Portsmouth’s Pain In The Neck

Portsmouth’s Pain In The Neck

By on Apr 24, 2010 in English League Football, Finance, Latest | 5 comments

Nothing in Adrian Chiles’ BBC career became him like the leaving of it, as Shakespeare might have written of his fellow-midlander if he watched ‘Match of the Day 2’. “This is what modern football has become.” Chiles told his last MOTD2 audience, with all the indignation at his disposal. “An administrator signing autographs. Whatever next?” (ITV in Chiles’ case, of course, as predicted in these pages…oh, come on, I got ONE right). And there, in the “2 Bad” bit of the programme’s closing feature “2 Good 2 Bad” was Andrew Andronikou, joint administrator of Portsmouth Football Club, getting out of a motor vehicle so big he had to jump to the ground, before signing autographs for people whose faces betrayed uncertainty as to he was, other than it couldn’t be David James. They’ll know him soon enough, though. He is only joint-administrator of the curiously named ‘Portsmouth City Football Club Limited’, but his two colleagues (Peter Kubik and Michael Kiely) could go about their business semi-naked, and not necessarily topless, and still not attract a shaft of limelight.

Andronikou came to Portsmouth with a good reputation in the ‘football club in administration’ community, after some years as apparent saviour of Swindon Town. However, this news will have sent mouthfuls of tea flying across breakfast tables all over Wiltshire. Andronikou was a largely unpopular figure among Swindon fans who, get this, considered him an over-bearing self-publicist. He angered them particularly by placing huge blame for the Robins’ financial difficulties on the Supporters Trust, calling them “busybodies” who represented “about 20” Swindon fans. Given that Trust membership at the time was about 1,000, this said as little for his arithmetic as it did his diplomacy. Little wonder that Portsmouth’s debt figure has been such a movable feast in recent weeks. One media story had the debt “approaching £120m” in the headline, and £122.8m by the second paragraph. It seems appropriate, therefore, that so much of Andronikou’s report to Portsmouth creditors should be printed sideways.

Nothing so far in Portsmouth’s sorry tale has been straight up. So why should Andronikou be any different? Sadly, if predictably, not all fans’ questions are answered by the 70-page document. And many of the more important ones aren’t even asked. Andronikou’s own words frequently betray unease. Of the execrable Sulaiman Al-Fahim’s attempts to but Pompey from previous owner Alexandre “Sacha” Gaydamak, he notes that “even though sufficient proof of funding was provided by SAF, the transaction proceeded,” despite SAF soon running “into difficulties as it transpired that he was looking to fund the purchase with costly debt-funding as opposed to equity.” Andronikou must surely have wondered why Gaydamak was so keen to make the transparently hare-brained decision to sell to Al-Fahim, given that chief executive Peter Storrie “was mandated by Gaydamak to find an alternative buyer.” The answer to that question is key to what happened next, financially, at Portsmouth. But Andronikou doesn’t appear to have asked it. Andronikou notes without comment that “In January 2010, a sum of £4m was repaid to Portpin from the proceeds from the sale of a player during the January Transfer Window.”

Portpin Ltd, beyond becoming a “Debenture Holder” in October 2009, is not explained in Andronikou’s report in the way other companies are (“Falcondrone Limited” – a vehicle controlled by Mr Ali Al-Faraj”). And it is intriguing that the February transfer of club ownership was to “Mr B Chainrai, an individual connected to Portpin” and not to the “debenture holder,” Portpin itself. It may not be in the least bit untoward. But questions like “who”, “how” and “in what way connected to”, which will have occurred to creditors immediately, are not answered. And it may not be in the least bit untoward that all Mr B Chainrai’s debts are secured, despite Portpin being the “debenture holder,” while young master Gaydamak’s “payment of approximately £2.5m to Barclays Bank plc which discharged in full a secured loan,” has become unsecured even though his claims that it remains secured are “being reviewed.”

Andronikou does note, correctly, that “there has been a huge amount of interest from creditors of the club…in particular in relation to the investigations that the administrators will carry out in respect of the affairs of the club.” And he adds that “the administrators have already started detailed investigations into a number of areas.” These have so far included Asmir Begovic’s “non-transfer” to Tottenham, and a £500,000 payment to a Swiss agent. The first left Andronikou ordering an investigation (“this one needs an explanation”) even though it was cleared up in full by one journalist asking one question once. The second has “populism” and “easy win” written all over it. The report makes it clear that a creditors’ committee will be formed and will be “(consulted) in respect of the investigation of the affairs of the club,” at the same time as the administrators seek creditors’ approval to “draft a CVA proposal”, both at a creditors’ meeting set for election day, May 6th.

