Chester City's Summer of Crisis Continues

Licence Revoked

Chester City’s pre-season friendly at Marine last Saturday was called off. All their other warm-up matches have since been cancelled too. This is not due to a waterlogged pitch or a scheduling conflict, but because the Football Association has refused to renew the club’s licence to play for the coming season.

For the long-suffering supporters at The Deva Stadium, it is just the latest blow in a summer that was already supposed to be rock bottom. Relegation from the Football League was swiftly followed by the club entering administration. Now, with the Blue Square Premier season just three weeks away, they are an unlicensed club barred from playing until the FA’s concerns are addressed.

The club’s owner, Stephen Vaughan, has been bullish, suggesting the problem is merely a matter of paperwork. But the FA does not ordinarily take such a drastic step over a perfunctory issue. It clearly feels something is wrong.

The Ownership Shuffle

The roots of this latest crisis appear to lie in the events of earlier this year. Legal ownership of Chester City was transferred from Stephen Vaughan to his son, Stephen Vaughan Junior. This move now looks particularly convenient in light of the club subsequently entering administration.

The FA’s “fit and proper person” test, for all its perceived weaknesses, bars anyone who takes a club into administration more than once from being a director. By transferring ownership on paper, Vaughan senior sidestepped this rule. He was no longer technically in charge when the administrators were called in.

He did, however, remain the club’s biggest single creditor. This position allowed him to effectively control the sale process. A prospective deal with former Chester player David Jones reached the due diligence stage before collapsing. Vaughan then stepped back in, proposing a Company Voluntary Arrangement to buy the club back himself. The CVA would pay other creditors just 15p in the pound on what they are owed. While Vaughan would write off his own debentures, it is hard to see how he could have realistically recovered that money through other means, given the club possesses no significant assets. A new manager, Mick Wadsworth, had been brought in to replace Mark Wright.

A Perverse Loophole

The result is a perverse situation where a club enters administration and emerges with the same owner, who has now cleared the club’s debts without earning a black mark against his name for the administration event itself.

This sleight of hand may finally have stretched the patience of the authorities too far. Supporters seem divided, with some blaming the FA for victimisation and others believing Vaughan has pushed his luck. The fact remains that a club has used the system to shed its debts only to return to the control of the very person who oversaw its financial collapse.

If this is the sort of loophole the FA is now trying to close, then this intervention is welcome, if overdue. The most urgent task for football’s governing body should be to make life as difficult as possible for those who seek to play the system. For now, an entire football club is stuck in limbo, waiting to find out if it has a future and what the FA’s specific concerns truly are.