The Sweeper: Portsmouth and the Premier League’s Disgrace

Big Story

The scale of Portsmouth’s debts have astonished onlookers, documented this week by administrators. As the Times summarises:

A report compiled by Portsmouth’s administrators has laid bare the extent of the financial mismanagement at Fratton Park.

The 70-page document reveals the club owe unsecured creditors £92.7 million, while overall debt has spiralled to £119 million – far higher than the most pessimistic estimates

Most stunning (The Sun: “Shocking and shameful, wicked and wild, irresponsible and incompetent.”) to people is the revelation in the document that  local charities, non-profits and businesses are still owed relatively trifling sums. £9 million is owed to 15 football agents, but no-one is crying for them; instead, quite rightly, the outrage is about the debts like these:

  • Priority Community Sports Centre: £11,000
  • St John Ambulance: £2,700
  • Faith & Football: £1,998
  • Carol Moore, a local florist: £995
  • Boy Scouts: £697

The Times features outraged fans:

“What is it that we have been ‘supporting’ in the last months and years?” one fan asked on a local newspaper message board. “From the big stuff, the millions sloshing around like bilge water in a [sinking] ship, to the pathetic non-payment to the Boy Scouts [£697], I am coming to the conclusion that this is not a business which we can want to have anything to do with.

“After the Cup Final, I am not sure anyone who supports Pompey can ‘support’ this business or any of the events it organises. This is not Pompey any more.”

The outrage is, of course, justified. A company bringing in millions of pounds of revenue each year through football and failing to pay basic debts to local companies and community organizations is a disgrace.

What it should not be is a surprise: Portsmouth are the 54th insolvency in British football since 1992, the year the Premier League launched, as David Conn mentions.  As has been usual practice in England, football creditors, such as other clubs, are paid in full before any other debts when a club becomes insolvent, due to Premier League (and Football League) rules, leaving the creditors above unpaid while other clubs receive millions.

This is a rule that, whilst understandable from a business standpoint, severely damages football’s reputation in many local communities, and makes a mockery of the idea football should be given any exemptions as a key part of community life. St John Ambulance, providing a voluntary service for clubs assisting the injured and sick, should not be left out of pocket by Portsmouth’s collapse. For once, tabloid outrage is fully justified and the Premier League should be ashamed of its own rules.

Quick Hits

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21 thoughts on “The Sweeper: Portsmouth and the Premier League’s Disgrace

  1. Gaz

    Please remember that it is not Portsmouth FC (the club) nor fans that have been ‘cheating’ or being incompetant. There is a whole hidden story here about the previous owners of the business – including the current owner who is not a saviour but is all part of the same gang – that needs to be told (but is being shamefully swept under the carpet as it is easier for people to scream about the club ‘living beyond their means’ and so on).

    Ask yourself where all the money that has been received over the last year or so has actually went. The fans were being told it was used to pay off debts when it has obviously not been used to benefit the creditors nor the club itself.

    Ask yourself why the accounts show massive yearly losses when the normal operating costs are just about covered each year by the revenue received and a player sale.

    Ask yourself if Pompey, prior to 2009, was working on a business model any different to that of Fulham, Liverpool, Man City or Chelsea.

    As fans, we know that the club has been torn apart and its heart ripped out by people cleared by the Premier League as being Fit and Proper. The current team and management (and us fans) should not be sullied by the actions of convicted criminals working for known asset-strippers and gangsters.

  2. Tom Dunmore Post author

    Understood, Gaz, but with respect, that’s not at all the point this piece is making…it’s about the football creditor rule, which applies to all insolvent clubs (see the final line, “For once, tabloid outrage is fully justified and the Premier League should be ashamed of its own rules.”)

  3. Dan

    Gaz, Portsmouth have garnered success using players they cannot afford. They can’t afford Dindane, O’Hara, Quincy (hence why his loan was cancelled) to name but a few, and those players have helped them get to the Cup final this year.

    That is before we look at the players that got them to Wembley in 2008 and the mammoth wages they paid players like Crouch who they signed after that (Crouch was on more money at Fratton Park than he was a Anfield).

    That is cheating.

    Running up a debt like Chelsea and Fulham have is not a problem in itself. Running up a debt you can’t pay is. That is the fundamental difference between Portsmouth and those clubs. (Liverpool is completely different as their debt is leveraged, in the same way Man United’s is, so is nothing like the situation at Portsmouth).

  4. Ben

    I still think the whole thing was a terrible money laundering exercise by Gaydamac sr. Peter Storrie may or may not have known what was going on but the club was being used by an arms dealer to launder blood money.

    And I agree with the point of this article. The football creditors rule is completely wrongheaded. And it’s going to do a lot of damage to Pompey’s local community when the local businesses get 30p on the pound while Sol Campbell gets a million in back image fees.

