We used to be called Magnolia Foods Inc. so we know lots about English football

As damning documents go relaying to the supposed business acumen of potential owners for Portsmouth FC, the legal document submitted to the U.S. Securities and Exchange Commission on behalf of Cala Corporation formerly Magnolia Foods Inc, this has to be one that any person would hope that the FA Fit and Persons Test wasn’t presented with. As legal documents go it’s a head on car collision waiting to happen, but given the past mistakes made in regards to the test, this document which is readily available in the public domain for anyone to find, will no doubt once again go unnoticed by the good people at the headquarters of the FA. The form relates to the desire to build an underworld resort. To dissect such a form in full would be a trifle dull and boring so I will try run through in short the key area’s that should highlight the most concern. If you wish to access the document in full you can find it at the following link;

http://www.faqs.org/sec-filings/100426/CALA-CORP_10-K/

This isn’t a fake document. It was as I say submitted to the US Securities and Exchange Commission and it does indeed read like a Dear Santa letter just with a few more legal jargon details contained within.

The document doesn’t just contain one or two alarm bells, it’s littered with them. I don’t want to belittle the average fan on the street by any shape or means but with all legal documents of any nature, it’s often easier to have someone break down the finer points rather than having to wade through the document in its entirety and lose interest totally. So I will try to break down the points that struck me the most in terms of the message the statement gave out.

Management believes that the project has a great chance of success however; there can be no assurance that (i) such individual unit or fractional ownership will be sold or significant revenue will be generated, and (ii) anticipated costs will not be significantly exceeded by actual costs incurred.

So in plain English Cala Corporation can give not one single guarantee that if permission is granted for such a venture that any of the units would be sold or a single dollar earned from it having been built. That’ll perk up the spirit of any potential investor then surely. Perhaps they can provide a copy of the tender to Stevie Wonder and kidnap his closest advisors and not let any Braille copies of this document enter circulation.

The Registrant owns no patents or trademarks, and has no employees.

So we have this wonderful idea but it’s so wonderful we didn’t seek any legal protection for it and we have no employees which means we have a team of no one capable of carrying out to fruition. What we really have is a picture drawn by a four year old Kindergarten kid that we really like and we’re hoping someone will be mad enough to give us the money to build it under the sea. Sure the plans look like they’re drawn in crayon but use your imagination folks. It can work honestly.

ITEM 1A RISK FACTORS

Risk Factors Connected with Plan of Operation.

(a) Limited Prior Operations, History of Operating Losses, and Accumulated Deficit May Affect Ability of Registrant to Survive.

The Registrant has had limited prior operations to date. Since the Registrant’s principal activities recently have been limited to seeking new business ventures, it has no recent record of any revenue-producing operations. Consequently, there is only a limited operating history upon which to base an assumption that the Registrant will be able to achieve its business plans. In addition, the Registrant has only limited assets. As a result, there can be no assurance that the Registrant will generate significant revenues in the future; and there can be no assurance that the Registrant will operate at a profitable level. Accordingly, the Registrant’s prospects must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the establishment of a new business.

So we have no experience in this field whatsoever, we have a history of making no money and we’re lucky if we survive by the skin of our teeth every financial year. What better message to send to the board of the FA to let us take over a football club. But there’s more. We admit that we have no prior knowledge of the industry we seek to enter. That makes us perfect owners for Portsmouth FC because let’s face it you let the likes of CSI buy the club previously so there should be no problem in letting us buy it with no funds available. We also freely admit that we’ve done no business for ages and that we’ve been looking at new ways of making no money. But hey, we’ve been looking. That should count for something right? Oh and you got us there, we hold our hands up, we haven’t made a penny or a dollar from anything for ages. But what does that matter when it comes to owning a football club. It hasn’t meant much too any governing bodies when it came down to the crunch at Portsmouth FC so why should it make any difference now?

So we have no money and can give no assurance of any investment of any sorts but Juventus floated on the stock exchange. Let’s go down that route it’s bound to be a winner. Please take a chance and forget any risks, expenses or difficulties in making a picture from a four year old a reality. It’ll all be fine honestly. We just need someone rich and stupid enough to make it happen because we have no money or expertise in this field. What can go wrong?

The Registrant incurred General and Administrative expenses of $234,762 for the year ending 2008 and $694,705 for the year ending 2007. Stock for services consisted of zero and $332,000 of the total general and administrative expense for the years ending 2008 and 2007, respectively. Officers salary of $150,000 and legal and accounting of $46,235 were the major components of G&A during the year ended 2008 while consulting expense of $64,241 and legal and accounting of $62,932 were the other major components for the year ending 2007.

