Generic clubs in financial crisis Thread

[6ft Kerplunk]

I'm starting to think Pompey's tactic on monday will be to just tell the judge they've got a few people interested so would it be alright if they carry on as they are until they can get that sorted.

Add in a bit of a sob story about those nasty FIFA bullies not letting them sell some assets, a few crocodile tears from Storrie and yep thats their defence.

[Stranded]

I don't understand business and that but I was under the impression that administration has to be an option whereby an administrator can run the club and try to sort it out (doesn't appear possible as no buyer will take on that level of debt) and the creditors need to accept it. Why would HMRC accept administration when they've gone to the effort of applying for a winding up order and are completely against the football creditors rule?

Palace did the same thing the day before a winding up order was heard. If this is OK, then you wonder why they didn't do this prior to the previous hearing?

[Rev Algenon Stickleback H]

That's good if there's a will to impose it, and the league has the power to enforce the rules. It has to come from the clubs themselves, though, otherwise I still think it will prove too unworkable. It's too easy to get around a salary cap (or whatever) by paying in kind. It's a completely different scale, but I remember ice hockey clubs used to break the league wage cap (a self-imposed wage cap, given that the league was run by the owners of the clubs, a bit like the PL) by paying the star players £50 p/w to play but employing them at the rinks as zamboni drivers for a grand a week.

Yep, and rugby clubs used to be amateur, with their stars all somehow having "jobs" for their sponsors.

Saying that, caps are pretty strictly enforced in US sports, so it can't be impossible.

The German system of licencing looks better, where clubs have a period of time to sort out their debts or get kicked out of the league. It's not perfect though, as a few clubs, including the likes of Schalke who fill a 60,000 seat stadium every game, are massively in the shit. They are also very much against the unfair advantage that the likes of Bayer Leverkusen and Wolfsburg get from sponsors using clubs as a marketing tool. Not to mention the money poured into Hoffenheim, who have gone from being akin to Maidenhead to title challengers thanks to one man's money.

[Sun Tzu]

Saying that, caps are pretty strictly enforced in US sports, so it can't be impossible.

Aren't they got around by giving players stupidly long contracts which make their annual salaries within the caps but mean that at some point the player has his salary 'paid up' for the duration of his contract and reaps the massive rewards in a lump sum which then is outside the salary cap.

bearing in mind the massive wages earned by many US sports stars it must be clear that the cap is honoured only in the way it is got around.

[Rev Algenon Stickleback H]

Saying that, caps are pretty strictly enforced in US sports, so it can't be impossible.

Aren't they got around by giving players stupidly long contracts which make their annual salaries within the caps but mean that at some point the player has his salary 'paid up' for the duration of his contract and reaps the massive rewards in a lump sum which then is outside the salary cap.

I don't think so. The NFL, for example, can release a player at any time, so there'd by no need for them to honour the remainder of a contract. Any remainder of a signing on fee would count against next year's cap.

It should be pointed out that though that the way their leagues work i set up to maximise profit for the owners. They don't benefit directly from success in the same way that a club here would. They even have to have a minimum salary to stop wners underfunding teams and raking in the profits.

bearing in mind the massive wages earned by many US sports stars it must be clear that the cap is honoured only in the way it is got around.

Only the top stars earn the real fortunes. There are plently of NFL players on championship style salaries. The impact of balancing out attracting top talent and staying under the cap means a real squeeze on the lesser players' salaries. It's quite normal for a team's star to earn 5 times the salary of many of his teammates.

[Dirk Gently]

There is a whole new specialist profession emerging - "cap accountants" - who are accountants who specialise in ways of making sure that contracts are wage bills fall within the rules, whilst maximising what the player actually gets.

[ankeny]

This is an outrage and we the taxpayer loses out again.What a wheeze this administration,basket cases can carry on under a new set up as if nothing happened albeit losing a few points.The taxman should have shut Portsmouth down last week but the sleezy spivs and their fans seem to have got away with it and it can only happen in football.I hope they finally go to the wall in the near future and good riddance.And to think some of us moan how SJM run our club at least we know the money we have got is safe in his hands and wont be thrown in obscene wages at some pampered,arrogant cheating footballer.

[readingbedding]

If they do enter Administration, they'll be able to sell players outside the transfer window and the winding-up hearing will be suspended.
HM Customs & Excise want them winded-up, but it may not happen now.

[Rev Algenon Stickleback H]

This is an outrage and we the taxpayer loses out again.What a wheeze this administration,basket cases can carry on under a new set up as if nothing happened albeit losing a few points.The taxman should have shut Portsmouth down last week but the sleezy spivs and their fans seem to have got away with it and it can only happen in football.I hope they finally go to the wall in the near future and good riddance.And to think some of us moan how SJM run our club at least we know the money we have got is safe in his hands and wont be thrown in obscene wages at some pampered,arrogant cheating footballer.

A club that's almost certain going down anyway gets their debts wiped out in return for accepting relegation.

Anyone here believe next season they'll lower their wage bill to avoid getting in debt when chasing promotion?

[Dirk Gently]

If they do enter Administration, they'll be able to sell players outside the transfer window

Really? How does that work then? In fact, they can sell players whenever they like - it's just that no clubs can buy them (or at least register and play them!)

.... and the winding-up hearing will be suspended. HM Customs & Excise want them winded-up, but it may not happen now.

Do you mean HM Revenue & Customs?

HMRC don't actually care what happens to them - they are interested in getting back as much of their (i.e. OUR) money as possible. So they'll do what they can to make that happen.