  5. Gaz

    Thanks Tom, I’ve been reading several articles this morning all ‘Outraged’ at the club when they do not understand the real story behind this mess (the Guardian has done some probing into this but hardly any other newspaper or web-article (outside of Pompey) has).

    I agree that the outrage should be aimed partly at the football creditor rule and the Premier League and would in fact like to see more of a means-tested application of how the x/£ is shared out – with previous owners, agents and footballers towards the lower end whilst the smaller businesses are prioritised.

    However, as pathetic as this may sound, the club itself is also a victim in this and until a proper investigation into what has happened to the club over the last few years is undertaken, issues such as how and why these debts have arisen (and not been paid off!) will continue to be swept under the carpet with the excuse of bad-management and living beyond means. My frustration is that a lot of media and fans lap up these excuses, portraying the club in a poor light and in turn getting outraged, when the problems arise from *individuals* extracting money from the club leaving us and the creditors in limbo.

  6. Gaz

    Dan

    Portsmouth has also been leveraged which is why the previous owners are trying to claim some £40m from the club (they have not invested any of their own money at all).

    Fulham and Chelsea can only operate with their owners acting as beneficiaries – in exactly the same way as Pompey did before our ‘beneficiary’ decided to withdraw the support and guarantees. If Al Fayed or Abromovich decided to walk away from their clubs, Fulham and Chelsea could well face the exact same problems as us as the finances are drained from the clubs to ‘repay’ the owners.

  7. Frank

    Gaz,

    You say the fans and ‘the club’ are the innocent victims in all this but surely the fans started smelling a rat many months ago so how come we never heard any concerned noises coming from Pompey fans over the course of the season?

  8. bahns

    From the quoted Times piece:

    “After the Cup Final, I am not sure anyone who supports Pompey can ‘support’ this business or any of the events it organises. This is not Pompey any more.”

    —-

    A couple different levels of hilarity going on with this statement, but my favorite is the whole “yep, just gonna tie this arm off and put the lighter to spoon one last time” attitude of him going cold turkey right after the Cup Final…

  9. pfcCornwall

    @Dan: Quincy’s loan was not cancelled because he couldn’t be paid. It was cancelled because the transfer window in Russia had opened and his home club in Moscow had received an offer for him. How’s that Pompey’s fault? I also heard a rumour (though cannot confirm it) that his home club were also paying a parge chunk of his wages because they wanted to use Portsmouth as a shop window for him…

    The ‘cheating’ claim is getting a bit old and doesn’t hold water. The vast majority of EPL clubs live beyond thier means. If any one of the big owners were to walk away those clubs would implode in a very similar manner to Portsmouth. Will you then accuse them of cheating for years?

    @Frank: If you look at some of the pompey related forums and message boards, you’ll see that many Pompey fans have expressed concern for some time, but the inept and possibly criminal financial dealings were not publically known, so no fans knew just how bad things were.

    The true victims in all of this are the small businesses that will lose out because of the EPL’s self serving rules, the fans and the club, which as an entity has been victim to the financial misdealings of the owners and senior management.

  10. Dan

    @Gaz Pompey’s debt is not leveraged. If it was, they would not owe money to hundreds of local businesses, nor would they owe money to current and former players, or most importantly, the taxman. Chelsea is underwritten by Abramovich. He puts his own money in. He has not borrowed money to do it, and can afford to write off the debt (and has already done so with some of it). That didn’t happen at Pompey.

    @PFCcornwall I fear you are blinded by loyalty. Most PL clubs are not living beyond their means – if they were, they would be on the verge of insolvency (Hull for example, are on the verge insolvency and have been paying wages that they cannot afford). Having a debt is not living beyond your means. Not being able to repay a debt is.

    As for Quincy, Spartak offered a refund on the loan fee (half of it). Pompey had no obligation to send him back, but needed the cash. Seeing as they paid £500k a month before he went, I’d say it’s fair to say they couldn’t afford him. Don’t forget, the club also kicked and screamed about how unfair it was they couldn’t sell players outside of the transfer window to urgently raise cash. Now those rules have been bent for you, how many players have you sold? Zero.

    Pompey also still has outstanding amounts owed to current players (it’s all quite clearly labelled in the report that was released yesterday) included those that are on loan, like Jamie O’Hara. If it was not cheating in a sporting sense, you would not have been punished with a nine point deduction. Moan all you want, it is still cheating. “Financial doping” is how it usually described.

    If the club was on it’s knees having been constantly signing bargain players on tiny wages, I’d have sympathy. But you were all more than happy to see Diarra, Crouch, Defoe, Muntari, Campbell, Distin, Kaboul, James, Johnson et al, all on massive, massive wages (that was no secret) that were painfully obvious you could not afford. Everyone else could see it at the time. Why not Portsmouth fans?

