Crystal Palace, Cardiff City, Notts County

Tom Davies reacts to Crystal Palace going into administration and looks at other teams threatened by HM Revenue & Customs

In a season of such widespread financial dysfunction, it’s perhaps surprising that it has taken until January for any professional club to go into administration, the fate that befell Crystal Palace at the end of last month. The administrator was called in by the London-based investment fund Agilo, a “specialist in distressed companies”, to whom chairman Simon Jordan had mortgaged much of the club’s asset base, including player wages, sale income and the basic fixtures and fittings.

Palace’s debt of around £4.5 million to Agilo is compounded by a £2m tax deficit and the seemingly unending complexity surrounding the ground. Selhurst Park had been owned by a separate company, Rock Investments, which itself has been in administration for a year. Jordan had claimed three years ago that he had repurchased the ground in a deal brokered with Rock’s Paul Kemsley, a former Tottenham director, but when it became apparent that Jordan could not stump up the funds, an aggrieved Rock imposed harsh terms, charging Palace £1.2m a year rent on a lease of only 25 years. Jordan himself is owed around £20m by the club.

Rock’s administrator Price Waterhouse Coopers is owed a year’s rent but has not taken the option of repossessing Selhurst Park, though it has had approaches from un-named potential buyers. Former chairman Ron Noades is rumoured to be one of them.

So whoever takes over not only has to clear the debts but repurchase Selhurst Park and cover expected cashflow problems. These are likely to arise in the summer due to Palace’s decision last autumn to sell next year’s season tickets in advance (see WSC 276), money from which has already been banked.

The task for supporters in the face of such seemingly intractable problems is immense. “Obviously we can’t buy the club,” says Lesley Palmer of the supporters trust (cpstrust.org.uk), “but there are hopefully other people out there who could join together with us. We can provide a focus and if we can show we have an active fans organisation it makes us more attractive to buyers.”

Perhaps the most unusual aspect of Palace’s woes is that HM Revenue & Customs didn’t strike first, but it does have its hands full with tax evaders elsewhere. HMRC’s next court date is with Cardiff City, against whom it has brought a winding-up order over the club’s £2.7m debt, due to be heard in the High Court on February 10. Of course it is possible a deal will be reached but it is only likely to provide a short-term sticking plaster, as other financial burdens remain.

Much supporter protest against chairman Peter Ridsdale has focused on the use of around £3m revenue from advance sales of 2010-11 season tickets, sold on the explicit promise of funding player purchases, that fans are worried will be used to meet other needs. But longer-term obligations remain. Cardiff remain in hock to the Sam Hammam-linked investor Langston, which is owed £15m in loan repayments – an overpowering reminder of the legacy of the voluble former chairman. Payments of instalments to Langston were due to begin at the end of last month.

Money is also owed to contractors for work on the new stadium, which came in at around £2m over budget, and to development partner PMG Estates, who built the retail park next door to the new ground. This formed part of the building project and covered the £7m owed to the local authority for the development. The club’s plans to raise funds by selling off £1.8m worth of land are also proving politically problematic.

Pessimistic estimates put the club’s overall debt at around £30m and, as can be expected when any reasonably high profile club is in need of cash, rumour and speculation have been abundant. A group of Malaysian businessmen has been in talks with the Cardiff hierarchy, as has the Guernsey-based property developer Ben Steele, who was similarly linked with Southampton last year, but failed to come up with the cash for a takeover.

The supporters trust (ccfctrust.org) is looking to force Cardiff to hold an extraordinary general meeting in order to scrutinise the books and the board’s plans to dig them out of a mess that, so far, has not derailed their promotion campaign.

Other familiar faces in the High Court in the coming weeks are, on February 24, Notts County. They were given a 28-day extension to the petition brought against them last month while they search for investors who can actually be identified. Then the utterly rudderless Chester City who, curiously despite having fewer obvious suitors, have been given a longer stay of execution, of 42 days before HMRC brings its winding-up petition on March 10. Fans have begun a boycott of matches (www.cityfansunited.com).

Some more encouraging news at Rotherham however. The club and local council have agreed plans for a new town centre stadium on the site of a derelict foundry by the River Don. The League Two club, who have been playing at Sheffield’s Don Valley Stadium since being turfed out of Millmoor in 2008, hope to have the 12,000-capacity venue opened by 2012. It is expected to cost around £20m.

From WSC 277 March 2010