The wondrous hypocrisy they call the EPL and FA

I know I say you shouldn’t be surprised if you follow Portsmouth FC given what has gone on the past few seasons but every so often we allow ourselves as fans a moments grace to savour some good news and wouldn’t you know it just a couple of short hours later we see another new reality come crashing in on us.

By mid afternoon fans were rejoicing the removal of Aaron Mokena off the clubs books not only from a financial perspective but moreover a footballing one in the fact he’ll never be able to wear a Pompey shirt again and similarly Hayden Mullins exit too this time evidently more because of the wage factor. Whilst Mullins might never have been the most attractive player to watch his work rate and impact on the role he played in the team were highly evident and fans in the main will be sad to see him go and wish him well with his new club Birmingham City. I won’t mention where Mokoena is headed because I have no wish to follow his career at any further stage in the future.

So buoyant with the news that the clubs wage bill had been lowered of course the joy has to be short lived as it has been for the past few seasons, with the announcement that Pompey are facing another points deduction with the punishment being sanctioned by the Football league.

Now like a coin there are two sides to how to approach being docked ten points by the Football Association and two arguments to come back with and this is how I see it and for those who don’t really understand the reason behind the decision hopefully this will make it easier to understand. Don’t worry if you don’t I’ve spent the past hour and a half on the text explaining what’s going on and why so don’t feel ashamed.

When the club first went into administration it offered non footballing creditors 20 pence in the pound on their debt which despite the objections of the HMRC over 75% of those creditors agreed to the deal put on the table and the club was able to exit administration. No monies of that agreement were ever paid off so when the club went into administration a second time you have one set of creditor’s owed money already who are joined by a second new set. In reality the fact that they are old creditors or new ones shouldn’t have mattered they are all in the same queue waiting to be told what they can be offered and be given the option to vote on whether the proposed amount should be accepted. However this wasn’t the case in reality and what happened was the newest creditors were given the power of the vote whilst the original set were not allowed to which is why the club has been sanctioned with a ten point’s deduction. The logic being that in the opinion of the Football League had the first set of creditors been given the right to vote, having seen the figure of 20p fall to just one pence in the pound, they’d most likely had changed their minds and voted against the proposal which would have ended in the club being liquidated and going out of business. So in reality by bypassing the system if you take your fans hat off and imagine it wasn’t your club and it was someone else’s you can say the punishment fits the crime and that actually that’s one they’ve gotten away with as daft as it sounds. Leeds United and AFC Bournemouth I believe and certainly in the case of Luton Town were all handed higher points’ deductions in the past by the Football league.

But here’s where the argument will come in and why people are calling the punishment unjust and unfair given the fact the club has already been given two points deductions which has ultimately played its part in being relegated each time. That argument is thus; The powers that be in the English Premier League and their footballing counterparts in the Football Association are the ones that sanctioned the very same owners that took Portsmouth FC into such a sorry mess and who then with their football creditors law let them stand back in the queue and wait to be paid in full potentially if the club avoids liquidation and to compound matters without any sanctions or punishments being laid at their doors. Yet the fans, the businesses and charities and government agencies like the HMRC are the ones who are punished because of the failings of two professional footballing bodies for not being able to do their job properly in the first place.

One of the principle checks of a fit and proper persons test would surely to look into the backgrounds of owners coming in to buy a club and to ask for proof of funds from where the club will be purchased. If it’s a loan from a bank than (unless your Notts County) you’d be pretty much safe to think that if they were able to get a bank to loan them the money then chances are if the banks are happy then they would be happy to. A few more backgrounds checks to prove any companies they own are making money would also be handy would it not? So in the case of Gaydamak the son of a known arms dealer who’s businesses aren’t making the sort of money to fund a football club comes knocking at the door, surely this could have been the point where alarm bells started to ring for the Premier League? But no he was allowed to take control of the club despite the national press clambering over each other to tell the tale of his father’s misdemeanours over the years some of them in football as well with Beitar Jerusalem. But no he was deemed fit and proper and allowed to join the queue as a football creditor and stand in line to take more money out of the club once everything had gone so horribly wrong.

