Bolton’s (First) Day In Court Ends In A Goalless Draw
At the High Court in London this morning, Bolton Wanderers received a stay of execution against a winding up order brought against the club last month by HMRC. And here ends the good news for this particular football club at the moment. To clarify, this morning’s court decision was widely expected. It has become a pretty standard part of the pas de deux that seems to be performed between clubs and the taxman for clubs to be given a period of grace during which they can attempt to raise the funds in order to keep the wolves from the door or, should this all come to nothing, take the relatively drastic – but very occasionally necessary – step of putting the club into administration.
It’s not particularly pretty and there isn’t a great deal of dignity involved in it all, but such is the life of the football club that lives beyond its means for as long as possible and is now facing the music. It isn’t the first time that we’ve seen it, and it almost certainly won’t be the last. The headline figure is a truly frightening one. £180m is an almost unimaginably large amount of money. But to keep referring back to this as a headline figure is somewhat misleading. The majority of the club’s debt is owed to owner and (now former) benefactor Eddie Davies, and it remains extremely unlikely that Davies will act in such a way as to foreclose upon the club in way that will endanger its future any more that is already under threat.
The words of the legal team representing HMRC, however, will have stung. The court was told that “proposed route” for rescuing the club was “speculative to say the least” and that and Bolton Wanderers FC Ltd appears “to be very clearly insolvent.” Whether either of these statement is completely true is, of course, open to debate. What we know for certain is that the club owes HMRC £2.2m, that there have been issues in ensuring that all of the club’s staff would be paid over the course of the last couple of months or so, and that the club remains under a transfer embargo for breaching Financial Fair Play rules. For now, though, there is a place for sentimentality and there is a place for hardheaded business dealing. That we treat football clubs as being more than being mere businesses may well be amongst the factors that contributed towards Bolton Wanderers receiving today’s adjournment.
A Fire Sale of the Vanities
The hard-headedness required to sell assets in order to give the club an opportunity to trade its way to survival will need to show itself over the next five weeks or so. The club is hoping to sell a car park at the Macron Stadium, which is next to a retail park, in a deal that could pay off HMRC and secure its financial position until the end of the current season. This, however, is not where the club’s fire sale is likely to end. Players and the club’s training ground are also up for sale, and Bolton Wanderers are no in a particularly healthy position as a seller. The whole world knows the urgency of the club’s financial position and this will obviously have a negative impact on the price of anything that the club receives as a result of selling its assets. The wolves of HMRC, however, are at the door, and this is such a pressing matter that no offer is likely to be completely overlooked at the moment. And a high interest loan to a company called Nucleus Finance is believed to have been paid off, which falls under the category of being A Good Thing.
What has been almost surprising about what has happened to Bolton Wanderers has been the speed with which the club’s position off the pitch has unravelled. It’s only just ten and half weeks since the extent of these tribulations really started to become fully apparent when a report of fears of redundancies at the club first surfaced in a national newspaper. In those few, short weeks, the club has seen a loan deal with Wolverhampton Wanderers for Rajiv van la Parra collapse whilst other possible loans also fell by the wayside, confirmation that Eddie Davies will write off £175m in loans to the club, the appointment of Trevor Birch as a financial adviser after chairman Phil Gartside became too ill to continue in his position, a failure to pay players’ wages at the end of November, sale of offices at the Macron Stadium and PFA assistance paying them at the end of December and entering into negotiations with both Wigan Athletic and Preston North End over the future of the club’s training ground.
A Very Bolton Takeover
In the background, of course, news regarding who the new owners of the club might be have been largely based on rumour and speculation. It was reported two weeks ago that one bid to take the club over was stumbling over who would take the financial responsibility for any further claims from HMRC. After all, the one that hangs over the club’s head is adjourned for a few weeks, but if it were to be paid the likelihood is that another one would follow soon afterwards, presuming that the club has not been maintaining its tax bill over the last couple of months. Meanwhile, the Lions of Vienna website detailed the public and unlikely to want to be public side of one group that has been sniffing around the club of late.
The involvement of Jonathan Disley is a particularly eyebrow-raising development. As Lions of Vienna points out, Disley may be reasonably described as having had a chequered business history in more than one respect, and his group’s apparent plan to sell off many of the club’s assets in order to cover what we would consider to be short to medium financial losses will only weaken its position in the long-term. Of course, the club will be likely to lose many of these assets should it eventually be nudged into administration anyway, but the very fact that the club could end up being purchased by somebody described by a national daily newspaper as someone who “portrayed himself as a legitimate multi-millionaire business man when in fact he was a bankrupt who made his living by asset stripping companies, which were in financial difficulty” will surely only increase the concerns of Bolton supporters over what the long-term prognosis for this football club might end up being under ownership backed by Disley.
Ultimately, though, the fate of Bolton Wanderers will come to rest in the hands of one man, the man whose extravagance, it might be argued, put the club in this position in the first place. Eddie Davies remains the owner of the club for the time being, but it is his position as by far the club’s biggest creditor that will come to be considerably more significant in terms of the club’s long-term prognosis. It might be argued that his ownership of the club is essentially worthless – apart from that it will be his decision who it is sold to – but his position as the creditor for a such a huge proportion of the club’s debt means that even in the event of the club being forced into administration, he would hold all the cards with regard to who the club’s new owners would be, because his vote would determine whether any CVA proposed by the insolvency practitioner dealing with the club – which could easily, were the club were to put itself into administration, end up being Trevor Birch – was approved or not. It’s not a bad position to be in. It’s certainly better than having HMRC as anything like a significant creditor in terms of the club’s overall debt, as they would almost certainly block any CVA proposal.
But the questions that Bolton Wanderers supporters will be waiting on answers for remain hanging in the air. Will Davies approve merely to the highest bidder or – if they’re not one and the same – the one with the clearest vision for how the club can be put back on its feet? For all the fine talk of writing off the club’s debt, would he continue this policy if the any new proposed seemed to have the means to pay a proportion of it back? Will adherence to Financial Fair Play – a failure to follow these guidelines means that, on top of everything else, the club is under a transfer embargo at the moment – be a key part of any negotiations, or would he prefer to just cut and run? None of these are necessarily as easy to answer as they may at first seem, yet the long-term health of Bolton Wanderers will be defined by the next few weeks. If Eddie Davies the businessman ends up making the final decision over all of this, the club may have to accept that reduced circumstances are the best it can expect for a few years while it gets back on its feet. If, however, Eddie Davies the supporter makes the final decision, the club might find that a few months pain is a small price to pay for a clean slate. Whether it’s morally acceptable for one individual to throw this amount of money into a football club or not is something of a grey area, but supporters of Bolton Wanderers would certainly be forgiven for preferring the latter to the former.
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