Southampton Fight Points Deduction

Southampton are to appeal against the ten points deduction imposed by the Football League. If they are relegated anyway, they would start their League 1 season with minus ten points. After studying a report by forensic accountants, the League decided that the holding company and the club ‘are inextricaby linked as one economic entity’. However, the club argue that Grant Thornton, the firm of accountants that conducted the investigation, went outside the remit agreed by the League and the club. The League has insisted, however, that Saints have no good grounds for an appeal.

Southampton are to appeal against the ten points deduction imposed by the Football League. If they are relegated anyway, they would start their League 1 season with minus ten points. After studying a report by forensic accountants, the League decided that the holding company and the club ‘are inextricaby linked as one economic entity’. However, the club argue that Grant Thornton, the firm of accountants that conducted the investigation, went outside the remit agreed by the League and the club. The League has insisted, however, that Saints have no good grounds for an appeal.

Only two of the thirty prospective purchasers that expressd an interest in the club have proceeded to due diligence. Fans have raised £120,000 to keep the club going until the end of the season. However, a deal must be struck soon as today’s home game with Burnley is the last chance to raise gate revenue. The company went into administration with debts of £30m. Most of that is owed to Aviva (formerly Norwich Union) for the construction of St.Mary’s Stadium and Barclays with whom the club exceeded their £4m overdraft. However, it is believed that a buyer would have to find less than half that figure which suggests that the creditors are prepared to write off a lot of the debt. The city council is also investigating the possibility of buying the stadium which would reduce the debt further. However, a League 1 club is a less attractive prospect than one in the Championship.

Plenty of Interest in Southampton

Southampton FC’s parent company has attracted as many as 31 potential purchasers interested in buying it out of administration. A shortlist of about four or five bidders for Southampton Leisure Holdings will be created after a process of due diligence. Those expressing interest include wealthy British individuals, some of them based abroad in locations such as Monaco. They are interested in football but see the game mostly as a business. No hedge firms or private equity firms have shown interest which is a contrast with the height of the economic boom. It is hoped to conclude a deal as soon as possible as during the summer clubs still have to meet expenses, including players’ wages, but have no income. Southampton has an excellent stadium and plenty of potential, but a buyer needs to have a plan to restructure the club’s debts while quite probably getting it out of League 1.

Saints Could Join Conference – 26/04/2008

If Southampton do not find a buyer soon, the club may have to go into liquidation and be re-formed. In that case the rules of football require that a club drops two divisions. Saints have already been relegated to League 1, so that would mean them starting again in the Conference. The chairman of the Conference, Brian Lee, has now confirmed that they have been sounded out about the possibility of Southampton playing in their competition next season. He told the Non-League Paper, ‘We haven’t actually been officially approached as such, but the question has been asked.’ The idea of the former Premiership club having a derby match with Salisbury City does stretch credulity. Nevertheless, it emphasises the urgency of concluding a deal for the Saints before too long.

Liquidation Plans Prepared – 30/4/09

Administrators trying to sell Southampton have begun drawing up contingency plans for liquidation after saying the club has only a short window to find a buyer. Talks are continuing with a number of ‘serious’ parties according to Begbies Traynor. These are reported to include a pair of Guernsey businessmen. The club has traditional links with the island. ‘The situation is fluid,’ said Mark Fry of Begbies Traynor. ‘I’d like to remain confident that the club can be sold before we get right to the wire, but at the same time I do not want to get people’s hopes up. We naturally hope that a sale will be achieved, but there is always the danger that none of the interested parties will make an offer.’ He said he was working on ‘potential contingencies’ should a buyer fail to materialise.