Portsmouth's Pecuniary Problems - a 9 point problem for Pompey faithful
Football club and Rugby club insolvency, and its ramifications, have been mentioned on this blog before (see here and here for football and here for rugby). Portsmouth Football Club's latest pecuniary problems highlight again the double whammy of insolvency and points reduction. This is of course the first time a Premiership club has gone into an Insolvency Act 1986 procedure.
I am still not convinced that the fiscal responsibility argument for points docking holds water. Some problems arise despite scrupulous financial behaviour. Why kick a club when they are already down even if the policy driver is to ensure future "responsible" behaviour by other clubs? Pompey have a strong fan base that may be able to ensure the club does not experience issues that other clubs have, such as Crystal Palace, Swindon, Luton, Southampton, Charlton, Leicester, and Leeds. No such issues now for AFC Wimbeldon, my local team. Come on the Dons!!!
The Pompey story has been reported widely, as one might expect (e.g. Daily Telegraph, Times, Independent, The Sun, to cite but a few). Pompey's administrator, Mr Andrew Andronikou, has appeared in the press talking about his role and function at the club (see the above press articles). His comments make interesting reading. It seems as if a CVA may feature in the rescue. There is also an interesting statement on UHY Hacker Young's website which outlines the position at Portsmouth. It notes:
"Statement from Andrew Andronikou, Partner at UHY Hacker Young, on the administration of Portsmouth Football Club
26th February, 2010
At approximately 10:30 this morning my partners at UHY Hacker Young Michael Kiely and Peter Kubik and I were appointed Joint Administrators to the Company and the football club.
Accordingly, as from this morning we are fully responsible for all executive decisions at the Club and we have now formally begun the restructuring process.
For the avoidance of any doubt, the Company is not going to be placed into Liquidation as the Winding Up Petition, which was due to be heard on Monday morning, has been suspended by virtue of our appointment.
We are looking to immediately address the significant monthly cash burn of the club by implementing a strict cost rationalisation programme. This means every aspect of the club’s overhead will be reviewed and scrutinised. Our aim is to maximise all revenue streams and to eradicate all unnecessary costs.
It is imperative if this club is going to survive that it returns to the fundamentals of any other business in the United Kingdom and functions within its means by avoiding to trade at a loss. Accordingly we have very important and difficult decisions to make ahead.
Discussions with interested parties
We are fortunate to have inherited a list of interested parties. Over the next few weeks we are going to explore these expressions of interests with a view to procuring either an investor or outright purchaser of the club. However, given the recent history of the club I would like to make it very clear before any other interested party approaches us that we will require upfront unequivocal proof of funds and also references that the party will satisfy either the Premier League’s or Football League’s profile for a fit and proper purpose.
At present we are only looking forward in order to stabilise the club and to reinstate a solid foundation for the future. We do however have the responsibility of investigating the Company’s recent financial history. I can assure you all this will be undertaken but at present we are focusing on the problems in hand – which are not insignificant. So the message here is please bear with us – but I do not want to be drawn on any questions in this area.
We aim to conduct the Administration on a transparent basis. We fully understand that this matter is of great importance to the local community as well as carrying a significant public interest. In our capacity as Court officers we have a duty of care to the creditors of the Company and accordingly we will formulate proposals in due course that will provide them with a maximum return on the exit of the Administration as well as ensuring that this Club fulfils its outstanding Premier League fixtures.
We will have our proposals ready for circulation within eight weeks of today’s date and accordingly a creditor’s meeting will be convened around that time scale. The Company will exit the Administration by way of a Company Voluntary Arrangement thus avoiding any further possible point deductions next season.
I would like to thank the Premier League for its assistance thus far and the preliminary concessions they are proposing to put forward to assist us. I would also like to thank Portpin Ltd and Mr Balram Chainrai as they have assisted in the process to save the Club.
I believe that is all I have to say for now – other than to appeal to the supporters of the club to try and put behind them a very disturbing season and to enjoy their remaining fixtures – please come and support your football club and help us to lift the profile of the Club to a status it deserves.
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...