Portsmouth’s Debt Up To £119m
The full extent of the financial horror at Portsmouth, then, is starting to become apparent. It is starting to feel as if every time the club’s administrator, Andrew Andronikou, opens or moves anything, there is a red bill hiding underneath, behind or within it. The figures estimated in the media earlier in the season had put the club’s debt at around the £70m mark, which had seemed insane enough for a club heading for relegation from the Premier League and with a 20,000 capacity stadium. The latest figures to be released by Andronikou, however, make the days of Portsmouth’s £70m debt seem like the carefree days of the past.
The current debt is now £119m, including £14m in unpaid transfer fees for Jermaine Defoe, Sulley Muntari and Glen Johnson, all three of whom have been sold on to other clubs at a considerable (theoretical) profit. The total amount that Portsmouth have been reported as having received in transfer fees for these players was around £50m. This may seem to be absurd beyond absurd, but it seems as if there is no madness that is too great for this club. £14m is owed to Balram Chainrai, the club’s current owner, though the fact that he is a secured creditor means that he will be likely to be paid in full. The £14m from unpaid transfer fees will also be excluded from any proposed arrangement to dig the club out of its woes because, under the football creditors rule, this is effectively underwritten by the football authorities.
The single maddest statistic to come out of Andronikou’s tally is the £9m that is owed to agents. Of this thoroughly depressing figure, £2m is owed to Pini Zahavi and £2.3m is owed to as as yet unnamed agent for the transfer of Lassana Diarra alone. Money well spent, I think we can all agree. If we look at the blocks of unsecured creditors, the former owners of the club (who are owed around £40m between them) could theoretically block any CVA if they stick together. As ever, we can assume that HMRC would vote against any proposed CVA. The size of the debt would surely mean that any CVA would be a very low percentage of the club’s total debt, and they have stated more than once their rank, outright opposition to the football creditors rule.
Quite where they go from here is anybody’s guess. Andronikou has already stated his lack of confidence in the consortium headed by property developer Rob Lloyd. Lloyd was criticised in some quarters for the blaze of publicity with which he launched his group’s interest in the club, and his due diligence was due to start two weeks ago, lasting for seven to fourteen days. There have been no results yet of what this may or may not have turned up, but things took a turn for the strange as the due diligence period started, with Lloyd telling the club that there had been a change in the funding of his bid without him being able to say who the new backers were. None of this cloak and dagger style of dealing with matters fills the watching Portsmouth support with a great deal of confidence about the nature of what is going on at the club at present.
What we can say for certain is that the FA Cup final will hardly dent the club’s finances, regardless of whether they win against Chelsea or not. For the long-suffering supporters of the club, however, this is probably irrelevant and would be entirely understandable if they took the attitude of “eat, drink and be merry, for tomorrow we die”. The club needs to agree settlement with its creditors if it is to have any chance of competing in next year’s Europa League. The club missed UEFA’s deadline of the first of March in order to secure its UEFA licence and, while they can apply for one retrospectively until the end of May, it seems unlikely that they would be granted one if they were still in administration and with no resolution to their financial crisis in sight.
Meanwhile, after a year of stating that there was nothing wrong with the Premier League’s financial model, Richard Scudamore confirmed that the league will be looking to introduce a “means and abilities test” to sit alongside the fit & proper persons test. Whether this is a pre-emptive attempt to circumvent any sort of post-election attempts to regulate the game or not is anybody’s guess, but it is not unreasonable to hold the opinion that the Premier League largely stood by and watched as the club floundered and failed. We will never know whether they were keeping their fingers crossed that the club would hold itself together until the end of this season (thus protecting the Premier League “brand”), but we know for certain that, from the middle of next month, they will be very much the Football League’s problem. The question may then become one of whether they will face another points deduction before the start of next season.
All of the above shines a harsh glare on the laissez-faire economics of the Premier League, and it is to be hoped that the FA and the Premier League learn a lesson or two from this most cautionary of tales. Meanwhile, there seems no definite consensus on who specifically is to blame for what has gone so horribly wrong at Fratton Park over the last two or three years, and the best that we can hope for now is that the club will somehow emerge from this having learnt a harsh lesson about the realities of both football and business economics. Portsmouth supporters, likewise, should enjoy the next few weeks, take a break from the panic and crisis all around them and get behind their team at the FA Cup final. Things may well get more difficult for all concerned before they get any better.