The mornings get warmer and the evenings get longer, but still the main protagonists in Port Vale’s takeover battle argue over how many angels you can fit on the head of a pin. The deadlock is straightforward. Successful local businessman Mo Chaudry wants control. The current board don’t want any individual to have control and especially one, it seems, Chaudry. And Vale’s constitution doesn’t allow for it anyway – which can only change if 75% of Vale’s shareholding votes for it. But in recent weeks, intrigue has piled upon intrigue in the Battle for Burslem – a “web of intrigue,” in fact, for those of you who like your movies American, cheap and made-for-TV. The last time this column cast its jaundiced eye Vale-wards, Chaudry and the board were about to undertake confidential face-to-face talks over Chaudry’s popular six-figure offer to assume control of Vale via a 51% shareholding. Both sides made encouraging grunts about the talks, using emotive language such as “they went OK.” But these talks have taken a back seat to very emotive exchanges.
Until late February, the board’s vow of silence in response to Chaudry’s relentless thrashing of their management would have had Trappist monks nodding in approval. Then, from out of nowhere – or Planet Mars, depending on your viewpoint – they produced an eight-page letter to shareholders, explaining how responsible they were for everything good to happen at Vale since they “saved” the club in 2003. The letter was a curious mix of history lesson and furious spin. It was designed to “report on the actions taken to stabilise the club over the last seven years, clarify the financial position… and explain… our caution with regard to potentially handing total control of the club to one person, whoever that may be.”
A number of paragraphs were dedicated to “Port Vale and the Community,” listing an impressive array of community initiatives and creating the impression that the board were wholly responsible for them all. However, three paragraphs down, they admitted: “The community work is largely funded by outside sources… the Club does provide facilities (buildings).” Not quite so grand an achievement. On managers, the letter basically said, well…at least we got one right, Micky Adams’ 2008 appointment. The travails of Adams’ replacement, Jim Gannon, have somewhat undermined this record. But the board took credit for offering Adams an extended contract, ensuring “significant compensation when he moved.” How much this contributed to the letter’s claim that “the business is trading profitably” was unclear.
The “true” position was that “the club remained in or close to a neutral or profitable trading position until the last two seasons” (what happened in those seasons is not referred to, for some reason). They pay their taxes and they are “in a significantly better position than 80% of their competitor clubs in the Football League. Recent articles on this site show how faint that praise is, and how damned Port Vale may be by it. Chaudry’s response was predictably incredulous. He soon lambasted the board for “stalling tactics” in the talks, urging them to “open up the club’s books so we can start our due diligence.” This comment may have surprised those who’d heard Chaudry previously detail how close the club was to administration. It seemed he already knew all there was to know about Vale’s finances. As for any confidentiality, it was clear such confidentiality didn’t cover…whatever Chaudry felt like saying.
But Chaudry had a bombshell to drop. He’d had the Vale Park ground valued at £3.4m, by the same firm of chartered surveyors who’d valued it at £4.5m for the board five years previously. And the board had valued the ground at £5.7m in the most recent club accounts, figuring that £1.2m worth of ground improvements needed to be factored into the ground’s value, penny-for-penny. The ‘true’ value was less important than the impression created that the board were over-valuing the ground to mask the club’s financial struggles, as the depths of the story in the local Sentinel newspaper had a quote from senior economics lecturer Ian Jackson, saying these valuations “may not have a direct bearing on Vale’s immediate financial picture.”
The Sentinel reported that Chaudry’s valuation was based on “the assumption that (Vale Park) would go on the market for residential development.” And Jackson added: “On the assumption that the ground is not going to be bulldozed, supporters should not be unduly worried about the re-evaluation.” It wasn’t all good news for the board, however, as Jackson further suggested that if Vale’s “trend for making a loss continues there is going to be a very significant problem.” Nevertheless, the board missed a trick by not creating the impression that Chaudry was just a property developer valuing the ground for “residential development.”
This may have created more unwarranted fears; Chaudry’s valuation was simply on the exact basis of the accounts valuation. But Chaudry hardly had the moral high ground on creating unwarranted fears…more like copyright on the instruction manual. Instead, however, the Board went on a horribly ill-advised counter-attack. Chairman Bill Bratt claimed Chaudry was going to “use the valuation” to “get the club on the cheap” and “put it into administration and thus gain control of the property for his portfolio.” And, again from out of the blue, Bratt revealed that the club had done their own valuation and that Vale Park was worth “over £5m.”
He added that Chaudry’s valuation did not “seem to be carried out in the normal manner,” without specifying the abnormalities (a “walk-by valuation,” he said). And the club’s valuation was “done professionally by a reputable valuer,” the implication – deliberate or not – being that Chaudry’s was neither, despite Chaudry using the same method AND PERSON as the board. To be fair to Bratt… no, I’ve got nothing. This was ridiculous. And not only Chaudry said so. Anti-board campaigners the “Black and Gold” supporters group systematically took Bratt’s arguments apart, asking a series of straight, rhetorical questions such as: “If the club has genuinely carried out £4m worth of improvements to Vale Park… why is there no evidence in the accounts of such expenditure?”
