Planning For Future, The Palace & Wednesday Way

Planning For Future, The Palace & Wednesday Way

By on May 9, 2010 in English League Football, Finance, Latest | 4 comments

Of the two teams involved in the unreasonably tense relegation “showdown” at Hillsborough last weekend, Sheffield Wednesday look the best, and possibly the only club capable of dealing with life in League One next season. On the brink of a takeover since Christopher Ecclestone was “The Doctor”, Wednesday will have been delighted with potential owner number 94’s pre-match assurances that they, Club 9 Sports from Chicago, would be as interested in a Wednesday team playing Rochdale for league points as one playing Reading.

Crystal Palace, meanwhile, are reliant for survival on a mostly anonymous group of supposedly reluctant investors with a 1970’s Radio One disc jockey as its public voice, thankful for the twin mercies of Championship survival and the disc jockey not being Dave Lee Travis. Palace were worthy survivors on the pitch. Without the ten-point deduction for entering administration they’d have finished alongside Neil Warnock’s QPR in mid-table, possibly higher if Warnock had stayed. And at Hillsborough, they played that way, offering what understandably little composure was on offer and having the best player on the pitch by a country AND a city mile in Darren Ambrose.

Wednesday, however, huffed and puffed and missed a load of chances, which, according to a Wednesday-ite acquaintance of mine, rather encapsulated their season. As a result of the result of the match, though, at least both sides now have a stab at survival, which might well not have been the case had Wednesday prevailed. Club 9 Sports have yet to detail their investment proposals beyond what they will not be doing, purchasing “any of the existing share capital in the company.” This may disappoint some Wednesday-ites who would love to see an old director or two bought out. But the Americans are garnering considerable praise for coming to an agreement with the Co-Op Bank and various loan note holders, in whose hands the club’s future lies.

Former chairman Dave Allen has long been holding out publicly for the return of the near £2m he’s loaned the club over time. And the cynic in me feared that his penchant for vindictiveness, as so often displayed during his Wednesday tenure, might lead him to demand repayment, as certain circumstances would have allowed him to do about now. Some Wednesday fans said I was wrong. Thankfully, I was. And, certainly before the drop, the Wednesday board were able to “remain supportive of (Club 9 Sports) efforts” in the same sentence as announcing that they were “to investigate options with other parties who have shown a determination to invest in the future of Sheffield Wednesday.” As of last week, then, Wednesday were wanted. This may, of course, seem like exactly the situation they were in two and three years ago, when anyone from Chinese casino owners (Carson Yeung!) to “Russian,” Irish” or “leisure” billionaires appeared interested. But it feels like progress.

There is a slightly greater degree of clarity about Palace’s “interested parties.” The “CPFC 2010” consortium was named “preferred bidder” by the club’s administrators, the P & A partnership, in March, largely, but not entirely, because it was the only bidder. There, however, the clarity ends, however, except that Palace are in a race against time to ensure survival before the money runs out. And it is a race they are starting to lose. The administrators’ public persona, Brendan Guilfoyle (middle name, Ambrose, co-incidence fans), reported interest of 44 investors, which soon dwindled to none when the ability to walk and chew gum at the same time came into play, until CPFC 2010 appeared on the scene after the deadline for offers was twice extended by a fortnight.

Long-time Palace fan and sponsor Steve Parish, the public face of CPFC 2010, won the credibility battle hands down with other reported “interested parties” including lovable former owner Ron Noades, local “businessman” Winston McKenzie and one of those American rapper johnnies, Sean Combs. Admittedly, the track record of American rappers in English football is arguably better than that of American “entrepreneurs” (Tom Hicks, I’m looking at you). But stories that McKenzie’s interest was an internet wind-up had more credibility than he being a figurehead for a “mystery, anonymous” overseas consortium. “I even called his consortium ‘Bluegill’,” noted the alleged wind-up merchant, Bluegill being an anagram of “gullible.” And Noades is interested in buying the freehold to Selhurst Park, which needs no further comment.

Parish, meanwhile, is the real deal, his company, international and design production agency TAG worldwide, having provided tangible financial support through shirt sponsorship, albeit just the back of the shirt. But the difficulty for Palace is the age-old one of separation of ground from club, which has so often been a disaster for clubs that you wonder how desperate they have to be for it remains an option. Former owner Simon Jordan may have been regarded by many as less to blame for his club’s woes than some owners at other strugglers. But his decision to virtually pretend that he bought Palace’s Selhurst Park ground from Noades in November 2006 has led his club directly into their current predicament.

