Will Androniko fix Portsmouth’s Financial Problems?

In one of the most unpredictable seasons in the Premier League, the one thing that is predictable is that Portsmouth most certainly will be relegated. With the Premier League imposing a 9-point deduction on the debt-ridden club for entering administration, the club has only 10 points to show and are bottom of the table, 14 points behind Hull City.

Portsmouth became the first Premier League club to go in to administration but anything is better than having to wind-up which is exactly what would have happened had the court decided in favour of  Her Majesty’s Revenue and Customs who in March had served the club with an order to wind-up. Going into administration means basically allowing an insolvent (debt-ridden) company to continue trading with the hope/expectation that it will be able to survive. This is done my appointing an administrator whose duty it is to safeguard the interests of the company’s  creditors. Portsmouth’s debt including taxes is  £78 million and they will need another £20m to see-the-season-out. Andrew Andronikou of UHY Hacker Young, an insolvency practitioner has been appointed administrator to help them put their house in order.

Andrew Andronikou has a very good track record having helped Swindon Town with similar problems. He got off to great start by persuading the HMRC to formally drop their challenge over the validity of  Portsmouth football club’s move into administration.  Andronikou has vowed to help save the club and bring it out of administration in “six-eight weeks”.  He said, ” I will be cutting to the bone, I can assure you. Restructuring starts today. There will be significant cost cuts at all levels. We have a huge job to deal with. I need to generate working capital in the next two months, we will have to sell one or two players but I am not looking to sell players on a fire-sale basis.”

Andronikou has since cut 85 jobs and put Peter Storrie the chief executive, on a salary of  “under £500,000” until the club was sold. So this guy really does do what he says he will. Which is more than can be said of  Portsmouth owner and ex-owners. The club has changed 4 owners this year alone.

Since the Premier League has deducted nine points it seems more likely now that it will allow Portsmouth to bring forward TV revenues and parachute payments to help see them through to the end of the season. The Premier League had earlier denied Portsmouth’s pleas for an advance of  £5m it is owed in TV payments between now and the end of the season, and the £16m it will be due in parachute payments. Also Portsmouth’s current owner Balram Chainrai has offered a £15m overdraft to help the club. With a business consortium headed by Cheshire businessman Rob Lloyd already interested in buying the club  it seems the six to eight week time frame for getting the club out of administration is achievable.

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The administrator met Rob Lloyd and ruled out the group from being given an exclusitivity  agreement, “I don’t think we are in a position to do that – they have to satisfy us in various other areas,” Andronikou said.”I also don’t want to discourage other interested parties.”

The fact that the consortium’s main backer remained anonymous and that their a lack of transparency surrounding the Lloyd’s consortium is what remained Andronikou’s main concern.

If Pompey fail to find an appropriate owner before the start of next season, with gate receipts going down and the wage and tax bill refusing to go away, they will find it very hard to assure the Football League of their financial ability to fulfill next season’s fixtures.

With football and the Premier League growing with each season, the need for better regulation of the industry has never been greater. The entire Portsmouth situation once again puts the focus on better administration of football clubs and the necessity of  running football clubs as proper businesses. This unfortunate situation could have been avoided by the club altogether, had they not overspent, lived within their means, paid their taxes and balanced their books!

Hopefully, Andronikou will be Portsmouth’s knight in shining armour and will be able to find appropriate buyers for the crisis torn club. In case you have upwards of £30m lying around why not buy yourself a football club?
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