So the English Premier League learned their lesson. Yet they didn’t and allowed the club to fall into the hands of one Dr Suliaman Al Fahim who we learned isn’t actually a doctor and is certainly not a wealthy Arab businessman despite being alluded to as the Saudi Arabian equivalent of Lord Sugar. His stint at the club unravelled very quickly when the promised fifty million inject into the club soon became apparent that it wasn’t going to materialise. An international warrant was put out for the arrest of SAF for matters which weren’t anything to do with the club. So did the Premier League learn this time? No let’s throw in an owner who might not have even existed and a convicted fraudster and well I guess if you’re reading this as a fan you already know the outcome; administration, docked points and relegation and the HMRC and small businesses and charities being left out of pocket because they play second fiddle  to the football creditors law. So the English Premier League failed to be held accountable for allowing a succession of owners being able to do such damage one football club. No heads rolled and they sort fit to hand out punishments upon the club after the culprits had left yet allowed some of them to still wait back in line unpunished for monies owed to them in full. Wonderful system isn’t it? Try telling that to anyone that stood to now only gain twenty pence in the pound on monies owed to them.

Fast forward to a new governing body this time in the shape of the Football Association who had gone on record as saying that given what had gone on at Portsmouth during their time in the Premier League they would do everything in their power to make sure the same mistakes couldn’t happen again. We were lead to believe that the FA were going to make sure Pompey could be given a chance to right their wrongs and start afresh new and not make the same mistakes. So surely having stated this intention the FA would get the fit and proper persons test right. Surely if the US car giant didn’t want to do business with a man like Vladimir Antonov then they wouldn’t let him run a football club would they? A man whose father had been gunned down in the streets sounds a good bet to run a football club doesn’t he? Yeah sure he does here you go sun stamped fit and proper go and run a football club, we won’t ask why you didn’t manage to take over at either AFC Bournemouth or Rangers before attempting to buy Pompey. We won’t ask why you weren’t allowed a licence to operate a bank in the UK. What we will do is pass you fit and proper. So surprise, surprise when an international warrant is made after the collapse of his bank by the Lithuanian government which leads to CSI going into administration and then Portsmouth again, no one is held accountable at the level at which the deal was allowed to be sanctioned and they are allowed to join the queue for their money back. No punishments had been handed out once again either and no heads have rolled yet further sanctions have been laid at the door of the club following on from the ten points that had seen us relegated into the third tier of English football last season.

The promises to keep an eye on spending never materialised. The Football League should have imposed strict embargoes on the club at the very start of the season last season not going into this to avoid any of this happening. They could have easily imposed what they are proposing now but they chose not to. All the warning signs were there but the FA chose to say that yes we think this man is fit and proper and when it’s proven that he wasn’t they don’t apologise for the fact or take it into account, they hand out further punishments on the club because they couldn’t do their job properly in the first instance.

Bloody marvellous isn’t it that two footballing bodies cannot be held accountable for their errors or even acknowledge them and can be allowed to hand out further punishments on the club. I’m not suggesting the club doesn’t deserve to be punished because we cannot hide from the truth of what’s happened but we can only marvel at the wondrous levels of hypocrisy being muted from behind the doors of two football associations.

Counting the cost of the beautiful game

There is an expression that in life there are some things so precious that you cannot attribute a price to them, seeing you child take their first steps in life for example, precious and treasured memories that will live in our hearts and minds forever and a day. Reality dictates that everywhere else in our lives there are costs involved and none more so than in the game of football.

In the week that Scottish Premier League clubs voted against allowing the Rangers newco entry in the top tier of Scottish Football, Stenhousemuir FC of the Irn-Bru Scottish Football League Championship Second Division outlined in a statement the impact on their club financially and on the part of Scottish football as a whole if Rangers were to find themselves playing in the bottom tier of Scottish football.

