Minus Ten: Portsmouth FC Don't Do Summers

A ten-point deduction before a ball has even been kicked in the 2012-13 season. That is the latest blow for Portsmouth, a club whose recent history has become a litany of financial disasters. The Football League’s ruling last week mirrors the troubles at Rangers, creating a grim symmetry between north and south.

The sanction stems from the club’s move from one Company Voluntary Arrangement in 2010 to another in 2012. The League ruled that creditors from the first CVA, who saw their potential return slashed from 20p in the pound to just 0.4p, were not properly consulted on the new arrangement. Representation by Baker Tilly on behalf of the now-liquidated old company was deemed insufficient.

As a consequence, the club faces its new life in League One starting on minus ten points.

Conditions Attached

The points deduction is just one of four conditions imposed for Portsmouth to retain its League membership. The club must also accept a limit on how much secured debt can be carried forward into the new company, ensuring that the full £18 million charge held by Portpin against Fratton Park cannot simply be transferred. The ground itself is worth nothing close to that figure. Furthermore, all football creditors must be paid in full, unless other compromises are reached. The final condition imposes a range of restrictions on playing budgets, future borrowing, and loan repayments for the next five seasons.

While some fans reacted with predictable anger, feeling punished for the mistakes of a long line of owners, the sanctions are hard to argue against. The list of those blamed stretches back through the years, featuring names like Gaydamak, Redknapp, Storrie, Al Fahim, Chainrai and Antonov. Few supporters would defend a business that continually fails to pay what it owes. Many on the streets of Pompey have had enough of being lied to and ignored by the cynical operators who have run their club into the ground.

Targeting Portpin

The conditions laid down by the Football League appear to take direct aim at the club’s recent ownership structures, particularly those involving Balram Chainrai’s Portpin. By curtailing the amount of secured debt that can be rolled over, the League has effectively blocked Portpin from repeating a past manoeuvre where it transferred an £18m charge from one of its companies to another, securing it against Fratton Park. The League is telling Portpin that it cannot expect to realise the full £18m it claims to be owed through the club.

The restrictions on future borrowing also serve as a warning against the kind of ‘financial doping’ attempted last season with CSI’s £10.5m loan. The openness with which these conditions have been announced is a surprise. Similar restrictions were rumoured to have been placed on Portpin in 2010, but the details were never made public. Perhaps the ongoing Department for Media and Sport Enquiry into Football Governance has encouraged this new transparency.

It is a sad indictment of the modern game that fans now need a working knowledge of business finance simply to ensure they have a club to support. At least the Pompey Supporters’ Trust, with its own viable bid on the table, shows that knowledgeable fans cannot be so easily dismissed as ‘aliens’ or ‘morons’ by owners anymore.

Administrator Trevor Birch is quoted as saying, “Portpin are still reeling and reviewing the situation.”

Birch must now finalise a sale. The Football League states it will consider the application to transfer membership once a final purchaser has been selected. With the new restrictions in place, one hopes the administrator is left with little choice but to sell to the Supporters’ Trust.