Crystal Palace Avoid The Axe… Just

Crystal Palace Avoid The Axe… Just

By on Jun 1, 2010 in English League Football, Finance, Latest | 9 comments

It has been a long Bank Holiday weekend for Crystal Palace supporters, and the new working week started with the longest day of all. With no take-over of the stricken club having been confirmed, the club’s administrator Brendan Guilfoyle had announced that the consortium looking to purchase the club from the administrators had until three o’clock this afternoon to reach agreement over the purchase after talks with the administrators for the company that owned Selhurst Park, Price Waterhouse Cooper, had hit a dead end. They got there in the end, stumbling over the line an hour or so over the deadline, but their story should be a salutory tale for all football supporters and club owners.

The tale of financial mismanagement at Crystal Palace was a familiar one but how the club came so close to extinction was less so, and key to the close shave that the club had was the separation of Palace from Selhurst Park. Previous owner Simon Jordan had claimed to have purchased the freehold to the club’s home for £12m in November 2006, but this was a half-truth that almost proved to be highly expensive. What actually seems to have happened is that Jordan did purchase the freehold from its previous owner, Ron Noades, but that that he had financed the deal through a former director of Tottenham Hotspur, Paul Kemsley, and the ownership of said freehold effectively passed into the hands of Kemsley’s Rock group of companies.

What happened next was a damning indictment of more or less every aspect of how this transaction was completed. Jordan was unable to pay a “parking” fee to get the lease for Selhurst Park back from Kemsley, but the Rock group had already entered into administration themselves. The Rock Group became the legal owners of Selhurst Park in 2008, and Jordan, according to records held by the club’s administrators, seems to have negotiated a new lease for the club to stay there which increased their rent from around £600,000 per year to £1,250,000 per year. The administrators themselves admit that they do not know why this happened with two years left on Palace’s existing lease on the ground.

The club’s administration, with the benefit of hindsight, was little short of being a foregone conclusion from the moment that the new lease on Selhurst Park was signed. The club’s debts were now owed to a variety of different creditors, and it was the Cayman Islands based Agilo, to whom Palace owed £5.5m, that pushed the club into administration at the start of this year. Administration was, in some respects, a good thing for the club. At a time during which HMRC were throwing around winding up orders with understandable abandon, it secured the club a bit of time to get its house in order. That it took so long, however, was due to the byzantine structure of the ownership of Selhurst Park itself.

A consortium, named CPFC2010, quickly appeared that was interested in buying the club, but the sticking point seems to have been that they were insisting on taking ownership of Selhurst Park. This meant, effectively, that two sets of negotiations had to take place – one for the club, through Brendan Guilfoyle, and one through Price Waterhouse Cooper. Meanwhile, on the pitch, manager Neil Warnock departed at more or less the precise moment that the ten point deduction was sanctioned against the club (which may be worth bearing in mind should he ever utter another sentence containing the word “loyalty” ever again), and the points deduction and a partial collapse in form left them scrabbling to avoid the drop from the top two divisions for the first time since the late 1970s. They managed it in dramatic circumstances, at Hillsborough on the last day of the season.

Since then, however, the club’s income streams have dried up and, with negotiations apparently still stalling (over creditor concerns that if the ground is sold to CPFC2010, they would miss out on a far greater sum than may have been achieved if Selhurst Park were to be bulldozed and sold for property development), the deadline was set for today for the matter to be resolved one way or the other. Last Friday, with ominous echoes of what happened at Portsmouth a couple of months ago, the club announced that they were to make twenty-nine staff redundant, and then Guilfoyle then confirmed that he would have to set a final deadline – this afternoon, at three o’clock. The money, even to pay players’ wages, had run out, and it was the final deadline that could be set without having to either sell players (which CPFC2010 had been against to the point of suggesting that they may have to pull out if this went ahead) or even, in the worst case scenario, the withdrawal of the administrators and the near-inevitable subsequent winding up of the club.

And so began Crystal Palace’s longest day. There were protests outside Lloyds Bank offices in London after a demonstration march by supporters earlier this afternoon. Over the weekend, the gravity of the situation had started to become clear, and external pressure was starting to build on all concerned to knock their heads together and reach agreement. The three o’clock deadline came and passed with no official statement, but the news wires were starting to hum. The official announcement finally came an hour and a half after the deadline, from Lloyds Bank:

Stadium administrator Pricewaterhousecoopers has reached an agreement in principle with CPFC 2010 in relation to the sale of Selhurst Park. This enables the consortium to go ahead with the purchase of both the Crystal Palace Football Club and Selhurst Park.

The dotted line hasn’t been signed yet, but at last there is some definite, positive news after four long months for Crystal Palace supporters. They have worked tirelessly to keep their club’s plight in the news, something which they achieved with stunning results last weekend as the news worsened. There may well have been points over the last few weeks when the men behind CPFC 2010, Steve Parish and Martin Long, looked at the figures, the hassle and the pressure that they were under and wondered whether it was all worth it or not. We can be certain, however, that if they did, the continued support of the supporters of the club itself must surely have encouraged them to keep pushing and keep negotiating in order to save their club. For the rest of us, this close shave acts as a timely reminder that we may yet not have seen the worst of the chill wind that is blowing over football’s finances.

