Three clubs get reprieves – Football Economy

Three clubs got temporary reprieves from winding up orders today – Portsmouth in the Premiership, Cardiff City in the Championship and Southend United in League 1. Of the three the club in greatest peril remains Portsmouth who are on their fourth owner this season.

Portsmouth have been given a seven-day stay of execution. They have been allowed until the afternoon of February 17th to file a statement proving that they can pay their creditors. The principal creditor is HM Revenue and Customs which have taken the club to court over an unpaid tax bill of £7.4m. They are also being sued by former defender Sol Campbell for £1.7m for image rights. They are involved in a separate dispute with forner owner Sacha Gaydamak over whether they have missed a deadline in paying £9m of the £28m they owe him.

It’s evident that the court was very sceptical about Pompey’s claim that they could pay their debts. Both the court and HMRC expressed concern that the company was trading while insolvent which is a very serious matter. Court registrar Christine Derrett said she feared the company would build up more debts which would not be paid. However, she was aware that if she made up a winding-up order immediately it would have very serious consequences not just for the business but for the club’s supporters. Although she emphasised that this was ‘not a consideration I can strictly take into account’, it was evident that she was doing what she could within the law to take account of the club’s fans.

Whether the club can survive depends to a large extent on how serious the two offers they have received turn out to be. The club is very close to the brink, but it has brought in accountants and insolvency practitioners Vantis to produce the required statement. It may be, as chief executive Peter Storrie claims, that the club is in a much better position than a few months ago with debts reduced massively, but it would appear that the amounts left outstanding are substantial and well beyond any cash that could be generated by the club in the short term.

Cardiff City have had their winding up order adjourned for 28 days. They are thought to face an unpaid tax bill of £2.7m and HMRC agreed to an adjournment after they made a payment on account of £1m. The club’s position was eased last week when the city council gave permission to the club to sell off a plot of land at Leckwith to major Bluebirds shareholder Paul Guy’s company Capital Retail Partnership for £1.8m. It was also agreed that the 40 per cent of the sale owed to the council (£750,000) would be deferred for five years when it would be repayable with interest over a further five years. The House of Sport which will procvide facilities for the club’s youth academy, a community sports hall and council offices will be built by club director Steve Borley, but this is subject to an extraordinary general meeting called by the Supporters Trust. The local Labour group leader, Ralph Cook, criticised the deal as ‘incestuous’.

There was a demonstration after last Saturday’s game by supporters who were angry about the way in which chairman Peter Ridsdale had handled the club’s finances. About 10.000 Cardiff fans bought season tickets for 2010/11 after the club told them that it would be used to bring in new players to boost the club’s bid for promotion for the Premiership. In fact the estimated £3m raised has been used to pay down debts, something for which Mr Ridsdale apologised. The club is effectively up for sale with those interested including Malaysian businessman Datuk Chan Tien Ghee (now a board member), American invetsors and Guernsey-based property developer Ben Steele. With a new stadium and a well-populated catchment area, the club has considerable potential.

Southend United have also had their winding-up hearing adjourned for 28 daus. After £2.1m was paid off in November, HMRC are claiming a further £205,000, but the Shrimpers are claiming that the original amount was overpaid by £200,000.