Portsmouth: The £800,000 Question Mark Over Fratton Park

Since October 2012, a group of individuals has committed £800,000 of their own money to keep Portsmouth Football Club running. These business partners, backing the Pompey Supporters’ Trust’s bid to buy the club, have been covering a monthly shortfall of around £200,000. If the Trust’s bid succeeds, their money converts to equity. If it fails, they lose everything. For some, the personal loss would be a six-figure sum. It is a staggering article of faith in a community-led future for a club that has suffered for too long.

This group, collectively known as the High Net Worth Individuals (HNWI), stepped in when the Trust became the preferred bidder. They replaced Portpin, the previous preferred bidder, who were deemed unlikely to pass the Football League’s Owners and Directors’ Test. Since then, the HNWI and members of the Trust’s presidents’ club have paid the bills. Yet fans are right to ask why a club in administration has been operating at such a significant loss for so long. And what money was being used before October, between the signing of new players in August and the Trust’s bid being accepted? Where did that £600,000 come from?

An Administrator's Overspend

The administrators, PKF, appear to have overseen a budget that was unsustainable. The recent culling of the playing squad in January, a necessary if painful round of cost-cutting, suggests the club can now operate at break-even. This should mean the HNWIs can finally stop writing personal cheques to cover the club’s running costs. But it raises another serious question: why were these costs not cut back in October, when it became clear that the budget set under Portpin’s proposed CVA from June was no longer viable?

Some of the players who have now departed were signed in August, a full six months after the club entered administration. They have complained that promises made to them were not kept. Who was in a position to make such promises? And why was that person allowed to sign players on wages that pushed the club further into the red every month? It speaks to a culture of overspend that seems to prevail at football clubs even when they are supposedly under the strict financial supervision of an administrator. For all the talk of cheating that sometimes comes from supporters of other clubs, Portsmouth’s dreadful results on the pitch tell their own story.

This situation should never have dragged on for so long. The administration was expected to be concluded in December. The HNWIs likely believed they were signing up for six weeks of funding, not four months and counting. The sale to the Pompey Supporters’ Trust hinged on a court case to determine the value of Fratton Park, but that hearing was adjourned. The cause of the delay appears to lie squarely at the feet of the administrators.

A Case of Cat and Mouse

The adjournment was apparently necessary to address two issues. First, there were problems with the paperwork for the sale of Fratton Park to the Trust’s property developer partner, Stuart Robinson. Second, and more bafflingly, was the possible oversight of a floating charge held by Portpin over the business of PFC. This is a perplexing error for a highly-rated firm like PKF to make. The charge, reportedly worth £2m, is part of the only charge held over the club, which was both fixed on Fratton Park and floating on the business itself. The Trust’s offer was made on the assumption that it dealt with the entire charge. So why did PKF make an application to the court that failed to do so?

There has been one silver lining to the delay. The extra time has allowed the Trust to improve its bid. It is now in a position to own Fratton Park outright from the start, without relying on a third-party developer. Loans from Portsmouth City Council and another source, secured at preferential rates, have been factored into a fully-funded business plan and are set to be paid off within two years. The Trust’s bid is signed, sealed, and ready to go.

Everything is out of their hands.

The deal now rests on the wrangling between PKF and Portpin. Portpin are being intransigent over their charge on the club and ground. The Trust’s offer of £2.75m for the ground, based on multiple independent valuations, plus settlement for creditors, is fixed. It will not increase to cover an administrative error. So are Portpin exploiting the mistake? Are PKF liable for it? The two parties have been talking, and the adjournment of a hearing scheduled for 31 January until 14 February suggests those discussions are ongoing. The whole affair is taking on the flavour of a game of cat and mouse.

Meanwhile, the Trust waits. The chair has set a target date of 1 March for the takeover to be complete, making it clear any further delays will not be their fault. It is time to set a deadline for PKF, beyond which their offer will not stand. Fans simply want to know what the administrators are waiting for. With a viable, fully-funded buyer ready, why can they not complete the deal?