The job of an administrator is to maximise the revenue available for the list of creditors and to propose a settlement that they can then vote on whether they'll accept it or not. But it's perfectly possible that a settlement can't be reached, eg if the creditors don't vote in favour of one (as a matter of principle, HMRC won't vote for any football CVA - as a protest against the football creditors rule. ) So it is all up in the air still, and administration may not guarantee their future if a buyer cant be found at a reasonable price.

[Sarah Star]

I see Cork's lost a winding up order too, though tbh I thought they'd gone already.

http://www.irishexaminer.com/breakingne ... 47437.html

[Royal Rother]

Companies often enter adminstration for a week or 2 and then go into liquidation. The Administrator has to find buyers for the assets (who the hell is going to buy a player they can't play, apart from at a daft knockdown price?) and try to find an investor (again, who the hell....?).

Sentiment will not remotely enter the administrator's mind in this. Just figures.

The only reason this has been done is to buy a couple of weeks additional time for the administrator to try to conclude a deal with a potential investor.

If a deal can be done where the administrator considers the amount the creditors will receive is more than it would be if they sold all the assets of the club then it might happen. But if all football creditors have to be satisfied before that is an option then it seems extremely likely that all they have gained is another couple of games to tag onto the end of their history.

[Tony Le Mesmer]

So, if Pompey go into Administration now, will they carry over the points loss til next season? I know the FL have a date cut off, but they are not in the FL. And if HMRC dont accept a CVA, thats a hefty further deduction is it not?

If they take -9 and would have gone down anyway and start over from scratch next season i cant see the matter ending there. They have basically not been punshed at all.

For me any club going inot admin should be relgated at least 1 division. if no CVA, they lose their place in the league. Anything less just gives club a license to cheat and in effect theive off everyone else.

[Royal With Cheese]

So, if Pompey go into Administration now, will they carry over the points loss til next season? I know the FL have a date cut off, but they are not in the FL. And if HMRC dont accept a CVA, thats a hefty further deduction is it not?

If they take -9 and would have gone down anyway and start over from scratch next season i cant see the matter ending there. They have basically not been punshed at all.

For me any club going inot admin should be relgated at least 1 division. if no CVA, they lose their place in the league. Anything less just gives club a license to cheat and in effect theive off everyone else.

Big +1 from Northern Ireland.

[Mr Optimist]

Lose 9 points this season and if they are still in administration by the start of the Championship season 2010/11 then they will lose a further 10 points.

I think it would be more enjoyable and just to see Pompey slide down the divisions than go bust so role on administration.

Anyone know if Pompey have any good youngsters coming through? I feel they are going to need them sometime soon so hope they invested in their academy as well as Crouch, Defoe, Johnson, Campbell, James etc on the never never....

[Sun Tzu]

Lose 9 points this season and if they are still in administration by the start of the Championship season 2010/11 then they will lose a further 10 points.

I think it would be more enjoyable and just to see Pompey slide down the divisions than go bust so role on administration.

Anyone know if Pompey have any good youngsters coming through? I feel they are going to need them sometime soon so hope they invested in their academy as well as Crouch, Defoe, Johnson, Campbell, James etc on the never never....

Steve Claridge said atthe recent 5l Forum that Pompey have nothing - they don't have a training ground, I believe he said their Academy is hopeless and in any case most of their young players will have walked away given the mess they are in.

[rabidbee]

Companies often enter adminstration for a week or 2 and then go into liquidation. The Administrator has to find buyers for the assets (who the hell is going to buy a player they can't play, apart from at a daft knockdown price?) and try to find an investor (again, who the hell....?).

How many clubs are owed money by Pompey for past transfers? It would be worth buy back players cheap and then try to sell them on again in the summer in an effort to recoup some of that loss, even if you couldn't play the player until next season. A Spurs-supporting mate suggested that Spurs were trying to do that in the transfer window.

thinking about it, presumably if Pompey were to be liquidated, then presumably they would cease to hold their players' registrations, and those players would be free agents. Am I right in thinking you can sign a free agent outside the window?

And no-one responded to my suggestion of season-long loans. Presumably you could loan a player for a large loan fee now, with an agreement to complete a free transfer in the summer?

[exileinleeds]

I can't help but wonder who they are going to appoint as administrator.

I am in no way an expert, but iirc, an adminstrator first takes their fees. Then they pay off the secured creditors ( I assume football debts fall in to this catagory), then HMRC, then everyone else gets about 2p in the pound....if the majority of creditors agree. HMRC are not going to be happy with this.

Forget football for a second- the government is seriously in debt. The only way out of that is to increase MASSIVELY the amount of tax revenue. Football clubs are high profile and get far more media attention than say...AstraZenica, "warning shots" are clearly being fired. Maybe things are at a point where this is one case where the revenue simply cannot be allowed to fail.

£11m may not be a huge sum in footballing terms- the price of a reserve goalie for a PL team....but enforcing the rules....
By forcing a COMPANY with the profile and media interest of PFC into liquidation, how much of an incentive is that likely to be to pay up to other companies to set their accounts in order. Stop taking the piss- or else.
As tax payers, we should all welcome their stance to recover OUR money.


Now we all know the courts are entirely and essentially (for justice) separate from government. Govt pressure cannot be brought to bear on judges. There is a little bit of me that wonders if someone from the LCD will not have a quiet word in the presiding judges shell like and suggest...for the greater good....


Insh'allah

[rabidbee]

If they want to rig the court, they just need to find a judge who's a Saints fan.

[Royal Rother]

Since 2003 HMRC are no longer a preferred creditor - they take their place alongside all the other unsecureds.