Portsmouth: Rank Bad Management, But By Whom?

Portsmouth: Rank Bad Management, But By Whom?

By on Apr 11, 2010 in English League Football, Finance, Latest | 2 comments

It says a lot, and none of it good, about the Premier League that all the right questions about Portsmouth’s situation are being asked by others, from HM Revenue and Customs to Private Eye magazine. It is becoming clearer by the day that Portsmouth Football Club has become a venue for an entirely non-football fight between two groups of business people. None of whom are called Ali Al-Faraj. In a recent Guardian interview, Ahmed Al-Faraj, the “brother” of the man Pompey fans have styled “Al-Mirage,” asked a pertinent question of those who doubted the credibility or very existence of the man who supposedly owned Portsmouth for over four months: “So who signed the documents with the Premier League and all the things with the banks, if he is not the owner?”

Ahmed’s comments were part of an effort to show that his “brother” had “full charge” of Portsmouth and took all the executive decisions while he was the owner. It is difficult to see how this could be true. And not just because his “brother” was quoted, three weeks after buying Portsmouth, as saying: “It is not us who makes the decisions, the club has its admin and its board of directors, (so the decisions) are not in our hands.” Mind you, this “interview” was conducted “via telephone on loud-speaker whilst he was present in Ahmed’s car following the tour of the club” (Ashara Al-Awsat, 24th October), the club his “brother” never visited, in the country for which his “brother” could not get an entry visa.

At one time or another, just about all the main protagonists in the Portsmouth affair this season have eventually had to admit that, no, they hadn’t met Ali Al-Faraj. Not even Mark Jacob who “had power of attorney of Ali.” (“Despite being his lawyer, Jacob has admitted he has never met his client” – Guardian, 4th February 2010). Not even the official UK spokesman for “petro-chemical giants” Sabic, who could confirm that Ali Al-Faraj was “a private shareholder in Sabic and a wealthy individual,” but only because “I read it in the Sun and I assumed they had checked.” (Independent, 6th October 2009).

Not even the execrable Sulaiman Al-Fahim gave “praise” to God for Ali Al-Faraj’s “presence” in a bout of unintended irony during one of his 94 “exclusive” interviews with the Arab press (Ashara Al-Awsat, 16th October). Eventually, he was forced to admit, in December that “I have never met Ali Al-Faraj” and that “I want to know who he is and what plans he has for the club” (Guardian, 2nd December). A not unreasonable attitude except for one minor technicality, this was two months after he’d sold 90% of Portsmouth to the man he’d “never met.”

Not even former Pompey Chief Executive Peter Storrie could refer to any direct conversation with the man, even though he “worked round the clock with Faraj and his associates” (Guardian, 26th August 2009) to buy the club just before Al-Fahim became owner. He did assure fans in December that “Ali and his associates worked hard on it today” (Independent, 4th December 2009), referring to the securing of new finance for the club, But then he added “that’s what I’m being told,” which was somewhat less assuring. And, of course, he was told wrong.

And not even the Premier League, as Ali Al-Faraj “passed the Premier League’s ‘Fit and Proper Persons’ Test’ in August, even though no-one at their London HQ has ever met him in person…his lawyer supplied personal information.” (The Sun, 7th October 2009). The lawyer who admitted “he has never met his client”). When Ahmed Al-Faraj was pressed on the specifics of his “brother’s” control, he suggested that Jacob was the man to ask, despite the pair’s lack of personal interaction. And he seemed rather too determined to draw a line under his and his “brother’s” roles at Pompey: “I think it is now finished,” he interjected as the questioning got detailed. “He is not owning the club any more so I don’t think there is any interest in talking about the club or anything.”

