By Nick Harris
22 February 2010
(with 23 Feb update at the bottom)
Portsmouth are bracing themselves for imminent administration as a means to stop them going out of business altogether, and sportingintelligence understands that insolvency practitioners from the chartered accountancy firm Hacker Young are on standby to handle the administration process.
Pompey’s owner Balram Chainrai had hoped that he would be able to sell the club, which has debts estimated at £60m-£70m and faces a High Court winding-up order next Monday over £12m owed in tax to HMRC. But would-be buyers, including a reportedly serious consortium from South Africa, have yet to prove they have the cash to do a deal, and administration is becoming more likely by the hour.
Portsmouth would become the first Premier League club ever to enter administration, and with a nine-point penalty attached to that fate, they would almost certainly be doomed to relegation. But Chainrai at least hopes to be able to keep the club in existence, and perhaps over time recoup some of the money (around £18m) he leant to the club to keep it afloat.
In a separate development at Fratton Park today, one of Portsmouth’s former owners, Sulaiman Al Fahim, resigned as the club’s non-executive chairman and offered his remaining 10 per cent stake in the club to the Pompey Supporters’ Trust (PST).
A statement today from the PST, whose working committee met Fahim last month when this offer was first made, verbally, said: “The working committee agreed that the offer had been made in good faith, but due to the circumstances of the club, we required financial and legal advice before we’d be in a position to comment further.
“No formal offer has yet been made to the trust, but appreciating the need for urgency in the current dire situation, the Trust and its advisors will deal with any formal offer immediately after it’s been received. A recommendation based on financial and legal advice will be put to the Pompey Trusts members, who ultimately approve any decisions of this scale.”
Meanwhile Portsmouth’s chief executive Peter Storrie has made public, explicitly, what everyone already knew about the root cause of the club’s financial crisis: sky-high wages that outstripped earnings.
“The bulk of the money has gone to the players in wages,” he said in an interview with ESPN. “The cost of the players’ wages this year is £37m. Last season, when it was running at its height, it was £52 million, and the year before [2007-08] it was £42 million. The vast majority of the money over the last two to three years has gone on players’ wages, and also on their transfer fees.”
According to sportingintelligence‘s sports salaries database, Portsmouth’s average first-team pay in 2007-08, the most recent season for the club we have in our unique records, was £26,923 per player per week, or the eighth highest in the Premier League that season. Pompey finished eighth in the table that season, and won the FA Cup.
23 FEBRUARY UPDATE
Portsmouth have confirmed via a statement on their website today that they will go into administration on Friday unless a buyer is found before then, which is unlikely. The club now looks highly unlikely to go out of business altogether, but as anticipated, increasingly likely to enter administration, be deducted nine points and get relegated.