The talks were off and the gloves soon followed. Chaudry set an arbitrary deadline of March 11th for the board to accept his offer and recommend it to shareholders at an EGM, a preposterous demand, in the midst of negotiations, even if it is the right thing to do. He unconvincingly feigned disappointment when the board disregarded his deadline, deducing in true Sherlock Holmes-style that “the absence of a response can lead to only one conclusion, namely my bid is not acceptable.” And he carried out his threat to withdraw his offer “in its present form,” after promising to “consider my position this weekend with my team of advisors.” But by the purest co-incidence of timing, while he was away doing that, there were significant moves elsewhere.
The seven-man board became six with the resignation of Paul Humphreys, one of the original board members from Valiant 2001’s takeover in 2003, after what he himself described as “months of soul-searching.” Before anyone could hijack the situation for a propaganda coup, however, he insisted that he was still an “avid supporter” of the rule disallowing any individual from holding 25% or more of the club.“ Ex-board member Mike Thompstone was more forthcoming. Thompstone resigned from the board after failing to secure a show of hands re-election at last December’s AGM. And he recently came out firmly in support of Chaudry’s bid as “a fantastic opportunity to move the club forward,” having previously been uneasy about an individual controlling the club.
Now he was naming names and dishing dirt in an e-mail which he allowed fan website “OneValeFan” to publish last weekend. The names he named in particular were vice-chair Peter Jackson and director Glenn Oliver, rather than Bratt, the major target of fans’ ire. He claimed Jackson was “intent on fighting” against Chaudry “to the bitter end to the detriment of Port Vale.” He added that Jackson alone had somehow vetoed a board initiative to “put out a statement to shareholders asking if they wanted Mo Chaudry to take over the club.”
And he claimed Humphreys had told him he was “so disgusted with certain members of the board that I can’t print it… but Glenn Oliver, hang your head in shame… your support of Peter Jackson makes me laugh out loud because I know exactly what he thinks of you.” If Thompstone’s tone was more akin to a school playground than an adult debate about company directors, they were still important allegations of boardroom disunity. And these were followed up by what seemed to be a fine piece of detective work from one of Vale’s many disaffected fans. It appeared to emerge that pro-Bratt director Graham Mudie had been elected to the board unconstitutionally back in 2006, and had cast significant proxy votes on behalf of significant club sponsor Broxap Investment Limited without their authority ever since. In an email which Broxap’s managing director, Robert Lee allowed fan website “OneValeFan” to publish last weekend, Lee claimed he had made “very clear” to Mudie that he was not “Broxap’s representative” and added that “neither you nor any Port Vale director has been given authority to vote on Broxap’s behalf.”
He added that he arrived at last December’s AGM to cast Broxap’s vote, only to discover that “Broxap’s vote had already been cast (by yourself, I later found out).” Despite the significance of this, Lee waited until, by the purest co-incidence of timing, just after Chaudry’s 11th March deadline had expired to mention this. One flaw in Lee’s argument was that it was… rubbish. The club issued a statement affirming that Mudie had been appointed correctly as a director. And that he “has acted correctly at all times,” most notably in acting as “the Company’s representative on the Board”, as it stated on a letter below the statement, a letter on…Broxap headed notepaper, signed by… Robert Lee. Lee had to admit “the letter, which I signed, says Graham was Broxap’s representative, so I was incorrect.”
Thompstone’s claims that Jackson had vetoed a board attempt to poll shareholders on the takeover also began to unravel, when Chaudry was forced to admit, despite claiming not to have had “even the courtesy of a formal response” to his latest bid, that… er… he had. And he admitted to the Sentinel that the response “revealed the board’s intention to poll shareholders.” The emergence of what resemble dirty tricks by Chaudry supporters should not, however, detract from the considerable support among shareholders that he has now gathered. A shareholders’ poll run by the “North London Valiants” (NLV) revealed that Chaudry had just enough support to change the “24.9% rule” which currently disallows his bid for 51%. This was predictable, given the NLV’s campaigning stance. And such exercises have significant margins of error (from my considerable personal experience). But the 40% turnout was impressive for such exercises and it indicated a groundswell of opinion against the current board’s continued dismissal of Chaudry.
The board now claim that, far from the club sliding into administration any minute now, its “finances remain positive and the indications are that we will break-even this season.” How much of this will be down to the one-off compensation payment Vale are due from Sheffield United for Micky Adams’ is unclear. That figure will largely determine the true state of Vale’s current finances. But while attention focuses on Chaudry and the board, another view is being squeezed out. One Sentinel reader commented this week that “if Mo really has the club at heart, he will buy 24.9% and work with the current board.” Such people oppose the individual benefactor model of club ownership and are tired of a board clinging to power when their chairman admitted in September 2008 he had taken the club as far as he could. The longer the current stalemate continues, the louder those voices need to be.
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