Saturday the twenty-first of February probably now feels quite a long time ago for the apparently perpetually beleaguered supporters of Farnborough Football Club. It was on this date that their team last won a match in the Conference South, and the team ended the season relegated from the division in second from bottom place, having conceded more than one hundred goals, with seven goals having been shipped in one match on no less than three separate occasions. Yet again, the club faces the prospect of a nervy summer, after the failure of a CVA which was – and to say this feels a little like performing an impersonation of a scratched record – supposed to set the club back on the straight and narrow but which could be forgiven for starting to feel like a millstone around the club’s neck.
This CVA was agreed in June of last year, and was a little unusual in its terms because it pledged a dividend payout to creditors of 100p in the pound, subject to token payment being made during an interim period. An annual report on the CVA released by the administrators last week stated that “The contribution amount was never set at a minimum contribution other than the claims had to be paid in full within 3 years,” but it seems reasonable to conclude that the total payment of £19.69 was not a figure that creditors of the club – who were owed a total of £1,254,263 – would have agreed had what has now occurred taken place. It was never believed that the owners of the club, Spencer Day and Rob Prince, would have been able or willing to pay this amount in full, but it was hoped that new buyers might be found that would have purchased the club for a peppercorn amount in return for clearing those debts in full.
Setting aside the small question of who in their right mind would have spent almost a million and a quarter pounds purchasing a football club with the recent financial history that Farnborough has “enjoyed” for a moment, the administrator states that “since been relegated from The Football Conference and in doing so, the value to them in funding the Club’s obligations under the CVA has diminished significantly.” Relegation does indeed come with attendant costs, at all levels of the game, but the proposal for a revised agreement with creditors is likely to have been met with one or two raised eyebrows. The club is now proposing a revised figure in settlement of claims of £20,000, to be paid in two payments of £10,000, followed by ten installment payments to be paid by the summer of 2016. This equates to a dividend of 1.59p in the pound, a far cry from the amount that the club had promised to creditors just a year earlier. The creditors meeting will take place next Friday, the twelfth of June, with the following proposals being put forward:
1. Accept the offer of 1.59p in the £.
2. The Issue of a Certificate of Termination terminating the arrangement by reason of the Debtor’s breach pursuant to the shortfall of realisations to enable a distribution of 100p in the £.
3. To present a petition for the compulsory winding-up of the club.
4. That the arrangement continues until the conclusion of the original 3 year term on 7th June, 2016.
On Christmas Eve, Rob Prince issued a message to supporters of the club via its official website in which he stated that, “We are making good progress with the Administrator regarding the CVA and hope to have more news on that well before the July 2016 deadline and we paid a very significant sum into it during this last season in order to move forward.” It now seems as if either Prince’s definition of what “good progress” might mean is wildly different to most people’s, that something has drastically changed since the end of last year, or that the club misjudged the likelihood of being able to find somebody that would pour this vast amount of money into the club, and so it is that a cloud of uncertainty yet again descends over Cherrywood Road.
Farnborough isn’t the only club to have found itself in existence-threatening difficulties over the course of the last twelve months or so. Last summer, Salisbury City FC and Hereford United were expelled from the Football Conference after failing to meet a deadline set by the Football Conference to clear its debts, with Salisbury City folding at that point and Hereford United limping into the new year before expiring, whilst Northwich Victoria have been reported as facing another winding up petition, this one brought by another football club, FC Halifax Town. Whether Farnborough follows them down this route over the course of the next few days, weeks or months remains to be seen, but these cycles are clearly an ongoing issue in within the non-league game which need to be addressed.
It is perhaps with this in mind that the Football Association recently announced a new set of rules for the governance of clubs playing from Step One to Step Four of the non-league game which will, to use their own words, “will help promote the sustainability and integrity of non-league football clubs.” These new rules are, from what we know at the moment, far more wide-ranging than anything than has been seen in the game before, and the fact that they are being introduced specifically at this level of the game surely says something profound about concerns over the ongoing brittleness of the state of management of clubs at this level. Under them, club will require a licence to compete from their leagues, and the leagues will have to will be assessed in various areas including legal, ownership, integrity, stadia and finance in order to award one. Of course, how successful these new rules turn out to be – and they’re not even going to be introduced until the start of the 2016/17 season – is likely to come down to two main factors.
Firstly, the devil, in terms of any rules and regulations relating to contractual or financial issues, has a tendency to be in the detail of what is drawn up. If these new regulations are filled with loopholes that allow the cunning and the canny to carry on as they have done before, it’s unlikely that they’ll be of much use at all. Secondly, since the leagues themselves will be issuing these licences, the question has to be asked of how consistently they will be applied (especially across the three four different leagues themselves,) and what might happen should it become evident that there are widespread problems within the management of non-league football clubs. Would the Football Association, for example, make use of widespread demotions in the event of a large number of clubs failing their new tests? Will there be a period of grace for clubs who are close to making the grade, or will the issuance of a licence be a simple black and white issue? These are questions that, presumably, will be answered prior to their introduction, next year.
In addition to this, the FA has recently confirmed that there will be changes to the Owners & Directors Test – the proper name for what is commonly known as the “fit & proper persons test” – which will allow them to publicise the results of said tests where required and to “take quicker action against a Club and an Officer that fails to comply with the Regulations,” whilst the Football League has confirmed its intention to tighten its rules concerning clubs suffering insolvency events, increasing the points deduction for clubs entering administration to twelve points from ten, insisting upon any administrator dealing with an insolvent Football League club speaking to its Supporters Trust in order to give them a chance to bid for the club during a twenty-one day window, removing the requirement for a club to exit administration through a CVA and adding a further fifteen point deduction to be imposed the following season should a club fail to pay back at least 35p in the pound (or 25p in the pound in the case of share transfers) to creditors.
The changes to Football League rules wouldn’t, of course, apply to the likes of Farnborough, but in a broader sense it is encouraging to see those who oversee the running of the game in this country finally starting to properly get to grips with issues relating to the administration of football clubs in this country that have allowed cultures of debt and near implosion flourish over the last two decades or so. It is unlikely that there will be any panacea of an answer to the long-standing question of how smaller football clubs can manage their finances in an age during which an ever greater proportion of the revenue generated by the game heads towards its top division and its biggest clubs. If correctly implemented and consistently applied, they might just go a long way towards stabilising clubs that have proved themselves incapable of doing so without external regulation. We shall see – but it’s a start, at least.
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