Clubs In Crisis: How Time Flies (Part One)

Clubs In Crisis: How Time Flies (Part One)

By on Sep 22, 2010 in English League Football, Finance, Latest | 0 comments

I take a month off to deal with some personal business (successfully, thanks for asking) and look what happens in the world of football. When I last looked, Liverpool’s ownership situation was one of utter chaos, with the current owners insisting on handsome reward for their failures – just like any other bankers. Blackburn Rovers were about to be taken over by an Indian businessman about which little was known. Cardiff owed money going back to the “successful” Peter Ridsdale era. Portsmouth administrator Andrew Andronikou was looking to sell Portsmouth to absolutely anyone who showed him proof of funds and then, whether they did or not, to show him proof of names including “Balram” and “Chainrai.” Manchester United’s financial dealings were “utterly unaffected” by any problems the Glazer family were having. And Sheffield Wednesday’s takeover was “imminent”. Whereas now…

The stories have mostly been well-enough told in national and local media. But there are still elements of each which have the capacity to surprise even a middle-aged cynic like myself, for whom “they’ve ****** it up!” is a default position when it comes to assessing football clubs’ financial (mis)management. It was only a matter of time, I guess, before something like Liverpool’s current stand-off happened. The “benefactor” model of football club ownership was trail-blazed by such as Blackburn’s Jack Walker, Wolverhampton Wanderers’ self-styled “Golden Tit” Sir Jack Hayward and Chelsea’s North Russian enigma-for-evermore Roman Abramovich. And the theory was that such experts at making money for themselves would ensure that they made money for themselves out of their football clubs, and, as a direct and inevitable consequence, the football clubs out of which they made that money would make money themselves, too.

The latest Hicks farrago at Liverpool should… SHOULD put the benefactor “model” to sleep as a workable business model for football clubs. With Hicks looking to re-refinance his debts by taking out more loans, in true Carol Vorderman fashion, Liverpool are in an even more laughable situation than ever. A three-man majority of their board are refusing to allow Hicks to re-refinance because they believe his continuing presence at Anfield is not in the best interests of the club. Hicks is legally challenging this stance because it isn’t in the shareholders’ (i.e. his) best interests. And both sides are… right. Should this impasse be settled by law, the results may have wide-reaching effects on clubs’ abilities to tone down the worst excesses of their owners. And it will officially give lie to the main justification of the benefactor business model of running football clubs, the supposedly natural co-relation between clubs’ interests and that of their owners. If only a major football authority like, say UEFA, would bring in some sort of rules to limit the scope of benefaction in football.

Hicks is yet to be consigned to history, of course, because of the list of ne’er-do-wells who responded to the call to buy the club. The systematic destruction of the credibility of Kenny Huang’s much-trumpeted bid was a joy to behold, especially as the main evidence for the prosecution was his own court testimony, when he made a series of statements about his sports background which were demonstrably disprovable. Well-respected football journalist Nick Harris, whose by-line has appeared, mostly in the Independent, above many of the better examinations of football finance, obsessively gathered the evidence to shred Huang’s credibility, from Huang’s claimed sources of funding to the level of his involvement in American sports.

The Sporting Intelligence web-site is the place to look for details. But leave yourself an afternoon and suspend your disbelief before settling down to read. And if you’re a Liverpool fan, try not to cry when you remember that Huang’s bid was taken seriously by the same Liverpool board upon which you are now relying to get rid of Hicks. Still, at least now that Benitez has gone, matters on the pitch have taken a turn for the better. No more scruffy 1-0 home wins over the likes of West Brom, no more impossibly defensive line-ups away from home, no more three-goal embarrassments in Manchester, no more silly substitutions of creative players, no more signings of mediocre full-backs and one-dimensional defensive midfielders. No more… well, OK… no more.

On the “imminent takeover” front, Blackburn Rovers have some years’ catching up to do before they are in Sheffield Wednesday’s league (or division). But, at the time of writing, they are on the way. Stories, usually from Alan Nixon in the People or Mirror newspapers, have appeared with clockwork regularity about new mystery bidders for the Ewood Park club, which has been up for sale officially for a couple of years now. When Rovers’ benefactor Sir Jack Walker died, so did the Walker family’s interest in football. And since the Walker Trust stopped its small-but-regular funding, the cry has gone up for more investment to keep Rovers hanging on to their place in the middle of the Premier League. This is because the club have given up on the concept of self-sufficiency – although why they think they are unable to attract sufficient support through the turnstiles to watch El-Hadj Diouf bulldoze goalkeepers every week, I don’t know.

This close season, two sources of investment emerged, both “Indian businessmen”, neither of whom could be filed in the “transparent” column. In June, Saurin Shah emerged with plans to tap into the potential support of the considerable South Asian community in Blackburn. This notion was as detailed as it got about Saurin himself. Plenty was written about his familial links to Indian money and the Indian Premier League, the world’s richest cricket league. But Saurin’s background was no more detailed than “in shipping and textiles,” which could simply have meant that he hung around the docks late at night in drag. Shah has since been usurped as favourite by Ahsan Ali Syed, whose business background looks superficially strong but hasn’t withstood even the limited scrutiny under which it has been put since he made his “£300m takeover” public.