Well, it might not be in his or his “brother’s” interests to cover Portsmouth’s recent history. But it is surely in the interests of any new potential owners to have all the details. And the joint administrator with the microphone, the never-knowingly-shy Andrew Andronikou promised over two months ago that he’d be covering it. “We have the responsibility of investigating the company’s recent financial history,” Andronikou said in a statement (club web-site, 26th February 2010) – although this statement also promised “proposals ready for circulation within eight weeks” to creditors. Andronikou at the time rightly gave priority to the “problems in hand…which are not insignificant,” and which he identified as “stabilising the club and reinstating a solid foundation for the future.”

But a dispiritingly anonymous investor is supposedly commencing due diligence and, it seems, changing identity, as I type (“a change to his purchaser”, Guardian, 6th April 2010). One would have thought that a thorough and complete investigation of the “company’s recent financial history” would be extremely helpful to “due” diligence. A “data room” has been provided for prospective buyers and their “forensic” accountants. But without the promised investigation, not all the “data” in that room be verified, or be the basis for a sound business decision on whether or not to buy the club.

As Portsmouth fan Mike Hall pointed out in an excellent pompey-fans.com website article, “how can anyone talk about what the total debts are when there are serious question marks over large lumps of it?” – lumps the size of £73m, by his informed calculations. This may, in part, explain why the quoted debt figure is such a movable feast. £60m very quickly became £70m, which increased to “£82-86m” at almost Weimar Republic-style inflationary rates. And last week, the debt figure broke the century barrier, which suggests either that the club’s day-to-day losses are horrendous, in which case Andronikou isn’t doing his job properly (see ”stabilising the club” – above), or that not even Andronikou is sure of his calculations, in which case Andronikou  isn’t doing his job properly.

Yet he is sure that his proposals for taking Portsmouth out of administration will be passed by creditors, despite HMRC’s continuing policy of opposition to football’s “Company Voluntary Arrangements.” The support of creditors owed 75% of the total debt is required for a CVA to be accepted (on the basis of “one pound owed, one vote”). However, HMRC are owed a considerable eight-figure sum, roughly a quarter of the total debt when it was ‘only’ £60m, which meant they could, and would have strangled any CVA at birth, before Andronikou got his abacus out.

Nonetheless, with mere pennies in the pound likely to be on offer, Andronikou can only have any confidence in getting the vote because the football creditors, who will receive all their money, have a say on whether unsecured creditors receive far less. There’s justice. It is fair to surmise from Andronikou’s numerous public comments that he was quite keen for Portsmouth’s last owner, Balram Chainrai, to be their next one. Certainly keener than he was on Rob Lloyd and his mystery man with the ever changing identity. Unusual, you might think, for an administrator to have a preferred bidder before any bidder has made a bid. But “unusual” is par for Portsmouth.

None of this, it seems, has ever been of the remotest interest to the Premier League, except for the damage it might have done to the worldwide “EPL brand.” As Premier League Chief Executive Richard Scudamore put it recently, with the sense of perspective for which he is famed: “Has it done damage to the Premier League? Yes, it has. When a footballer gets caught in a nightclub, it has a similar effect” (Guardian, 29th March 2010, completely in context, be assured). Indeed, the comparisons could not be more direct, so long as the footballer caught in the nightclub was using a football club to fight business battles over tens of millions of pounds which had nothing to do with the football club or the game itself whatsoever, and which threatened the very existence of that football club, and could still do so. As long as they treat multi-million pound financial mysteries with the same gravity as one player getting caught doing something (or someone) unspecified in one un-named night club, the Premier League will never ask the right questions. And fans will have to rely on HMRC or Private Eye instead. Which says a lot about the Premier League. None of it good.

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    2 Comments

  1. Excellent article, what’s specially troubling is that the premier league actually makes public the name of the owner, who knows what might happen with the weird ownership situation in Leeds United.

    Santiago

    April 11, 2010

  2. Expect HMRC to take to court any CVA that stitches them up over the 25% rule just like they did with Vaughan’s fraudulent one at Chester; a case they won.

    Martin

    April 17, 2010

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