The following contracts total £15.7 million per season in the Scottish Leagues and all include termination contracts should either of the Old Firm clubs not be involved in the SPL.

Loss of Sky broadcasting payments of circa £10 million per season.

Loss of ESPN broadcasting payments of circa £5 million per season.

Loss of Sportfive broadcasting payments of £2.7 million per season (overseas broadcasters)

Loss of Sponsorship of £1 million per season.

Additional new broadcasting deal with income of £3 million per season.

The inclusion of Rangers into the lowest tier would see Stenhousemuir lose the SFL central payment aligned to the SPL settlement payment which would total £50,000 per season. Whilst that figure might pale into comparison to the sums in the leagues south of the border, for a club of their size it will have a real detrimental effect and as such costs would have to be cut accordingly to make savings. The demise of one football club will it seems have as detrimental effect on the leagues as losing the ITV contract did several season previously south of the border.

In the statement the clubs outlines that having already made commitments to the playing staff for the season significant savings would have to be found in other areas such as having to scrap the youth system entirely. Some of the staff who oversee their community programme would have to be made redundant. This won’t be an isolated case in Scottish football either. Many clubs I am sure will have to follow suit and scrap their youth systems to and in the very worst cases of some small Scottish sides, the threat of administration will be a very real threat indeed.

The loss of revenues into the Scottish game and the culling of youth training will see the standard of the game diminish which will in turn have a future impact on TV contracts and sponsorship with companies not wishing to invest in a market further reduced of quality.

In a tough worldwide economy the supporters of other clubs are finding themselves punished for the actions of just one club that they have never themselves ever supported. Why should the fans of a club like Stenhousemuir FC be punished for what did they do wrong or the sets of fans from any other teams who will equally be effected? Why should hundreds of youngsters be denied of the chance to be able to turn professional because of the conduct of one football club who flew too close to the sun and got their fingers burned? The grass roots game in Scotland will be praying for rain in the forthcoming weeks and the seasons that follow if some sense of normality is to be resumed but how many people will be left counting the costs of others mistakes and just how many teams will be left cometh the hour when the decision what league the newco Rangers will be allowed to play in this season?

Football is now more than ever a game of the haves and the have not’s.

The irony at the demise of one club in Scotland and it’s not impact across the board can be summed up south of the border where the English Premier League has just tied up another record breaking broadcasting rights package which will see Sky TV and BT pay a joint total of £3.018 billion for the privilege. Now compare that to the poultry sums of £15.7 million set to be lost in the Scottish game or the loss of just £50,000 and the effect it will have on Stenhousemuir. It’s hard to believe the land of Scotland and England joins together the two countries Premier Leagues are so far apart.

But whilst the English Premier League on paper seems to continue to thrive underneath the surface the levels of debt do not dwindle as clubs spend beyond their means and above their levels of income. Lessons are still not being learned and we remain in danger of the threat of teams being forced into administration or out of very existence despite record levels of money coming into the game at the very top level.

This week saw the news that Manchester United, the largest football club anywhere in the world, were once again seeking fresh investment to pay off some of their estimated £423 worth of debt by filing for an initial public offering of shares in the US.

The club claims to boast a worldwide following of a staggering 659 million fans. With another huge cash injection from broadcasting revenue and sponsorship deals with worldwide firms including DHL pouring into the clubs coffers how may you ask did the club see its cash and cash equivalents on its balance sheet drop to £25.6 million as of March 31^st this year down from £150.6 on June 30^th, 2011.

Since the bitter takeover of United by Malcolm Glazer and his six sons in 2005 fans have cited that the family has saddled the club with too much debt and left them unable to compete against rivals or be able to compete to buy or retain the world’s top players. The shift in financial power and the league title to city neighbours Manchester City will only add fuel to the fire and the anger of the fans.