Much has been made of the relatively small-time “trail of debt” uncovered by Adrian Goldberg of BBC Radio 5 Live Investigates, as if the Beeb have some sort of London-based, anti-Blackburn bias and were prone to sensationalism about such things. The virulently Brummie Goldberg, however, was the driving force behind football fanzine “Off the Ball” which slightly pre-dated the still going-strong When Saturday Comes but was alongside it as the pioneers of the fanzine movement back in the mid 1980s. And although Syed’s trail of debt amounted to little more than £100,000, its very existence – including rent arrears and London congestion charges – sits uneasily with the image Syed is currently portraying of a multinational mover and shaker in the business world.

Syed “ticks all the boxes” for a modern-day football club potential bidder. He’s been a “lifelong fan”… for ten years. He’s promised a £100m transfer kitty and thinks David Beckham has a shred of top-flight football credibility. He has also talked of getting Blackburn “back to the glory days” which, if he knew his history, were 1995 and… er… All credit to the club for undertaking their own due diligence into these potential bidders, which now include three thus-far-anonymous Australian tycoons (an “anonymous Aussie – an oxymoron if ever there was one). It came as no surprise to me that their due diligence “went further” than the Premier League’s. It will need to, as Syed’s hopes of completing a deal before the end of the transfer window went up in smoke very early on… unless he meant January’s transfer window. He could, of course, still be the “real deal.” But I’ll wait and see, if you don’t mind.

Cardiff City’s new Malaysian investors, Dato Chan Tien Ghee and Vincent Tan, could also be the real deal – and without the inverted commas, too. But its just too early to say one way or another as the legacy of former chairman Peter Ridsdale is yet to fully emerge. That legacy is largely one of debt. “PR-Pete” certainly worked hard at Cardiff over the years, some of it good work. But he never worked harder than in May, as he was about to leave the club, trying to convince observers that his “legacy” was simply Cardiff’s shiny, new stadium and shiny new future. He would have got away with it too, if it wasn’t for those pesky Seasiders from Blackpool and their promotion play-off winning ways. At the time, cynics said the Malaysian’s promised £6m investment was mostly already spent, or about to be spent – on tax and other debts. The cynics were right, as, in portraying the Malaysians as good for their cash, Bluebirds director Steve Borley revealed that they had “put in more than £10m already and it will be more than that soon.”

Borley suggested that Cardiff’s squad strengthening over the summer was the manifestation of this, especially the undeniably bold move to bring Craig Bellamy to his hometown club from big-spending Manchester City. This was unfortunate on two counts. One, that news of Bellamy’s move, and the money surrounding it, was quickly juxtaposed with Scottish club Motherwell’s increasingly desperate efforts to get back £175,000 that Cardiff owed them for a year-old transfer. Whilst Bellamy was striding in one door, Motherwell chairman John Boyle was threatening to have bailiffs knocking on another one for their long-owed money. Two, and linked, was Cardiff chief executive Gethin Jenkins’ efforts to make Cardiff’s fiscal priorities seem more reasonable than that, noting on the club’s official site that “we released ten players off the payroll…and have not paid a single transfer fee this summer.”

So, if not transfer fees, what the Malaysians had actually spent the £10m on. The inescapable answer was Ridsdale’s “legacy” – his “legacy debt.” Alongside his revelations of the Malaysians’ £10m investment, Borley noted that “the directors have been working their way through a mountain of issues,” which translated as a “mountain” of debts. Hidden away in Jenkins’ trumpeting of the Bellamy deal (“the business and sporting case for signing Bellamy more than stacks up”), was the more startling revelation that “faced with similar problems” to Cardiff’s this summer “some (clubs) would have chosen to go into administration.” As an indictment of Ridsdale’s tenure at Cardiff, this certainly “more than stacks

Throughout the summer there were revelations of all kinds of Bluebirds debts, from other clubs and fiscal authorities to “mysterious Caribbean firm Player Finance Fund I SPC,” who rocked up in June to claim “£2.5m-£3m.” And, remember, Borley said “it will be more than that soon.” I once wrote that former Cardiff supremo Sam Hammam’s biggest achievement was to make Peter Ridsdale seem like the good guy when Hammam’s grim fiscal legacy fully emerged. Ridsdale’s biggest achievement? When Ken Bates lambasts Peter Ridsdale for his financial management, you find yourself siding with Bates.

PART 2: Mandaric for Portsmouth? frying pans and fires on the South Coast. An insight into the mind of a (the?) Malcolm Glazer fan. And Sheffield Wednesday’s takeover. It’s imminent, you know.

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