    Pompey fans were not complaining then, so they can’t have the audacity to try and play the sympathy card now.

  11. Indexed Results

    There’s one rule for football clubs and one rule for the rest of the business world. Only in football does the taxman rank below other creditors when it’s time to settle up. With other businesses such small creditors would be unlikely to get even a sniff of any money. Whoever is owed the money, the club has been financially mismanaged and while previous owners may have walked away relatively unscathed, local businesses and the taxypayer loses out. It’s time for a overhaul of the rules and regs around football club ownership.

  12. Amy

    Gaz,

    You say the fans and ‘the club’ are the innocent victims in all this but surely the fans started smelling a rat many months ago so how come we never heard any concerned noises coming from Pompey fans over the course of the season?

  13. Rob

    Amy, you clearly weren’t listening.

    As Pompey line up against Chelsea in the FA Cup Final, it neatly summarises the short-sighted, blinkered viewpoint of so many modern football “consumers” that they consider Portsmouth to have “cheated” and Chelsea to be somehow honourable.

    The only difference between the two is that Pompey’s Abramovich has decided to pull the plug and plunder the club then sow a trail of confusion and dishonesty as the carcass is picked over. All whilst Pompey fans have had to endure the high-minded lecturing of so many who are ignorant of the facts.

    Why not look at where the money has gone at Portsmouth, rather than this endless diatribe about “doing a Leeds”, which has not been the case at Portsmouth despite appearances. Though the end result looks about the same.

  14. Rob

    re: the original article, it is hard to disagree.

    You will find Portsmouth fans are currently paying the St.John’s Ambulance bill from their own pockets whilst the previous owner of Portsmouth, Sacha Gaydamak, relaxes on a Mediterranean yacht.

    This is all a source of terrible embarassment to the Premier League who are sweeping Portsmouth under the carpet of the Football League as quickly as they can.

  15. Andy

    Yes – Pompey fans and the club are victims.. yes we all went to Wembley and loved it, yes we all loved Diarra, Defoe, Muntari, Johnson etc…

    Muntari cost £8m, sold £13.5m
    Diarra cost £5m, sold £20m
    Defoe cost £8m, sold £15m
    Johnson cost £4m, sold £17m
    Crouch cost £11m, sold £10m
    Kaboul cost £5m, sold £9m
    Distan cos £0, sold £5m

    Yes this doesnt tell the whole story but along with all the other vast income streams there has been a huge amount of money poured into Pompey…. so the question is where has it gone? Yes the wages were big, but not to the tune of £119m debt…..

    The administrator has stated that Falcondrone, the investment vehicle of Ali Al Faraj, is owed £17m by the club – how can this be? He owned the club for 5 months, during which time we had TV money and gate receipts as well as player sales. We also had capital investment c. £20m from Chainrai….. The wages were paid on time in only one of the months he was owner and he walks away being owed £17m….. all you people who are outraged at the behaviour and excesses of the football club should take a few maths lessons as this doesnt add up. Almost all of the debt that the club is in has materialised since the club was sold at the start of the season….. how can a club with a reasonable wage bill (now and since the summer) generate £119m worth of debt in just 8 months? Yes, bad management – I tend to think the people managing the club new exactly what they were doing though.. unfortunately its not illegal.

  16. FootballMS

    Dan,

    The fact that you can list multiple examples of how the club has been a selling club over rescent seasons si interesting given their debt but it only serves to highlight their downfall, clearly they didn’t make any profit on these player sales due to agent buying fees, agent selling fees and inflated wages

  17. Andy

    Thats a very odd way of looking at it FootballMS…..

    The question should be why are multiple people allowed to take over a football club and leave it in financial ruin… debt was quoted to the courts in feb of £60m… now theyre £119m… something is smelling very fishy – something other than wages and agents fees – again, I am suggesting you retake your maths exams….

  18. Dave

    Dan,

    The fact that you can list multiple examples of how the club has been a selling club over rescent seasons si interesting given their debt but it only serves to highlight their downfall, clearly they didn’t make any profit on these player sales due to agent buying fees, agent selling fees and inflated wages

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  20. Lee

    [...] Tom Dunmore notes that, although this sort of paperwork has been available for most “football insolvency [...]

  21. Rick

    Thats a very odd way of looking at it FootballMS…..

    The question should be why are multiple people allowed to take over a football club and leave it in financial ruin… debt was quoted to the courts in feb of £60m… now theyre £119m… something is smelling very fishy – something other than wages and agents fees – again, I am suggesting you retake your maths exams….