Last week, Portsmouth FC became the first top-flight football club in England to go into voluntary administration as a result of their massive debts, currently estimated at £86 million. Over the season so far, they have repeatedly failed to pay wages on time, owe the Inland Revenue millions in unpaid taxes and VAT, have had to sell many of their players to get quick cash and – as a result – are lying firmly at the bottom of the Premier league table. According to the Guardian (3/3/10) they need to find £14 million just to keep going until the end of April.
When a football club goes into administration they are normally docked nine points either in the current season or the following one depending on circumstances. The apparent aim is to stop clubs doing this just to avoid paying bills they have rashly incurred. However with Portsmouth the League is holding back on doing this at present until things become clearer. This is due to the fact that the Inland Revenue (HMRC) has gone back to court saying that they are unhappy with the decision and way that the club has carried out the voluntary administration process. They have challenged many of the stated figures, saying things are in fact much worse, and – more interestingly – have raised doubts about the validity and independence of the administrators brought in by the clubs owners, stating that the link between the two parties is far too close.
The case that must be in their minds is Leeds – once a top club in English football – which went into administration and ended up being sold by the administrators, despite many complaints, to a consortium involving the old owners. Many ordinary creditors – and the taxman – ended up getting little in return. The ‘new’ owners got a club free of debt. HMRC had been pushing for a winding up order on Portsmouth on the basis that they were trading whilst being insolvent, so that they could get something to offset the money owed by the club to them. By going into voluntary administration the intention was to negate any winding up order and have administration carried out under the special rules reserved by the football authorities for themselves in which the first people to get any money from the administrator would be any other football clubs who are owed transfer fees etc. – very convenient for them. No wonder the stuffed shirts of the Football Association and the Premier League have been so comfortable with the situation where one football club after another has gone into administration once the bills have got too great.
Alas for them HMRC have had their noses tweaked once too often and seem determined to ensure that they get their slice of the Portsmouth cake. Rather than accept the voluntary arrangement, which it was assumed would sink the winding up order; they are pressing the courts for action that may well involve Portsmouth being shut down after all. They have produced figures that show that the club’s liabilities exceed their assets by a massive £65 million, raising severe doubts about the feasibility of administration as a solution.
Any outsider reading all this will wonder how a game which seems to be so full of cash is riddled with such debt. Of course Portsmouth has always suffered from being a small club with an old ground unable to generate the amounts that say Manchester Utd or Liverpool can generate in matchday income. Yet both these clubs are also saddled with huge debt which has to be serviced on the regular basis by the club itself rather than the owners. The difference with Portsmouth is that these owners are happy to continue with their nice arrangements – at least for now. But it is now pretty much accepted that a large number of Premier League clubs are carrying unsubstainable huge debts and that others could well be joining Portsmouth in death row. For example, West Ham, having had the little problem of being owned by backers from Iceland – whoops – is now being forced to cut back on their expenditure levels by their new owners.
The temptation is to blame everything just on the incredible salaries being earned by the players in the top flight. It is true that some take home millions of pounds a season in wages, bonuses and assorted deals – the sort of money which would have been unthinkable even for a top flight player a decade ago. But football at this level has become very much about money – and big money at that. A clubs can ‘lose’ countless millions by being relegated. Missing out on the money pot which is the Champions League can be a big blow once you have played in it for several seasons, as is the case with Manchester Utd and Arsenal. Like a drug you can become all too reliant on it.
So a club will spend any amount to preserve their place at the top table be it high wages and bonuses, massive transfer fees, payments to money sucking agents, whatever is needed. This was Portsmouth’s fate. They avoided relegation, won the FA Cup and played in Europe. All was fine so long as the owner signed the cheques. But now the money has dried up. Portsmouth had had one owner after another – each one dodgier than the last and all seemingly unable to produce any actual backing to reduce or remove the huge debt now engulfing Portsmouth. If the HMRC are successful in challenging the voluntary administration arrangement – which they think may be aimed at dumping this debt to make the club a better prospect for some of the people who own it already – then Portsmouth will disappear into history.
But football clubs are not like the other factories and shops which have gone bust over the last few years. They are an important part of the community. Ordinary fans hate the way their clubs have been picked up by rich spivs and used as their playthings. They have seen their clubs taken away from them – tickets prices have soared, games are played at all manner of times to suit television and everything seems to be about money. Of course in the lower leagues the reverse has happened as money has flowed away from them leaving an endless parade of clubs in debt, paying low wages, struggling and in quite a few cases going into administration to try and survive.
Now things have changed even for the big spenders of the Premier League. Money has dried up – from the sponsors, from the owners themselves and from the finance houses who, in the past, would have come up with the cash to keep the show on the road. The banks were happy at one time to lend clubs what they needed but they have been pretty loose with the cash themselves in the hunt for quick returns and are now not so keen to take a risk. Even television may not be so forthcoming in the future as belts are collectively tightened. Whilst times were good the clubs owners gloried in the publicity they got from possessing a football club. Now that the bills are mounting up they are not so happy. Is this a trait which has just affected football in this country? No it is not. According to the vice president of Spanish club Sevilla: “There are six or seven of the 20 clubs in the Primera Liga who are in bankruptcy or administration with difficulties with social security and the tax authorities “(Guardian Sport 3/3/10)
So where does this leave the ordinary Portsmouth fan – or any football fan for that matter? As things stand it may well just be with a pile of memories. Action must be taken. These clubs should be recognised for the community assets they are – or rather should be – and taken into public ownership. The moneymen should be shown the door and these clubs run by and for the benefit of all. For millions of working class people their clubs – your clubs – are a part of the fabric of their lives. Being taken to your first game, the memories of the great nights, the victories, the cups, the pain and the joy – this is all part of that collective experience which binds fans together. This is a part of our culture. The moneymen have come in to use it for their own benefit and now the crisis of their system – the capitalist system – is causing a cancer to spread through the game. Clear them out and save our game for the people who really matter.
This article first appeared on Socialist Appeal.
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This post was written by Steve Jones