Jordan supposedly bought the freehold off Noades for about £12m. But in reality, former Tottenham director Paul Kemsley financed the deal, allowing Jordan to “park” the ground with Kemsley’s Rock group of companies. Then came the credit crunch, and not only was Jordan unable to pay Kemsley the “parking” fees to get the ground back, but Rock itself went into administration. Now we have a consortium, CPFC 2010, which wants to buy the club once it has secured the ground, while the ground’s administrators, Price Waterhouse Coopers (PwC) won’t sell the ground to CPFC 2010 until the consortium have secured the club as a going concern. In the midst of this, Crystal Palace Football Club has stopped earning money now that the season has finished, leaving a tight, fast-approaching deadline for solving the stand-off between consortium and administrator.

PwC’s recently-published report to creditors raised damning questions about Jordan’s financial acumen. It particularly noted the hyper-inflationary rise in the ground rent – from barely manageable to ruinous – after Selhurst Park Ltd (SPL), a wholly-owned subsidiary of the Rock group, acquired the ground in April 2008. And the report wondered aloud why “the club entered into a new lease (at this time) when two years remained on the existing lease.” The reasons are “currently unknown to the joint administrators.” The increased rent was part-inspiration for Jordan mortgaging the Selhurst Park lease, Palace’s Beckenham training ground, his club shares and future Football League payments to the Cayman Islands-based Agilo Masters Fund in June 2008. The annual rent, the report noted, increased from “in the region of” £5-600,000 to the startlingly precise £1,248,072. And the journey from there to administration was pretty quick, via Agilo’s secured debt.

The Crystal Palace Supporters Trust are veterans of Palace administrations, having raised considerable funds when the club was going through the insolvency process at the turn of the century. And, openly encouraged by CPFC 2010, they are on the fund-raising trail again, as the consortium seeks what it sees as a more realistic price for Selhurst Park than its £7m book value. Should all else fail, the Trust have also sought advice from Supporters Direct, the national umbrella body for supporters trusts, on the formation of a phoenix club. In the meantime, though, Palace’s creditors meet on May 17th to approve the administrators’ future course of action. They are refreshingly clear over what they want, “a going concern sale of the business and assets of the company to CPFC 2010.” (They are also, incidentally, refreshingly clear in what they are going to get per hour, as “the joint administrators’ fees are capped at £500,000 until the secured debt to Agilo is secured in full.” They have already incurred “time costs of £616,087,” so their hourly rate is hurtling towards national minimum wage by the hour. Portsmouth fans may have a view on this).

Otherwise it is down the route of selling players or “the joint administrators will have little alternative but to resign from office and invite HMRC to proceed with a (winding-up petition) as they deem appropriate.” And in perhaps the least surprising statement ever written in such a document, “in the joint administrators’ opinion, this outcome needs to be avoided.” Palace’s list of creditors stretches the report to nearly 250 pages, though only because it includes season-ticket holders up to the year 2025. For those with that level of long-term commitment, we salute you (my old History teacher was a Palace nut back in the late 70s and early 80s, and it was reassuring somehow to see his name on the list).

Despite those pages of commitment, though, Palace are in a frantic race against time. While the football world ponders what sort of future awaits Portsmouth, Palace’s demise could, relatively speaking, slip under the radar. “It is imperative that a sale is agreed as soon as possible,” the administrators’ report states, clear as you like, “given the lack of funding during the close season.” Money and time is running out.

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    4 Comments

  1. “Wednesday, however, huffed and puffed and missed a load of chances, which, according to a Wednesday-ite acquaintance of mine, rather encapsulated their season.”

    Well not really – we didn’t create enough chances, missed most of those that we did and gave away too many soft goals.

    “But the Americans are garnering considerable praise for coming to an agreement with the Co-Op Bank and various loan note holders, in whose hands the club’s future lies.”

    Really? Where from? I’m disappointed as you’re usually more questioning than that Mark.

    Ken

    May 11, 2010

  2. Thanks for this Ken. Certainly justifies the tone of your earlier comments.

    And I’ve got a question at last: Have Club 9 got their decimal points in the right place?

    Lets hope the “other parties” who have shown “determination” to invest in Wednesday are, well, determined.

    Mark Murphy

    May 14, 2010

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