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    9 Comments

  1. Thank you Steve Parrish and Martin long for working so long and so hard to get us out of the wilderness and back to the promised land that is Selhurst Park.Your tireless work is very much appreciated by palace fans everywhere.

    les samuel

    June 1, 2010

  2. Another fine article from 200%. But the reality is that Palace have had it easy again. Not a chill wind for them but more like a pleasant breeze.
    You drew a comparison with Sheffield Wednesday in an earlier article. Lets have a closer look at some of the emerging facts:
    -Palace invested heavily in their squad with money they did not have. Wednesday spent only what they could afford.
    - Palace went into admin for the second time in 10 years. Wednesday have serviced millions of pounds of debts for much the same time.
    -Despite a 10 point deduction, they still stayed up. Wednesday went down.
    -Palace punished many of their employees, the taxman (and taxpayers), their Bank and businesses who gave them credit, by writing off millions of pounds worth of debt. Wednesday are still servicing theirs.
    -Palace got their ground back, and in terms of net flow, haven’t paid to do so.
    -Despite being in admin, and with the exception of two players, Palace are clearly not a selling club! Wednesday will be prepared to sell, even as they plan to win promotion.
    -Palace start their next campaign in the Championship, probably overspending again. Wednesday will be in League 1, cutting their cloth according to what they have, with little likelihood of a transfer fee being paid for any player.
    -Palace emerge considerably richer than Wednesday and will probably be so for some time to come.

    Palace fans have a lot to look forward to. Others will no doubt choose to take the same route while the benefits of such gross mismanagement remain.

    totem owl

    June 1, 2010

  3. Totem Owl – you should really get your facts right. Palace have not invested heavily in the squad – we haven’t bought a player for money for 18 months, and not paid significant money for anyone for much much longer. Our agent fees were non existent. We didn’t sell that many players this season because we didn’t have that many to sell in the first place – we often couldn’t fill our subs bench.

    How can you say we haven’t paid for our ground? That has been the whole point – the price for buying it back after the combined greed of Noades and naivety & shapp trading of Jordan lost it for us.

    And a final point – our staff and players were ALL paid (even if sometimes late) until the very end of the current saga. Our new owners have stated that they will not follow the route of the past, they will base the club on our excellent academy and youth program rather than buying million pound players.

    None of this is a knock at Wednesday – but correcting some myths you are sustaining.

    Big Blue Eagle

    June 1, 2010

  4. Sooner or later I hope one of the clubs from the top 2 divisions goes bust completely. Madness the way football is run.

    Jertzee

    June 2, 2010

  5. the “holier than thou” attitude of some football supporters is misguided. who does toten owl want to see punished, the palace supporters? the former chairman? the hedge funds? the banks? all of them? and how? more than a ten point deduction? compulsory relegation? those sanctions only punish the fans. the real culprits usually walk away to get involved with other football clubs or retire to their yachts on the costas. woe betide sheff weds should fall into debt. be careful what you wish for.

    Bern

    June 2, 2010

  6. I wasn’t quoting myths – I was using facts. I realise the issues with the ground were behind much of Palace’s problems, but the fact is they still chose to overspend. They spent £257,000 on agent fees in the 12 months to June 2009. Wednesday spent £5000. In 2007/8, their wages were £10M or 97% of turnover – Wednesday’s have been about half that at under 60% of turnover since 2004. I’m sure I could go on and on.
    As for filling the bench, I’m well aware that both Sheffield clubs have not had a full bench at various times over the last two seasons, so don’t use that as a sob story. It won’t work.

    The bottom line is that Palace made sure that football was the loser and financial mismanagement is the winner in this sorry tale. If pointing that out makes me holier than thou then so be it, but that was not the point.

    Finally Bern asks who I want to see punished? Think about this – who did get punished. I don’t think it was Palace.

    totem owl

    June 2, 2010

  7. We’ve seen it with Rotherham, Bournemouth and Notts county (Munto fiasco) in L2. Plus ca change… like the banks, football punishes those that play with a straight bat and rewards those that are financially profligate.

    NottyImp

    June 4, 2010

  8. Sadly Football probably needed a club like Palace to get liquidated for anything substantial to get done.

    So the nonsense goes on…

    Martin

    June 8, 2010

  9. It doesn’t sound like anything has yet been written off, though it seems a CVA is in the offing. Whilst the 10 point admin penalty seems fine to me (admin doesn’t actually lose any creditors any money), I’d say the penalties for liquidating in the Premier / Football League are too small. For me, it ought to be at least a demotion if not 2 or 3 levels down (as happens in non-league). But fortunately that circumstance hasn’t happened to Palace. I also wonder whether agreed CVA’s ought to trigger some penalty too, on a sliding scale according to percentage of debts written off.

    oftenscore6

    June 15, 2010

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