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.

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

What impact will the abolition of the Tribunal System system have on Pompey and football in general?

Anyone who’s read my previous blogs on football finance will know it’s a subject close to my heart. So when last Thursday a deal was struck to overhaul youth football in the football league it will come as no surprise to those regular readers that it’s set my fingers off and running over the keyboard once more due to the damaging nature of the deal that was struck and it’s possible ramifications for many clubs who ply their trade outside of the football league. Whilst the main headlines were about a potential threat of scrapping relegation in England’s top tier, it seems the shouts being made by the football world enabled this story to escape past the noses of many fans up and down the country. Pretty much in the same way that politicians and the government manage to do on a daily basis with faux pas’ they have made and don’t really want any attention drawn to.

Last Thursday the Football League Clubs undertook a vote in which they voted in favour of proposals that could result in clubs from the Premier League being able to pick up the best young talent from lower leagues for a fraction of what they would currently pay at present under the current systems. Of the 72 member clubs, 46 votes were in favour of the proposal, 22 against, 3 no shows and 1 abstention. When you read the changes afoot you’ll be aghast at the numbers that voted in favour of such a move, but its felt that many of the yes votes were made by clubs who felt they had no choice but to give the rule changes consent after the Premier league threatened to withdraw over £5 million of funding that they currently give to lower league clubs each year for youth development.

The new system will be tied in with the Elite Player Performance Plan (EDPPP) which will see a four-tier academy system introduced into the English game. The new deal will see every club receive an increase in their funding for a four year period. The actual amount will vary from club to club based upon their academy status. The aim of the EPL is to implement the EDPP P for the start of the 2012 – 13 season and its aim is to ensure the best players are developed by the best coaches using state of the art training facilities. All sounds good so far. The idea being that the most-talented youngsters will realise their full potential which will benefit not only the clubs the players are at but also the England team as well. The EDPPP has itself widespread support from the football league level and many clubs believe the new system will succeed in many of its aims.

So what’s the key issue then? Why is it so damaging to football league clubs? The new set up has been combined with an overhaul of the tribunal system currently used to determine a transfer fee when two clubs have reached a stalemate and cannot agree a fee for a home-grown player. After two years of discussions between the football league and the EPL about how the system should operate, the final offer was put on the table;

There will be a fixed tariff dependent on how long a player has been at the selling club. For example, the fee is fixed at £3,000-per-year for a player's development from 9 to 11 years old. The fee from 12 to 16 will depend on a club's academy status but will range from £12,500 to £40,000. Such a change will obviously see English Premier Clubs having to pay large fee’s for the best home grown players from lower league clubs. One example made was Chelsea paying MK Dons an initial £1.5 million for 14 year old Oluwaseyi Ojo last week. With the new system Chelsea would have been able to buy him for less that £150,000 however additional bolt-on amounts will be given to the selling club if the player is a success. It’s this part of the deal that the EPL insist makes it a fair one from their point of view. This however is obviously dependent on the player going onto to achieve success with a Premier League Club. For those at the top of the game gambling on paying £100,000 for unproven players will appeal on the basis that as long as some succeed, those who don’t make the cut won’t have cost them the fee’s that they’re currently have to pay under the current tribunal system.


There is however a very large and real possibility with the big clubs hovering around to sign the best players from 9 to 16 years of age that rather than the EDPPP creating a new generation of stars and talent, it could well have the opposite effect when young players at the top clubs find themselves far removed from first team action and sent back out on loan to lower league sides to gain experience. The other flip side is that the extra funding is over a fixed four year term. With only two sides out of 72 in the football league not having an academy– those of Hereford and Morecambe, when the current increase in funding is removed it’s felt that many sides will fold their academies claiming the outlay and time to develop young talent, won’t be adequately compensated should the big guns come knocking at their door.

So how will this affect clubs long term? Well several sides survive on the basis of producing good youngsters and then selling them off for big fee’s to offset costs, two good examples of which would be our nearest rivals Southampton and fellow Championship side Crystal Palace. John Bostock was sold aged 16 to Tottenham Hotspurs from Palace having made his Palace debut aged just 15. The initial fee for the deal was £700,000 with an extra £1.25 million set to follow dependent on appearances for the first team. Since his move he has yet to make a single first team appearance for Spurs in the Premier League and has spent subsequent time out on loan to Brentford and Hull City. When Alex Oxlade-Chamberlain departed for Arsenal in the summer the move was rumoured to have been for a down payment of £12 million with the fee set to rise up to £15 million with extra add on clauses and incentives. Chamberlain followed in the footsteps of Theo Walcott who joined Arsenal for an initial fee of £5 million which is set to rise to £12 million with additional add on clauses inserted into the deal. For a club like Crystal Palace who aren’t long out of administration and still have a CVA to service albeit a much smaller one in part than Pompey’s, the change in deal could be catastrophic for them in terms of long term future stability. Pompey certainly won’t be exempt from the change either and could feel long term ramifications when the current system is replaced.

Although admittedly some way behind the current production line of fellow south coast rivals Southampton, under the tutorage of ex-Pompey legend Andy Awford, the club’s youth system is starting to finally flourish. The names of Sam Magri, Ashley Harris, Lewis Stockford, Matt Gledhill, George Colson, Lewis Tallack to name but a few will hopefully be gracing the hallowed turf of Fratton park for many seasons to come. But should a big name club come in from anyone of a group of talented youngsters the club will pretty much be powerless if the player wishes to move on. We saw this to our detriment in the summer when Nadir Ciftci left the club to sign for Kayserispor in the Turkish league. Whilst the club did receive £100,000 compensation for the player, this would have been much lower under the new system. Losing one player on search terms is bad enough. Losing an entire crop of home grown potential stars is unthinkable especially when new owners CSI announced their five year strategy for the club with such a large emphasis being placed on the academy system. For an established power house in the English Premier League such as Chelsea to have looked at the way Sam Magri played during the England Under 17 World Cup Finals this past summer for example and decided that paying under £100,000 would be a great investment for someone that could become the next John Terry for club and country, then Pompey would be pretty much powerless to stop such a move happening if the player wished it to come to fruition even if it meant the player having to see out the remaining part of his contract which was the case with Ciftci.

It’s great to read that the academy holds such an important part of the next five years for CSI, but you have to wonder who much it will be in their plans if they are no longer guaranteed a big money fee if they produce the next Alex Oxlade- Chamberlain from the south coast for example and that player wants to take a chance at signing for a larger club. With falling attendances meaning less revenue coming into the club and a CVA still to finance which was far greater than the one the new owners at Crystal Palace inherited, you’ve got to question what the change will have brought about in the new owners approach to handling the club will be.

Because let us not forget Vladimir Antonov was very specific when he first brought the club - it was so he could make money from it. So with the potential of golden windfalls from academy players coming through now gone, what happens next for CSI? I guess only time will tell.