On September 25th 2008 the then Port Vale chairman Bill Bratt declared: “I feel the board and I have taken the club as far as we can.” And now, officially, they have. The end of the “Valiant 2001” era at Vale Park, which began when the self-styled “supporters” organisation bought Vale out of administration in 2003 will be mourned by no-one. However, the way it has ended may have longer-term repercussions which will only gradually come to light over time (he says, getting his excuses in early for drawing conclusions laid waste by events).
I can’t have been alone in thinking: “Hooray, Peter Miller’s resigned… oooh, hang on… why now?” when Bratt’s brief-but-not-brief-enough successor chairman left Vale last weekend. The immediate practical impact was to make an already-ineffective board formally ineffective, as it fell short of the constitutional requirement of having four members, as well as the general requirement of knowing their arse from their elbow. Football Club and Supporters Club (SC) solicitors reportedly met after Miller’s announcement. No-one would say why, with the SC blaming “political and commercial sensitivities” at the club for their rare silence. Then chairman Pete Williams said they’d been “working extremely hard behind the scenes to get rid of the current regime.” But Miller didn’t get where he is today without knowing where the edge of the law is. Trading while knowingly insolvent is over the edge of the law. So he went before the money – begged, borrowed or (ahem!) otherwise – ran out.
Football club insolvencies have been frequent enough over the last decade to develop a tradition. And a traditional early sign of trouble is the transfer embargo, which duly arrived from the Football League the same day Miller departed. Less traditional was the tale of an un-named Vale employee who received a “demand from HMRC for unpaid tax.” The story appeared to get key details confused, but it provided an early warning of tax problems ahead. The employee initially suggested HMRC was making him personally liable for unpaid tax on his Vale salary, leading some fans to ask how Vale could “stoop so low.” They hadn’t, for once. But they had deducted tax from staff salaries without passing it on to HMRC, apparently a not uncommon practice among struggling businesses, football and non-football.
The next sign of trouble made me wince, so the ends of fans’ tethers must have been reached when they read that Vale were on the cadge to Stoke-on-Trent city council for between £300,000 and £600,000 (the amount rising daily at inflation rates rarely seen since the Weimar Republic). Vale needed the loan to survive long enough to even reach administration; it was described as “cash for administration”, which I suppose is one up on “cash for questions.” And the ghastly timing of the request ruthlessly exposed the damage done by the board’s unwillingness to admit the true state of Vale’s finances. The council announced £24m budget cuts just before the board began begging. And cabinet member for finance, Sarah Hill, announced that Vale still owed £9,033 of their February repayment of the £2.25m the authority loaned the club in 2006.
The board must have been encouraged when Hill expressed a desire to “work with them as much as possible to protect…the club’s future…(and)…no desire to place the club under undue pressure at this stage.” But Hill also noted the need to “protect the money owed to us” and the council’s “responsibility to the public purse.” And, as one well-informed reader of the local Sentinel newspaper noted, the council cannot do anything ultra vires, (“beyond their power”) or else they’d be in breach of the “Wednesbury Principle,” (a 64-year-old legal principle that basically requires council decisions not to be absurd). Having googled ultra vires and “Wednesbury Principle,” the council debated the issue, subjected it to a considerable scrutiny process and unlikely as it seems, decided it may be sensible to lend to Vale even though 80% of the last loan, which left the “public purse” six years ago, still hasn’t come back.
Council leader Mohammed Pervez said his cabinet had given a “steer to council officers to explore putting Port Vale into administration” rather than instructing them to do so, which perhaps betrayed an uncertainty about this strategy. Had Vale come remotely clean about their finances before the budget cuts announcement, the politics of a bail-out would have been less fraught. And Vale still haven’t come clean, as the council have delayed a loan decision until “at least” Monday due to “confusion over the precise amount needed.”
