Portsmouth case highlights lack of lesson learning

The relentless nature of modern day football means the game is one in which déjà vu is a regular occurrence; you sit in the same seat every fortnight, with the same people around you, watching broadly the same XI players against largely the same teams as the year before, singing the same songs.

A recent addition in the past few years to this series of regular events has been the (almost) bi-weekly news update of certain financial gloom and the possible chance of doom at Portsmouth FC.

Following on from the issuing of a winding up order from HMRC over an unpaid tax bill back in January, the club has applied for administration for the second time in two years. To further add to the sense of history repeating itself, Andrew Andronikou looks set to be the administrator once again; a depressing state of affairs when there is speculation regarding the appointment of an administrator akin to the rumour mill of the appointment of a club’s future manager.

 In a move designed to buy time and free up working capital for the short term, Portsmouth will apply for administration, thus incurring a ten point penalty. Andronikou states his two aims are to keep the club in the Championship and to find a new buyer, a case of each target being mutually beneficial to the other.

This latest crisis can trace its roots back to Portsmouth’s parent company, Convers Sports Initiatives, plunging into administration back in November of last year. CSI was owned by Lithuanian businessman Vladimir Antonov who was arrested on suspicion of bank fraud, resulting in CSI immediately losing any incoming capital and falling into administration and a fire sale of its assets.

Since November, Portsmouth have been in a state of limbo as Antonov, who is fighting extradition to Lithuania, resigned as Chairman and a director at the club but CSI remained in charge but in administration itself.

 However, HMRC lost patience and issued the winding up order regarding an unpaid tax bill of an estimated £1.9 million as well as a further £4 million+ bill from the previous regime in charge at the club. Despite receiving their Premier League parachute payments earlier and not paying staff wages since Christmas (due to the club’s assets being frozen), the club is unable to pay these bills, resulting in the application for administration made this week.

This overhanging tax bill from previous regimes, in addition to the fact that any new investor would need to have huge proof of funds to pay off former creditors (and owners) Balram Chainrai and Alexandre Gaydamak, pretty much sums up the creek Portsmouth have been left up not just by former owners, but the organisations that are meant to prevent this kind of thing happening; the Premier League, the Football League and so on.

Whilst Andronikou and his company, UHY Hacker Young, were the facilitators for Antonov to buy Portsmouth, their job is to find a buyer, not to assess his credentials. That is the role of the Football League (in the case of Portsmouth) through its fit and proper persons test for any new owner or director of a football club.

The Football League’s test is quite thorough if a potential owner has been involved in football club ownership for any extended period of time. For example, a person fails the test if they themselves are filing for bankruptcy or have been connected, as a director, of two or more other clubs suffering an event of insolvency.

Antonov rightly passed this test. However, as Shadow Sports Minister Clive Efford points out, the bank Antonov owned in Lithuania had its application to operate in the UK denied by the Financial Services Authority as they felt the bank would likely fail to deal with the FSA in “an open and co-operative way”.

As Efford says; “Such a case highlights our concerns that due diligence is not taking place and that there are not sufficient fit and proper person tests. Something should have alerted the Football League or the FA to that person’s history, and they should have considered whether the purchase was in the best interests of the club or the game.”

The Football League have said that Antonov “misled” them by providing possibly fraudulent information when checks were undertaken on his business plans. This simply isn’t good enough. The Football League’s role has an administrator of the game means they should do everything in their power to investigate potential owners fully.

Clearly, everyone involved in an administration case wants to get a new owner in as soon as possible so that employees get paid and business can go on as usual. However, this is not the first time a questionable individual has been allowed to buy into Portsmouth FC. Nor is this the first time the inevitable, negative consequences have come about.

Lessons need to be learned. Hopefully this will be the last sense of financial déjà vu at Portsmouth, and not in the sense that they go out of business, no football fan deserves that.

Daniel Whiteway @Dan_Whiteway

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Comments

[Isma]

Great post, perfectly explains the situation at Portsmouth these days.

PUP!

PS: Antonov is Russian, not Lithuanian ;).