Portsmouth fans will be hoping that these investigations will eventually lead to the right questions being asked, of the right people (the Begovic case does not encourage), and asked before any Company Voluntary Arrangement (CVA) proposals are put to creditors (many media reports have suggested this will be May 6th. This is not what the administrators’ report says). Their concerns are many. Andronikou will, as required by statute, “prepare a report on the conduct of the directors of the company” to be lodged with the catchily-titled “Department for Business Enterprise and Regulatory Reform.” But the “conduct of the directors” is comprehensively not the point. Yes, it would have been nice to see the execrable Al-Fahim forensically examined. But we won’t be, because the report “will remain confidentia

The names causing concern among fans partly do so because they were palpably not directors, or even, according to the Premier League, ‘shadow’ directors…even the Israeli fraudster Daniel Azougy who, Andronikou’s report notes, again without comment, was “appointed (by Al-Faraj) to assist with the general running of the club and the making of executive decisions.” Now, unless this assistance only stretched to making the tea, and/or supplying the paper on which these decisions were recorded, that statement places Azougy at the heart of the “direction” of the club. Yet there is little sign that Andronikou will be “consulting” the creditors’ committee about Azougy. And the Department for Business and other love songs, won’t,  by statute, be concerned either.

It could be argued that these are secondary issues for Andronikou at this particular time, and the Football Association are to “probe” Portsmouth’s mismanagement (who do they think they are, the game’s governing body?). But the FA need to ask the right questions, too, and not just the ones about phantom signing-on fees, exorbitant agents’ fees and the unlikely willingness of someone to pay for the rights to David Nugent’s image. It has been disappointing to note that the very idea of two strands to Portsmouth’s tale – Gaydamak’s overspending and the, literal, nonsense which has gone on since – is being submerged by the mountain of stories about the mountain of debt. Questions about post-Gaydamak events are being treated, even by some of the more respected football business commentators, as the over-active imaginings of “conspiracy theorists,” a phrase usually translated as “crackpots.”

In many ways, though, the Portsmouth tale is the same old same old, just with a few extra noughts. David Conn, for instance, has written the same, high-quality Guardian article about shafted small businesses – and St John’s Ambulance – since the days when they were Independent articles. Richard Scudamore, for instance, has defended the Premier League, with his bog-standard trick of feverishly denying accusations which haven’t been made, thus avoiding the genuine accusations which have been. “You can’t say it’s the way we distribute money that’s caused problems,” he noted, correctly. Which is why people haven’t, preferring instead to note that the Premier League allowed every single “rank bad manager” responsible for what Scudamore calls Pompey’s “rank bad management,” to manage rank badly. Harry Redknapp, for instance, has again pointed to the massive transfer profits that Portsmouth made under his tutelage, sitting in his Sandbanks residence wondering where the money went, but ran out of fingers before he got to the FORTY… MILLION… POUND… rise in staff overheads which occurred while he was recruiting the relevant staff (unless the cleaners union negotiated a whacking-great long-term pay deal, in which case get me a membership form).

But Andronikou’s the star, the man of the people, the defender of the club…the pain in the neck. His defence of the club has only manifested itself in a series of ill-informed digs at the football authorities for making decisions according to their regulations. He has pontificated on the football creditors’ rule (with partial justification), Portsmouth’s bar from European competition (with minimal justification) and their nine point deduction for entering administration (with no justification whatsoever). Stick a Father Christmas fright mask on him and he could pass for Ken Bates, such is his oafish, scattergun mode of attack. Even with the soft target football creditor’s rule, he, unlike eloquent critics such as Conn, was clueless, making wild claims about illegality (the rule only makes payment a prerequisite for league membership) and the Premier League “looking after their own.”

His challenge to the nine-point deduction disappeared alongside all his hot air on the subject. And this week, he noted, apparently seriously, that “we had hoped to make an application next week” for Pompey to play in next season’s Europa League. This would have made said application almost exactly two months late. And Portsmouth had also, of course, neglected another pre-requisite, trading solvently, which really ought to have occurred to a joint-administrator. In such a context, his bleatings about only learning of the decision from the telly were irrelevant and, according to FA and Premier League officials, “disingenuous at best.” Andronikou is “confident” the CVA will be passed; especially now the debts are so high. And, it would seem, with more to come if former manager Paul Hart’s inexplicable absence from the creditors’ list is a guide.