Inevitably, the players were not paid on time this month. And the board’s reluctance even to come clean to them left an understandably furious manager Micky Adams to break the bad news, just hours before their pay was due. Before the begging bowl could go out to the players’ union, the Professional Footballers Association, its CEO Gordon Taylor tied financial help to “a realistic possibility of the club being viable in the long-term,” a possibility which apparently Taylor won’t yet consider. The begging bowl wasn’t long under ex-director Stan Meigh’s nose, either. Meigh was one of the enemy when he was voted off Vale’s board at last June’s infamously indecisive EGM. But he recently became the enemy of the enemy by pledging to vote his considerable shareholding in favour of ousting the current board. This week, he suggested a willingness to help with unpaid tax and wages “if I could be sure where the money was going.” Vale fans could perhaps have been forgiven for thinking “well, go on, then,” as HMRC are “in the process” of serving a winding-up petition on Vale,
Meigh could therefore direct any payment straight to them rather than “pay towards (departing Vale CE) Perry Deakin’s salary,” as he said he feared. He noted, correctly at the time, that “no-one knows how much we owe.” And no-one is going to be writing blank cheques in Vale’s direction at the moment. HMRC themselves are refusing to say how much Vale owe (although the transfer embargo stemmed from a reported £88,000 tax debt). But they never do. “We cannot discuss individual cases,” is the usual mantra from the “HMRC spokesman” quoted in such newspaper stories. Even the “spokesman’s” harsh-sounding warnings about clubs “heading for trouble” if they “regard paying tax as an optional extra” or use “tax collected from employees or customers as working capital” is a standard press release. Auditors citing “material uncertainties” which “cast significant doubt” about clubs continuing as a “going concern,” used to make headlines but have equally become standard for struggling clubs; and doubtless Vale’s accounts contain the phrase. But we’ll have to wait, possibly for ever, to find out, as the March 13th AGM/EGM became an unsurprising casualty of the week’s events when the “information packs” due to be sent to shareholders on February 25th… erm… weren’t.
The worst comment of a normal week would have been Bratt’s; though some might ask why the Sentinel wanted his opinion, which was: “the club isn’t being run right otherwise these bills would be paid on time.” I suspect “you’re a fine one to talk” would be an abridged and heavily-bowdlerised version of Vale fans’ reaction. But we’re not in a normal week. So current (acting) chairman Mike Lloyd took the prize, the biscuit and the p**s by blaming a “revenue shortfall” and “a loss of £200,000 so far this season” on “the various (anti-board) campaigners.” Lloyd is not alone in playing the blame game, with one of the “various” anti-board campaigning groups, “Starve ‘Em Out” (SEO) packing their response with criticisms of “Vale directors past and present” for “eight years…haemorrhaging of cash and assets.”
The difference is, of course, SEO were right. Their organised boycott of season tickets has had an inevitable impact on Vale’s revenues – otherwise directors such as Lloyd would have lauded its failure long ago. But for a £200,000 loss in eight months, the blame lies mostly elsewhere. So, as one financial expert told the Sentinel, “everybody would want administration, even some fans.” Vale cannot make the step with only three directors. But the council are prepared to do so as they would be secured creditors, entitled to full repayment from an administration process.
There will be six “interim board” candidates who probably didn’t fancy digging into Vale’s finances, digging up the problems/bodies and finding a buyer without attracting accusations of favouritism towards local businessman Mo Chaudry. Chaudry himself claimed, with an immodest air of ‘I told you so’ that: “the board had a fantastic opportunity 15 months ago, they could have talked to me but they turned their backs.” And he appears to have already started negotiations to buy Vale. He declared his “duty to see if the right deal can be structured” to allow him to “give the club a future.” However, he was quick to add that “the more I have to pay to buy the club, the less there is going to be in the kitty to preserve its future.”
His critics have picked up on this. But when he added “I have to make a business decision,” he was surely echoing the thoughts of any sensible potential bidder. Of course, administration would terminate the old regime, unless the two “investors” who persuaded Adams “right up until last Saturday” that “everything was rosy” were real rather than a 94th attempt by the board to cling to power. It would also rid Vale of the shareholder “democracy,” including the unpopular “24.9% rule” which denied Chaudry the authoritarian control he demanded when he bid for half of Vale last year. Adminstration would also end the team’s promotion play-off push, which was surviving recent traumas remarkably well. Fans may view that as a small price to pay for a securer future.
Ultimately, administration will be in the interests of Vale’s creditors rather than the club itself, which fans – and Chaudry – ought to remember from the off. As for Vale’s future structure, V2001 was only ever nominally a “supporters” organisation and fans appear willing to cede what little formal influence they had over club affairs in return for whatever Chaudry eventually offers. However, V2001’s demise shouldn’t signal the death of “the vision of a fan-run club”, as the Sentinel suggested this week, anymore than former owner Bill Bell taking Vale into administration in 2002 signalled the death of the “benefactor model.”
Until the Supporters Club’s recent transformation, fans have lacked the cohesive voice of supporters’ trusts at other clubs. Even (especially?) under Chaudry, fans will require that voice. But that is a secondary argument for now. Should Vale emerge to rebuild its fortunes, it will require two simple things from its “leaders,” credibility and competence. Too often in football, and especially at Vale in recent years, that has proved too much to ask. It shouldn’t be.
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