Avoiding the Drop

The Last Days of Pompey. Get it?

One would think that voluntary administration would start to solve some of the problems over at Fratton Park; it might not start solving them immediately, but at least the spin doctors who’ve been announcing financial statements to the public would be removed from control so a clear understanding of how much debt the club is actually in could start to be established.

One would, apparently, be wrong. In spite of the fact that there’s now a self-appointed administrator in charge of the club (and, really, I see no way that that could go wrong), the amount of debt – which seems like a fundamental thing – has yet to be concretely established. In fact, it’s already changed since this morning.

Here are the key points from “The Guardian” piece on Portsmouth’s administration that was linked to in this morning’s “About Last Night”:

• Total debt: £78 million (higher than estimated previously; this number’s gone from like £30 million to £78 million in about a week).
• Amount owed to Her Majesty’s Revenue and Customs: £18 million.
• Random “WTF?” Moment #1: Portsmouth hasn’t had a bank account for several months, and has been running all of their payments through an account set up in their attorney’s name (which seems like the Premier League club equivalent of not having a checking account and getting your paychecks cashed at the seedy cash advance place on the corner).
• Random “WTF?” Moment #2: The Endeavor Fund, a group that was planning a takeover of the club, ultimately fell apart when they couldn’t provide proof of funds from a recognized financial institution (read: bank); said fund was represented by a 23 year old who once offered to meet with the current owners of the club “at his Dad’s home”.

Here are the key points from a different piece in “The Guardian” from later in the morning (maybe five hours later):

• Total debt: £86 million (an £8 million increase since the story from earlier in the day, which was based on figures given on Sunday).
• Total value of the squad: £21 million (or £17 million less than club spokesman/manager/chief spin doctor Peter Storrie had claimed last week).
• Amount needed to survive until the end of March: £7 million (an additional £7 million will be required to survive through April).
• Amount by which the club’s assets are exceeded by it’s liabilities: £65 million. This raises questions about how the club can realistically hope to restructure their debt under administration.
• Random “WTF?” Moment #1: Current owner Balram Chainrai (the fourth owner this season) could actually make money off the club, as there are plans afoot for him to buy the club’s Fratton Park ground for £10 and lease it back to the club at £1.3 million a year as a secured creditor.
• Random “WTF?” Moment #2: The current administrator – which was appointed by the club – has reasonably close ties to Chainrai, as both of them use the same solicitor.

So much for that rosy outlook. HMRC appear to have very serious reservations about the way that Portsmouth went about entering themselves into administration; the complete lack of any real paper trail or any reputable administrator’s involvement, coupled with the hinted-at possibility that Chainrai’s looking to make some cash out of the administration process, is not helping their case.

Ultimately, though, this is going to be the problem: How does a club that doesn’t own their own training ground and is only valued at £21 million pay off £86 million? If they can’t, then it’s game over for Portsmouth. The case will be heard on March 15th.