The Registrant has incurred net losses: $1,114,398 for the fiscal year ended December 31, 2008 and $721,403 for the fiscal year ended December 31, 2007. The Registrant’s current liabilities exceed its current assets by $320,590 as of December 31, 2008 and $184,366 as of December 31, 2007. At December 31, 2008, the Registrant had an aggregate accumulated deficit and accumulated deficit during the development stage of $13,722,590 ($11,886,789 and $1,835,801, respectively). This raises substantial doubt about the Registrant’s ability to continue as a going concern.

As a result of the fixed nature of many of the Registrant’s expenses, the Registrant may be unable to adjust spending in a timely manner to compensate for any unexpected delays in the development and marketing of the Registrant’s products or any capital raising or revenue shortfall. Any such delays or shortfalls will have an immediate adverse impact on the Registrants business, operations and financial condition.

Net losses of over One million dollars for a firm that has no staff and no experience of what we’re doing or guarantee’s of making any money. How can we explain this one away? Oh, I know, we’re huge fans of the Austin Powers films. You know the one’s where everyone laughs at the bad guy and the little finger when he says One Million Dollars and everyone laughs because it isn’t a large sum of money anymore. It’s fine. We can all laugh and see the joke can’t we? Come on everyone lets all laugh together “ha ha ha ha ha.”

At this juncture I’ve skipped down many legal passages that cause massive alarm bells to jump to this;

ITEM 2. PROPERTY. The Registrant maintains an office at 1314 Texas Street, Suite 400, Houston, TX 77002. It currently does not own any equipment at that location.

So you want to do business with us? Fantastic news. That’s really great. Oh, you want to come and see our operation first hand. Well, what can I say; perhaps we’d be better coming to see you at your offices. We wouldn’t want you to put you off by showing you such ground breaking offices such as ours. We like to do business on equal terms, honestly we do, we’d much rather come down to your level if that’s OK with you. When in Rome Del Boy my son, when in Rome!

OK so enough with the annihilation of this form already. It’s pitiful, skin crawling and as a legal document surpasses everything that I had managed to pull up on CSI and a certain Mr Antonov before he was able to gain control of Portsmouth FC and pass the so called Fit and Proper Persons Test. If you are curious then please read the document in full. If you don’t like Horror Movies in the form of legal documentation then give it a miss. I suspect it’s for best. I hope that AA has at the very least done once basic background check on the relevant parties who are supposedly vying to take over at Pompey. The egg on his face from last time is still very fresh especially when all the evidence of what was ultimately going to happen to the club was laid bare on the internet for all to see if only he’d taken the time to read just one fans forum or blog before letting the club into the hands of those that he did.

I trust he won’t be making the same mistake twice.

So in a short conclusion: That’s no to Cala then and we told you long before CSI took over what was going to happen. It was a tad obvious wasn’t it n’est pa? I’m still awaiting the e:mail that promised me the credentials on why CSI were the real deal. I always thought email was supposed to be faster than snail mail. I somehow think that email will never arrive.

PUP

Who do you think you’re kidding Mr Wenger if you think that Sky will run?

Arsenal manager Arsene Wenger, never a man to stray away from controversy re-entered the arena with his claims that football has “sold its soul’ to television companies and said Premier League bosses must intervene to ensure fixture scheduling was fair to clubs. However he does accept the importance of the money that TV rights bring into the game. Does Mr Wenger have a point or should he be grateful when considering the reliance that many English clubs have on the income received from TV rights and broadcasting deals?

Mr Wenger’s claims of unfairness stem around the fact that all five of Arsenal’s games in January have been moved for the television cameras. I’m sure he has a point but the bigger picture remains that for many clubs in the league without the money brought into the game from TV broadcasting rights they’d be facing the wall. Arsenal luckily for Mr Wenger remains one of the best run clubs on a financial basis anywhere in the world. Only Bayern Munich can realistically be in with a shout of being able to claim they are run on a better basis.

In 2010 Arsenal’s turnover was £382 million of which over one fifth was derived from TV and Broadcasting monies received to the tune of £85 million. Arsenal finished with a pre-tax profit of £56 million. Arsenal’s debt stood at £136 million most of which was occurred after the building of The Emirates which had helped to bring in more revenue than TV standing at an impressive £94 million. The interest due on the debt annually stands at £19 million. With turnover up £66 million on the previous season and a sensible transfer policy, Arsenal are well on course to reverse their debt in the next few seasons. Interestingly the owners at Arsenal didn’t put a single penny into the club for that financial year. Compare that with Aston Villa for example where £206 million was pumped into the club; £116 million in cash and £90 million in loan notes or at Blackburn Rovers where £104 million was put in made up of £100 million in capital and £4 million in interest free loans. Of Aston Villa’s £91 million turnover 57.14% was from TV money. Blackburn’s total of £58 million was even more reliant with 74.14% of the total coming from TV money. So Arsenal in theory can afford to be able to moan a bit louder than most clubs but you cannot escape the fact that football income from TV if offset against wages would have allowed Arsenal to pay off 77.27% of their final wage bill which stood at £110 million.