Further anger will be shown after the filing in the US showed that not only has the family borrowed from the club, something they are legally entitled to do, but that at least one of the Glaziers son’s also brought the clubs debt which earned him a higher rate of return on the money than the family was paying on its borrowings; All legal and above board.

Whilst it remains unclear why the family borrowed the money from United back in 2008 or what the funds were used for, the filing shows that at the height of the global financial crisis in December 2008, the six sons were given £10 million in loans for at least five years from the club for ‘general personal purposes,’ to be repaid at an interest of 5.5% At that time commercial banks were charging on average an interest rate of 11.44% for a two year personal loan in comparison according to the US Federal Reserve. Furthermore between October 2010 and January 2011 Kevin Glazier, members of his immediate family and a Glazer family company bought $10.6 million of Manchester United senior secured notes in the open market that they placed an 8.375% interest charge on. In April 2012 the Glaziers were paid a dividend of £10 million which I’m sure you won’t be surprised to read and discover was subsequently used to pay back the original loan that had been made to the family.

What should remain paramount to this entire network of interest rates, borrowing, lending and debt levels is that prior to the £790 million takeover of the club by the Glazers in 2005 is that Manchester United were entirely debt free yet the league ratified a deal to allow the Glazers to saddle the club with the burden of debt, not themselves but the club itself having been totally debt free. Let us not forget that the club had seen a move by Australian media mogul Rupert Murdoch’s Sky TV to buy the club some years before in 1998 which would have seen him pay 875p a share for the club which has been rubber stamped by the board in September of 1998. The deal however was rejected the following April by the Monopolies and Mergers Commission and the DTI.

In the case of Manchester United moves are being made to raise funding to pay off the debts however in the case of Portsmouth FC who now find themselves in the 3^rd tier of English football having been relegated last season following a ten point deduction the agreement in principle to a new CVA to take them out of administration will mean that the club have legitimately been able to shed £107.3 million worth of debts in two seasons without having to even paid a penny on them according to the administrator from their first administration Andrew Andronikou with up to £40.1 million being owed to the HMRC. The club found itself back in administration after the arrest of club owner Vladimir Antonov on charges of fraud and embezzlement lead to the clubs parent company CSI going into administration before the club itself subsequently again went back in administration.

Under the terms of the new CVA non-football creditors will be paid just 2p in the pound on monies owed whilst footballing creditors i.e. the players, agent’s et al will be due all monies owed to them by the club. However the deal is dependent on the club being able to remove the large earners off the clubs wage bill before anything is finalised and Pompey boss Michael Appleton heads into pre-season with just ten senior pro’s set to return to training and no goal keeper in place having released first choice GK Jamie Ashdown as well as Matt Gledhill and Daniel Nizic.

Once again those most affected by the actions of a few remain the fans and local businesses as well as the UK tax payer though unlike in the case of Rangers FC the fall of Portsmouth FC won’t have such a disastrous knock on effect to other clubs as it is about to north of the border.

The question remains what is being done to stop a possible meltdown of the highest order in English football. Whilst UEFA’s Financial Fair Play system will see attempts made to stop clubs living beyond their means and getting into debt, this will only affect the clubs playing in Europe each season and won’t stop the problem which has seen clubs like West Ham and Bolton build up levels of debt of over £100 million each. Wigan Athletic chairman Dave Whelan has called for a wage cap to be introduced and was joined this past week by West Ham Co-Owner David Sullivan who expressed his opinion that a cap should be introduced. The high levels of revenue being poured into the English Premier League haven’t seen debt levels decrease, but increase further as clubs wage bills continue to rise and money going out of the game in the form of fee’s being paid to agents. These levels of debt can only be sustained for so long as we have seen in the case of Portsmouth FC and it’s surely only a matter of time before we start to see some of the middle size clubs being caught out which will start to have a ripple effect through the leagues.

Sadly as always I fear it will be at the point of no return for some when things are finally ever changed.