Four clubs fight to their keep heads above water. By Tom Davies
Who could possibly have imagined that the link-up between Sam Hammam and Peter Ridsdale at Cardiff City would have brought problems? The fallout from Hammam’s departure as chairman is casting a considerable shadow over City’s future, with the club facing a court action in March over £24 million of unsecured “loan notes” owed to investor Langston, for whom Hammam is now acting as “mediator”. Defeat in court is likely to land the club in administration.
The loans date from Hammam’s period in charge; back in 2005, he claimed the club had secured vital funding through loan notes issued to “non-UK resident investors” (Langston has offices in Switzerland and Panama). Then, Hammam cited the apparent fact that they would not need to be repaid until 2011 as proof of the lenders’ “long-term commitment” to the club (as documented in WSC 221), commitment that seems to have since waned. Cardiff, now under Ridsdale’s stewardship, are saying they had an agreement to pay them off by 2016.
Administration would result in control of the club being relinquished to the largest secured creditor, PMG, owned by City director Paul Guy, which has lent the club around £10m. Langston disputes this arrangement, its solicitors Hextalls saying in November: “[Langston] has lost confidence in the board of directors, who should relinquish control of the club to Langston.” Hammam insists that he has no interest in Langston beyond his mediator role.
Progress can at least be claimed on the new stadium development across the road from Ninian Park: City are set to take up occupancy in summer 2009, although, with funding for it dependent on associated retail development and in the light of the endless soap opera in the boardroom, bets might best be hedged. Recent shenanigans have at least finally sparked an organised response from fans – moves to establish a supporters’ trust have gathered pace and a launch is expected within the next couple of months.
The spectre of administration has returned to haunt Bournemouth, a decade since the club’s last flirtation with bankruptcy. New investors promised by the consortium that took over the League One club last summer are still to materialise, leaving Bournemouth struggling with debts of £4m. Talks between new chairman Jeff Mostyn’s consortium and potential investors are “ongoing” and administration has been floated as a potential last throw of the dice to entice new interest, but, with the consequent ten-point penalty likely to condemn the team to relegation, it’s a risky strategy.
Mostyn has at least paid off the crippling company voluntary arrangement from Bournemouth’s 1997 spell in administration, but ongoing losses dog the club. Mostyn’s consortium also bought out the supporters’ trust’s “golden share” – with the trust’s approval – as part of its efforts to make the club more “attractive” to investors, a move that underlines the weakness of trusts in certain crisis situations. The trust did manage to negotiate ongoing representation for two of its members on the club’s board, but with a much reduced democratic stake. “Some people will complain we’ve now got no power, but when we had the golden share others said we had too much power,” said supporters’ trust spokesman Rob Trent. “These are tough times for the trust movement in general, simply because of the rise in the cost of running a club.”
A flurry of pre-Christmas takeovers appeared to bring a number of clubs back from the brink. Events at Coventry are covered on page 13, while Ipswich Town and Swindon Town also have new owners. Ipswich were taken over in December by media-and-events entrepreneur Marcus Evans, whose group has acquired an 87.5 per cent stake, purchased the club’s £32m debt and pledged £12m in further investment.
In the light of the club’s parlous previous position, the Ipswich Town Independent Supporters Trust has welcomed the takeover, but has raised questions over some of its details, particularly the current and future management of the debt. In a statement it said: “The £32m of debt remains problematic for many Town supporters, as Marcus Evans has been able to purchase this for 20p in the pound, meaning that he has paid less than £7m for the outstanding debt [payable to Norwich Union and Barclays]. However, that debt is not to be absolved from the books of Ipswich Town and the full £32m remains payable to a Marcus Evans Group company. In addition, the Trust understands that the debt will continue to accrue interest, so the debt will increase.” However, the deal stipulates that Evans’ group cannot sell the debt and the club separately, which has offered some reassurance, as has the decision to retain plc status.
Chinks of light have also emerged at the end of a long, dark tunnel at Swindon, too, with the successful takeover by telecoms businessman Andrew Fitton about to be completed as WSC went to press. Fitton has also been in talks in the past week with HM Revenue and Customs, over settling the club’s long-standing £3m tax debt. The deal at least ends the discredited chairmanship of Willie Carson and rids the club of widely distrusted “adviser” Mike Diamandis, though long-standing benefactors the Wills family are likely to retain a boardroom presence.
From WSC 252 February 2008