Portsmouth FC has failed to reach a settlement with the tax men, the club will possibly see its fourth new owner in a year and has just till 1st of March to settle the finances. Anand Narayanan analyses where did the 2008 FA Cup winner went wrong.
17 May 2008: Kanu scores the only goal of the game in the FA Cup final of 2008 to send Portsmouth fans delirious.
29 October 2008: Kanu was once again the hero as his 73rd minute goal sent Pompey 2 – 0 up against none other than AC Milan! Ronaldinho and Inzaghi ensured it ended 2 – 2 for Milan, but it was nevertheless one of the most memorable matches for Pompey supporters.
Fast forward >> Feb 2010:
Portsmouth sits 8 points off safety having lost 17 out of 25 league games this season. They have scored just 20 goals with only 5 of these coming away from home. Players and staff have had payments delayed for months in a row. They have their 4th owner in less than 10 months and have just about saved themselves from a winding up order from HMRC.
While the Pompey faithful still keep their hopes up for a miracle and premiership survival, the stark reality is that the club has much bigger and immediate problems that don’t seem like going away. If Portsmouth does indeed get liquidated, it would be the first Premier League Club to do so. In what could be a cruel irony, Pompey’s 2008 FA Cup Final opponents Cardiff City and League One side Southend United are also facing winding up petitions. But more importantly, it will highlight the situation of a number of football clubs in today’s world. Will Pompey be the first of many football clubs who are living beyond their means to pay the price? That’s a discussion for another day. Today, it’s all about Portsmouth and what they are facing.
So what went wrong? How can a club crash so dramatically in just over a year? Did nobody see the writing on the wall for so long? What’s the situation now? And what’s next for the club? Let’s try and address these issues.
So what went wrong?
No one really knows. The main reason popularly acknowledged is the irresponsible manner in which the club is being run. Not just Portsmouth, but all football clubs in general. Especially in the money making machine that is the Premier League, football clubs are so used to living beyond their means that the situation at Pompey did not raise any eyebrows. But the success that a Manchester United or Liverpool enjoy, allow them to survive in spite of this without raising too many red flags. Even Manchester United fans are now noticing the issues at their club, but it’s still nowhere as serious as Portsmouth’s. Even with the FA Cup triumph (their only major trophy in a long time), the club did suffer a brisk end at the UEFA Cup, Pompey didn't really have the income stream to support a continuous life of unregulated spending. It was always going to come back to bite them.
How can a club crash so dramatically in just over a year?
Once again the answer is mis-management of money. Where is all the money at Portsmouth going? is the question a number of observers are asking. Consider this. Since the 2009 January transfer window opened, Portsmouth have sold Defoe, Diarra, Crouch, Kranjcar, Distin, Johnson, Kaboul and Begovic for healthy profits in most cases. So where has the money from all these sales gone? The fact that the ownership is changing with alarming regularity, isn’t helping the case. No business, let alone a football club, can survive under the sort of uncertainty that Pompey are facing.
Did nobody see the writing on the wall?
Money makes the world go round. The common belief is that the powers at Portsmouth were too blinded by the money flowing in from the previous ownership and the increased television deals to think about the future. They continued to spend large sums of money on player transfers and fees.
What is the situation now?
They have just about managed to dodge a bullet with a 7 day extension, which was later extended till 1st of March from HMRC on the winding up petition. To give you a background, the petition from the Revenue and Customs department is for unpaid tax bills. This amounts to over 7 million pounds in Portsmouth’s case. They could have bought themselves more time or even settled this out of court if they had made a majority of the payments and provided provisions for the balance payments. However, the offer of cash payments made by Portsmouth has not been acceptable to HMRC. As a result they are pressing ahead with the winding-up order. The bigger issue for Portsmouth here is that this means complete liquidation with the club’s assets being sold off and player’s contracts being terminated. Unlike administration where the club would still survive as a football club, a winding up order means the end of Portsmouth FC.
Portsmouth have brought forth some evidence of two new bidders who are interested in buying the club. This would substantially reduce their problems if they could show the ability to pay off the taxman. However, the judge is not impressed by the serial offending from Portsmouth which means that she has granted the club only a week to show proof of this said investment.
The Premier League is expected to help bail out Portsmouth to save the current situation. Winding up Portsmouth in the middle of the season could totally throw the season out of order and lead to major scheduling problems of the league. However, the judge in reading out her last verdict had said that though she understood the implications, she saw it purely as Portsmouth’s problem and would not let it dominate her decision, though she would consider it.
So what next?
New owner Chainrai, Peter Storrie and the lawyers at Portsmouth need to come up with a convincing argument of how they plan to payback the taxes in the next few days. If this involves a wealthy owner it will most certainly add to the hope that Pompey can also manage premier league survival. But surviving the taxman would be the primary consideration.
With the current situation of a number of football clubs and the money being thrown about especially in the Premier League, Portsmouth could just be the tip of the iceberg. The problems in football run much deeper and hopefully this will encourage other clubs to keep their finances under better scrutiny so that football can continue to be about football on the pitch instead of courts, petitions and money!
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