Andronikou’s original debt estimates were £60-70m. When accounting company Vantis produced a statement of affairs for the High Court in February, the figure was little higher. The 26th February statement of affairs in the administrators’ report also puts the figure in the sixties. And, as has been noted in these pages, HMRC’s £17.1m debt would give them enough clout (25% of the ‘electorate’) to vote down any CVA, if the debts were really ‘only’ that astronomical. Now, with the figure approaching the national debt of Peru, HMRC don’t have anything like that power…even taking into account the remarkable presence of Southampton Football Club among the trade creditors with £35,000 worth of votes. Much of the suspicion surrounding Portsmouth could, though, easily be dissipated. Ali Al-Faraj, still Pompey’s longest-serving owner, is, one suspects, not owed any image rights payments. But his “vehicle”, Falcondrone Ltd, is on the list of unsecured creditors, owed £1,767,125.60.

The administrators’ report includes a “proof of debt” form for creditors. And it wouldn’t be unreasonable for Andronikou to ask Al-Faraj to deliver his by hand, in front of the cameras. I’m sure Andronikou would be happy to do this – it will be in front of the cameras, after all. The Premier League would be happy; they could compare the signature on his “proof of debt” form with that on his “fit and proper persons’” documentation. In the meantime, Al-Faraj could sit on the creditors’ committee, alongside representatives of other major unsecured creditors such as “Ocadia Investments”, who are, according to Andronikou’s report, a “corporate vehicle controlled by the Gaydamak family trust.” They could be independently represented by a family member who has never had anything to do with Portsmouth at any stage ever. Like, to pick an example purely at random, Alexandre Gaydamak’s dad, Arcadi. He’d be good and, if all Portsmouth’s troubles have really been “laid bare” this week, Al-Faraj would surely be happy to do all this too.

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    5 Comments

  1. Getting hugely hacked off with the “won’t someone think of the fans” defence which is all you ever hear. Are these the same fans who have had 2 FA Cup Finals and a European campaign in the last three seasons whilst the debts were racked up?

    Yep, really sorry for them. Man up and take your medicine.

    Mick

    April 25, 2010

  2. Yay Mick, its about time somebody said it.
    Every day we get whining Pompy fans (I live in Bournemouth – and support Poole so no real vested interest) whittering on about how they are loyal and diserve so much better.

    Not true though it is. Pompy have only ever gated approx 50,000 in an all standing stadium, Everton; Man U, Chelsea, Man City, Liverpool, Arsenal, Forest etc all gated in the 80,000 week in week out. Since the all seating rule Pomly have gated as low as 5-10,000 for leage games (albeit lower league) and merchandising revenues are pap.

    Facts are that Pompy are a small Championship to large Lg 1 team – they spent money they didn’t have to take all their fans on a 5 year magical mistery tour of the Prem and now they are going to go back were they historically (given revenues, fan numbers and results) always should have been.

    Think of the fans – given £120,000,000 I’m fairly sure Poole or even the mighty Cherrys, lol, could surive the Prem for a couple of years. I’d love to follow them to Europa League glory – not going to happen though is it.

    You lived the dream, now it’s time to wake up. And if you attend the matches, buy the replia shirts and eat the pies Pompy will earn enough to come back. If you don’t (and you never have yet…) you’ll stay were you belong.

    Stoney

    April 26, 2010

  3. “gated?”

    Pompey’s ridiculous “debts” have nothing to do with football…

    Martin

    April 29, 2010

  4. Great article, Mark. It’s refreshing to at least see some people are trying to get the truth published about what is really going on at Pompey. Now if only the nationals and broadsheets would run with it.

    Shame that your article doesn’t appear to have been read (or understood) by Mick and Stoney though. Perhaps you could include comic-strip illustrations next time…

    Gaz

    April 29, 2010

  5. Good article and about time someone started to ask the obvious questions about Andronikou and the magically increasing debt figure.

    For the guys complaining about Pompey fans, stop reading the tabloids and listening to Talk Sport and start thinking things through. Pompey didn’t “overspend”. Gaydamak was paying the fees and salaries and our problems occurred when he stopped funding the club. No different from Chelsea or Man City if their owners pulled the plug. No-one seems to mention them “spending money they haven’t got” but the situation is exactly the same.

    The fact is that almost 50% of Pompey “debts” are to previous owners, none of whom have actually put a penny of their own money into the club but are now holding their hands out hoping to bury their snouts in thr trough.

    Steve

    April 29, 2010

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  1. The Sweeper: Newspapers and Bloggers Must Overcome “Debt Story Fatigue” | Pitch Invasion - [...] Murphy, in a masterful autopsy today on Portsmouth’s 70 page report (PDF) to creditors (any more reports and Adobe …

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