Are Wednesday & Palace Cracking Up?

Are Wednesday & Palace Cracking Up?

By on May 25, 2010 in English League Football, Finance, Latest | 9 comments

A brave, or foolhardy, contributor to the Sheffield Wednesday fans’ website “Owlstalk” last week asked the straightforward question “Who did what?” about club chairman Lee Strafford’s recent departure. The last time I dared look at the thread, it had stretched to 57 pages of responses but barely an answer. Meanwhile, at Crystal Palace, former chairman Simon Jordan is right where he wants to be, at the centre of the story. He is, so about 94 local and national newspaper headlines have informed us, the “key to Crystal Palace’s future.” But he’s been that for a long time and look where it’s got them

So the Sheffield Wednesday saga drags on. Again. Having won a few ambiguity awards over the months, US “investment group” Club 9 Sports finally made an investment offer to Wednesday’s board on May 13th, and went terrifyingly public with the detail on May 17th. However, on May 14th, Wednesday’s board said an unequivocal “Foxtrot Oscar” to the terms. And on May 17th, Strafford resigned as chairman, to be replaced by rave from the Wednesday grave Howard Wilkinson, who had been “acting as technical adviser to the club” – which may have explained a lot to a lot of Wednesday-ites.

Wednesday’s relegation had a significant, ultimately fatal impact on Club 9’s offer, not so much reducing it as moving it a decimal point to the right. What eventually emerged was a “total cash commitment” of £10m, which was calculated by Club 9 – possibly using the Duckworth-Lewis system – as “the highest value ever placed on a League One team.” The immediate investment was to be £2m. But the other £8m was committed on an increasingly vague basis, £3m over next season, “as needed in a disciplined approach” and the other £5m “for the future.” For that, they wanted majority board membership and, the real eyebrow raiser, a £420,000 annual “management fee.” This would fund “international player development” and “sales management,” as well as the more jargonistic “community outreach” and “audience development.” And these services would take “a small army of talented executives and managers to properly design and implement them.”

Club 9 issued an unusually frank Q&A article on its otherwise sparse web-site, eschewing the usual “why are Club 9 Sports the future of Sheffield Wednesday?” style questions for pertinent and searching ones which looked as if they’d genuinely been asked by genuine Wednesday-ites with genuine concerns. They were challenged on all aspects of what was already looking like a failed bid, from the size (large) of the management fee to the size (not large) of the initial investment. “Help us understand,” pleaded one questioner, “how injecting a very small amount of capital which you then withdraw by way of management fees over a short time, helps the club move forward?” S/he got a full answer on who would be doing what to whom and why, with only one lapse into jargon, concerning “sponsorship solicitation.” Modestly, Club 9 noted that “the club would never be able to afford this level of operational talent without the management fee.”

Wednesday’s board thought differently, although suggestions of division have subsequently been rife, e.g. that one longer-serving director had a “swing vote” which determined whether Strafford resigned. And Club 9 suggested likewise in their Q&A. Someone asked about Strafford’s resignation and gleaned the cryptic response: “That’s a very good question for others in Sheffield,” before the somewhat less cryptic “One of our concerns with this club does involve a lack of cohesiveness and alignment of interests inside the board…when businesses fail or falter, it is often as a result of too much “inward facing” as opposed to “outward facing activities.

If the Q&A was meant to win over enough Wednesday-ite hearts and minds, it failed. Dubbed “Cloud 9 Sports” by the (many) sceptics, the Americans were heavily criticised for the modesty of their investment. And they have been linked all-too-often with some shadier elements of the investment world, which recalled Strafford’s “by the way” style reference in February to “a lot of crooks” showing an interest in the club. Indeed, much of the afore-mentioned “Owlstalk” thread was taken up with cryptic comment about investors of varying resource and propriety. One post mentioned “ac v nt” and I spent possibly too long pondering who “ac” and “nt” were and why they were against each other.

So, “the old guard, led into bat by Howard Wilkinson, take another unwanted and unwelcome turn at the crease”, noted the clearly cricket-loving Alan Biggs in the Sheffield Telegraph newspaper. Even a stonking investment offer might have failed to dislodge some of this “old guard” who are unwanted and unwelcome largely for presiding over Wednesday’s decline from UEFA Cup to Johnstone Paints Trophy in under a decade. The board say they are “continuing to engage with serious potential investors.” But the emphasis, before and since Strafford resigned, has been on the club “progressing on its own two feet without outside investment.” Indeed, chief executive Nick Parker last week went as far as to say: “We have a lot of experience in ensuring that this club is financially stable and has been for many years, due in no small part to the longer-serving directors.” Wednesday’s continuing multi-million debts suggest Parker was taking the ****. He wouldn’t be the first to do so in this tale.

Palace’s route to salvation is now the more linear. Administrators P&A Partnership, fronted by Brendan Guilfoyle, have worked their way through a labyrinthine negotiating path, which Guilfoyle likened to a “Rubik’s Cube” at a recent supporters’ meeting, to the bafflement of all under-30s present. Palace should now exit administration with dignity, points and, most importantly, stadium intact. But Jordan remains a stand-out spanner in the works. And, as per his usual modus operandi, he could not be more high-profile about it. At the recent creditors’ meeting he took (verbal) swipes at Guilfoyle for not marketing the club after it avoided relegation, a bit much from someone who had failed to sell it over a three-year period when it wasn’t far shy of the play-offs.