Whilst Mr Wenger bemoans his fixtures being re-arranged for the sake of television, over in La Liga television plays an even bigger part in the gulf between the clubs in the Spanish top flight. Arsenal may have finished 22 points behind eventual League winners Manchester United last season they finished 29 points above Birmingham City who were relegated to the Championship having finished 3^rd bottom. Contrast this with La Liga and Villarreal who finished 4^th the same position as Arsenal in the Premier League. Villarreal’s point haul of 62 points was 34 points behind the total of League Winners Barcelona who finished the season with 96 points. Second placed Real Madrid finished the season on 92 points, 12 more than the English Champions Manchester United. Barcelona’s goal difference was a staggering +74, Real Madrid’s +69. In comparison Manchester United’s were +41 and Chelsea’s +36.

The most astonishing fact for Villarreal was that they finished closer to the 3^rd relegated team Deportivo than they did to the eventual winners Barcelona, separated by just 19 points. Villarreal were even closer to Almeria who finished bottom on 30 points than they were to catching Barcelona at the top.

Television revenue in La Liga has created the wide gulf. Clubs in La Liga are able to negotiate individual deals with TV companies and ultimately it’s made La Liga into two leagues. One between the top two of Barca and Real and a separate league between the remaining 18 competing clubs. This occurrence isn’t however just a Spanish problem, just look north of the border where the Scottish Premier League is dominated by the two Glasgow giants Rangers and Celtic. Last season’s champions Rangers finished with 93 points one ahead of their closest rivals. Third placed Hearts finished the season on 63 points, 30 off Rangers or to look at it another way a full ten wins behind just to have drawn level on points. Equally as impressive as the top two sides in La Liga Rangers finished with a goal difference of +59 and Celtic +63. Although Scottish football doesn’t have the same levels of income from TV that English football has and certainly not of La Liga’s top two with their own deals, the revenue generated on the turnstiles and from European competition year in year out has created its own two tier league structure in Scotland to mirror that of Spain. In England you can claim that on their day any club is capable of beating any other where as in Spain and Scotland such a claim wouldn’t hold as much weight even if you do get the occasional shock defeat in both leagues from time to time.

It’s estimated that combined Barcelona and Real Madrid receive 125 million Euro’s per season from TV deals. That figure is just on the domestic market and doesn’t include income from the Champions League deals. That figure in context to the Premier League is three times the money that Champions Manchester United got from TV income. Villarreal received 42 million Euro’s from their TV deal. Some of the smallest clubs in the league had deals worth only in the region of 15 million Euro’s. It’s not hard to work out how the Spanish League ended up with their players going on strike when 50 million Euro’s went unpaid from the end of last season. Under a new proposed shared domestic TV rights deal in La Liga, Barca and Real are still set to receive a combined 35% of the revenues coming in with the rest being shared between the remaining 16 clubs.

So unlike in England with Mr Wenger’s comments, you’re unlikely to hear the same murmurings coming from Spanish clubs as you do here. The real issue for them is the complete imbalance of TV money instead which presents such a wide gulf in their league. I’m sure given the opportunity to be able to receive the same amount of money as Arsenal do every season from TV income, the remaining sixteen clubs would quite happily play at 2am on a Thursday morning every week to be given the same.

The bottom line and the crux of the matter is football and TV now walks hand in hand. Since Sky entered the game back in the nineties the two parties would not be able to exist without each other anymore. Why did Sky TV pay an astonishing £1.782 billion for the rights to screen 115 games a season between 2010 and 2015? Because they make their money back and some.

Arsenal have the right as I mentioned to moan when they can boast gate receipts higher than the money they receive from TV deals and can feel rightly aggrieved to have had to change all five fixtures in a month to suit TV. However the coverage they receive will be worldwide. They will be watched by fans all over the world who will watch the likes of Robin Van Persie which will translate in shirt sales for example resulting in a higher income for the team. The wider the audience the more they will be able to claim from sponsors. If you can say to a sponsor that your advert will be shown in five consecutive games on TV in one month, in puts you in a much stronger position than a side like QPR for example who are reliant on the money of new owner Tony Fernandes to pay the reported wages of Joey Barton who is said to be on £80,000 per week when their ground Loftus Road has a capacity of just 18,360 and wouldn’t generate the required amount to pay the total wage bill every season.

So in conclusion whilst Mr Wenger might be bemoaning the rescheduling of the fixtures I’m sure the Arsenal board and commercial department aren’t singing from the same hymn sheet. Perhaps he should spare a thought for the teams outside of the top two in the Scottish and Spanish Premier Leagues as they search for a more level playing field. Football is a business first and foremost now. You cannot escape that fact. If you get into bed with Rupert Murdoch sadly you have to pay the price. So instead of moaning I’m afraid you’re just going to have to accept that football is no longer what is used to be, namely a sport. What happens on the pitch for 90 minutes is now simply a by product or an afterthought if you will.