norwegian students who`s trying to get through a purchase of Chester City Football Club. It may seem strange, but I appreciate your skeptism to our prosject, I think it is a fair, honest and natural skeptism. If no one were skeptical It would make me wonder. I read from your great article that you ask some questions to our knowledge and rightly so. I would like to answer as good as possible the issues you mention in this article.

    1. We don`t have any legal contact at the moment, but before any negosiation can start this must be on place, of course. When it comes to the demands of running a club, I would guess it is much like the demands in norwegian football, which is quite hard demands. Taxes is another issue we are aware of and without saying I got big knowledge about british tax systems, in Norway we have taxes on everything and something we should know quite good. But this demands and systems is clearly something I must use the next weeks to learn more about.

    2. I take fully responsibility for taking this to the media before contacting the fans. This have been a bad move from my side, I am sorry if this meant you not respecting us and our prosject. The full blame is on me. We are fully aware about the demonstrations7actions that`s been against the current leaders and also about the work the fans of Chester has mobilized during the latest year. This info I have received from reading this site and other fans of Chester sites.

    3. We are planning the future based on the fact that Chester will play in the Blue Square North next year, as relegation seems impossible to prevent. If our group can demand anything for the possible owners it will be that atleast one representative of the supporters in the board room hopefully a couple more. Who would know more about the club than the supporters?

    4. We know that making a profit would be difficult, but still we see possibilites for a reasonable business. But this is not our main issue at the time. At the moment the most important is to save the club.

    For me, football is about emotions, identity and cohesion and this is our guidelines in our work with this prosject.

    Best regards,
    Håvard Rødal

    Håvard Rødal

    February 9, 2010

  6. Håvard, are you aware on the Football Conference’s rules on exiting administration, other insolvency rulings and possible demotions to the Unibond League (which would seriously alter potential turnovers)?

    And what would you do if the club you bought was found to be unprofitable? It is all very well seeing “possibilites for a reasonable business”, but what if you had miscalculated? Could you give Chester Fans United a guarantee that you would not let the club die?

    Matt Boothman

    February 10, 2010

  7. To my mind the Scottish banknotes constitute the high point of the season so far. Abolsutely fantastic.

    ejh

    February 11, 2010

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