Gateshead: Run Into The Ground

Well, that’s one crisis averted, at least. National League club Gateshead survived a brush with the High Court yesterday, a winding-up petition raised on account of outstanding payments owed to a number of parties including, of course, HMRC. On the surface, normal service should probably resume. The team is having a good season, after all. They haven’t been beaten in the league since a home defeat at the hands of Solihull Moors on the eighth of January, and have pushed their way up to seventh place in the table, the final play-off place in this particular division.

All of the above is true, but it only tells part of the story of what has been going on at Gateshead this season. In January, the club lost its manager, Steve Watson, to York City. At the time, Gateshead were in eighth place in the National League whilst York City were in sixteenth place in the National League North. It’s a substantial drop, even if York City is the “bigger” club of the two. His replacement was Ben Clarke, who’d previously played almost three hundred games for Gateshead as a defender, and he has played a blinding hand under trying circumstances. Meanwhile, the popular Mike Coulson was promoted to Director of Football in January, but resigned after two weeks and is now involved at Blyth Spartans.

All is not well at Gateshead Football Club. The club was purchased by the Hong Kong-based businessman Dr Ranjan Varghese in July last year. A deal had been agreed to sell the club to a different “overseas consortium” in May, and so shaky was the club’s financial position that when the buyers withdrew, the club was forced to temporarily revert to a part-time status. But not long after Varghese turned up, so did another familiar face – that of Joseph Cala, a name already familiar to supporters of both Portsmouth and Morecambe. There must be something about that bracing sea air.

Cala was, in the overall scheme of things, little more than a bit-part player in the long-running soap opera that Portsmouth Football Club became about ten years ago, but his involvement at Morecambe went further, with him having agreed terms for a purchase before failing the Owners & Directors Test. His involvement at Gateshead has not gone unnoticed, though, and at the end of last week a joint statement from the soon-to-merge Football Supporters Federation and Supporters Direct expressed concern at the apparent extent of his involvement at the club:

The Football Supporters Federation and Supporters Direct are concerned about the involvement of Joseph Cala at Gateshead. We are aware of his background and attempts to enter English football at both Portsmouth and Morecombe where local fans questioned his motives. Our organisation supports football fans across the country and will offer help and assistance to concerned Gateshead fans, and we look forward to attending their meeting this Thursday.

In September, the club was placed under transfer embargo after going significantly over budget last season, which saw the team finish in seventeenth place in the table. The club remains under the same embargo now, with a squad of just sixteen senior players before the sale of Fraser Kerr to Hartlepool United and Scott Boden to Chesterfield. And towards the end of last month captain Scott Barrow claimed that he was being touted around clubs by Cala and, according to Barrow, “an agent that doesn’t even work for me.” On top of all of that, the sale of Kerr was reportedly done behind the back of new manager Ben Clarke, who reportedly only found out about it hours before it was completed. This is the behaviour of someone who wants to lose the manager who’s working tiny miracles to give his club the chance of a place in the Football League, against all the odds. It’s both psychopathic and self-destructive.

Joseph Cala doesn’t appear on the records at Companies House at all, and the footprint left by Dr Ranjan Varghese is surprisingly tiny as well, for an international businessman based out of Hong Kong. This is his only ever appointment as a company director, according to their website. Cala failed the Owners and Directors Test, but this hasn’t stopped him from being given the mildly amusingly board-member-like title of “Chief Financial Advisor” since he’s been at Gateshead. Well, it’s almost CFO or CEO.

There is, however, a serious side to all of this. Regulations don’t just apply to whoever’s name is on the dotted line at Companies House, because that is so easily side-stepped by those who may be barred from acting as a company director. The concept of the “shadow director” is enshrined in law, with The Companies Act 2006 defining one as as a person who acts, “in accordance with whose directions or instructions the directors of a company are accustomed to act.” In other words, someone who sits on a board of directors, but takes instruction for someone else, or someone who exerts that control. Acting in such a way is not illegal (a shadow director might be a management consultants or even, in the case of insolvency cases, a creditor), but it does mean that directors and shadow directors are treated the same under football’s regulations, and if Cala were to end up being considered to have the control of a director within Gateshead Football Club, there would likely be ramifications for the club.

Recent news stories about the winding up order and the thinness of the playing squad, however, seem to have woken Varghese from his recent slumber, and the last week or so has seen a flurry of media activity on behalf of both he and Cala. Speaking to the Sunderland Echo, Cala stated that the circumstances that led to him becoming involved at Gateshead were that “I was in Houston minding my own business and we knew Ranjan”, told supporters that “there’s nothing to be worried about”, and claimed to have cut the clubs expenses from £200,000 per month to £40,000 per month, whilst keeping the club full-time. They may only have fourteen senior professional players, but by God they’ll stay full-time.

Last Friday, Varghese added his bit in a public statement. It was a singularly useless statement, full of hot air, claiming that the club needs crowds of 2,000 to break even (all of which makes their decision to sell two of their best players all the more perplexing), reaffirming their ongoing desire to get their hands on the £200,000 bond that all National League clubs have to pay to the league itself, mumbling something about the embargo being lifted soon (as they’ve been saying for the last few months) and, in words that don’t sound much like they would have come from Ranjan Varghese’s mouth, “We are football people and I would like to request that everyone gets behind the lads and support them.” No-one amongst an increasingly incandescent fan base seemed convinced in the slightest. They “get behind the lads” every week, and were doing so well before anyone connected to the current circus running their club rolled into town. They don’t need telling that cheering more loudly will fix everything by one of the people responsible for breaking their football club in the first place.

Set against all of this, the issuing of a winding up petition against the club is hardly surprising. Running Gateshead FC is always going to be difficult. Situated in the metaphorical shadow of Newcastle United, the club has long struggled to get people through the gate (their current average home attendance is 931, the third-lowest in the division, above only Boreham Wood and Braintree Town), whilst the International Stadium, with its capacity of 11,800 and running track, is both two big and too soulless to be suitable as a home stadium, even though it has been since the club’s reformation in 1977. This, however, only means that Gateshead need even more careful handing than other clubs at the same level. Although this shouldn’t need to be said, “careful handling” does not equal “hacking wildly at the wage bill and selling the team’s best players.”

The National League needs to carry out a full investigation into how Ranjan Varghese came to become involved at Gateshead, and the same into a “Chief Financial Advisor” who seems to be acting very much as though he runs the joint, no matter how loudly he claims not to, despite having failed an Owners & Directors Test. Considering everything, we should consider Gateshead’s position in the National League table to be an act of the most supreme gravity defiance, but for how much longer will the patience of the remaining staff last? What happens next? How does this end happily for the supporters? Gateshead may have survived in court yesterday, but that feels like something of a hollow victory, considering everything else that has been going on there over the last few months.