In turn, Guilfoyle noted that pretty much all of Jordan’s claimed £7.8m debt was being disputed one way or another, which probably didn’t help Jordan’s mood. And in turn again, Guilfoyle wasn’t best pleased when Jordan squeezed onto the creditors committee charged with “helping the joint administrators.” Jordan got on as representative of “First Artist Sport Limited”, despite his well-documented view of football agents as “scum, evil and pointless.”

Jordan is, though, a First Artist shareholder, having figured, probably correctly that he’s been so rude about agents he “needed a relationship with one.”Jordan added criticisms of Guilfoyle’s inability to raise funds, which would have raised a chuckle in the Kevin Blackwell household, after Guilfoyle sold chunks of the Luton team while they were in administration, under Blackwell’s management, in 2008. The, wholly speculative and unfounded, suggestion then was that Guilfoyle had a beneficial arrangement with certain agents at Luton – and Luton were never short of an agent in those days.

Suspicions were aroused again in January when the agent involved in Victor Moses’ transfer to Wigan, shortly after Palace went into administration, received £100,000 for his work on a deal between willing buying and selling clubs and a player more than willing to head for the Premier League. “I could have sold him in my sleep,” said then-manager Neil Warnock, understating nicely, as ever. In the midst of Warnock’s departing diatribe at Guilfoyle, he made reference to the “administrator’s agent” telling him he could buy players (you could imagine a preening self-publicist like Andrew Andronikou having an agent, but…). So for Jordan to accuse Guilfoyle of not selling enough players went against more than one grain.

Now, though, Guilfoyle has had to sell. Darren Ambrose, to QPR – and back to Neil Warnock, much to the delight of Palace fans, I’m sure. The money will pay summer wages at Selhurst Park. And Warnock of all managers will know how helpful £750,000 is. Palace’s quoted monthly wage bill when they went into administration was £800,000. And with the, according to Guilfoyle, “well remunerated” Warnock now at QPR, £750,000 should cover a month. Anyone looking to lambast Warnock for getting Ambrose on the cheap should note that the midfielder was “£1.5m-rated” when Wolves were interested in him last month, so it could be argued he’s gone for half-price. Moses, however, was “£5m-rated” before he went to Wigan for £2m. Warnock has no more taken advantage of the buyer’s market for Palace players than anyone else. Less so, arguably.

But whatever the moral rectitude of Neil Warnock, the loss of Ambrose highlights the time-critical urgency of Palace’s financial plight. And if Jordan is a stumbling block, he needs to be overcome quickly. The chances are that he will be overcome, however. Jordan has pledged to “make sure I help to get the best deal for the creditors.” He has a pivotal position as a major creditor, with Guilfoyle acknowledging that Jordan’s support is “key” to a successful CVA, despite the dispute over his debt. But he has taken a contradictory negotiating stance, declaring that “it will not be by my hand that Crystal Palace fails this CVA.” So he can’t credibly threaten now to do so, as even if he does, Guilfoyle can call his obvious bluff.

Jordan, therefore, is right where he wants to be, at the centre of the story. But it is not as comfortable a position as usual. The good thing for Palace is that if, as likely, Jordan’s emotions seize him at the vital moment, he’ll vote for the CVA. And even if they don’t, his chances of getting any more money from failing the CVA are slim. He hasn’t done the right thing by Palace in so many different situations, which is mainly why they are where they are. It seems he can be trusted to do so this time. And, given my track record on predicting the future at Sheffield Wednesday, Palace fans had better start praying now.

Thanks to Ken Toft for providing useful resource material for the Sheffield Wednesday section of this article and a better perspective on the Owls than I’d previously mustered.

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    9 Comments

  1. Both of these clubs are going to either sink into mid-table mediocrity in League One, or have a Newcastle-style super-galvanisation and take both automatic promotion slots with ease.

    Obviously, as a Huddersfield fan, I’m hoping it’s the former. I’m also hoping no clubs start League One on -10/-15/-30 or whatever next season, but I doubt it…

    CTT

    May 25, 2010

  2. CTT – no danger of them taking the League One automatic spots between them. Palace didn’t go down.

    Enjoyed what I saw of Huddersfield this season, hope you make it next. Never thought Lee Clark would make a manager!!

    Mark Murphy

    May 25, 2010

  3. CTT, Palace havent been relegated so i doubt theyll be taking any league one promotion spot next year, regardless of any “super-galvanisation” that may happen at the club.

    Tom Wolsey

    May 25, 2010

  4. So they haven’t. Who did go down then…

    Ah, no danger from busted Plymouth and Peter-out-borough.

    Southampton and possibly Wednesday it is then…

    CTT

    May 26, 2010

  5. Does anyone know what Palace’s debt to HMRC is and (more importantly) how it compares to Jordan’s dubious £7.8m debt?

    Another summer, another doctored CVA I suspect. Hopefully another law case to follow.

    Martin

    May 26, 2010

  6. The statement of affairs as at 26 Jan 2010, in the administrators’ report to creditors said:

    PAYE and NIC £1,488,876 VAT £656,212 TOTAL: (£2,145,088)

    …and St Johns Ambulance £15,817

    Mark Murphy

    May 26, 2010

  7. Main problem at Hillsborough is the Co-op Bank’s £20 million loan is secured agAinst the stadium valued A FEW YEARS AGO at £25 million, ie before property market crashed and severe flooding – the ground’s in a flood zone – see website of Environment Agency. So, the Yanks’ valuation was generous as ground’s now worth no more than £10 million, plus a re-valuation’s overdue and administration’s next step.
    Even showing Cantona the door or not supporting di Canio when the ref took a dive was not as bad as this.

    Mark

    May 26, 2010

  8. Cheer up Mark – Billsaja to the rescue!

    Mick

    May 26, 2010

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