By Nick Harris
25 February 2010
Portsmouth will tomorrow become the first Premier League football club ever to enter administration after talks with four groups of potential buyers for the ailing south-coast club failed to make material progress ahead of a 3.30pm deadline this afternoon. The administration process is already underway and will be completed tomorrow.
Pompey face a winding-up at the High Court on Monday over £12m of unpaid taxes owed to HMRC, which forms part of total debts estimated at £70m. As sportingintelligence revealed on Monday, insolvency practitioners from accountants Hacker Young have been standing by since early in the week, and now Andrew Andronikou, a partner of the firm, based at their London office, will act as the club’s administrator.
“We made a conscious decision to put it into administration tomorrow morning,” Andronikou told the AP news agency this afternoon.
Administration will bring a nine-point deduction for the Premier League’s basement club. A board meeting of the League will ratify that at a meeting within the next few days. Portsmouth’s current tally of points will thus be reduced from 16 to seven, leaving them 17 points from safety as things stand today, and effectively relegated already.
If there is any solace for Portsmouth’s long-suffering fans, who have endured a soap opera season of four owners, serial financial crises and few wins, it is that they now look likely to survive, albeit as a Championship club from next season. They also remain one home FA Cup quarter-final win away from a place in this year’s last four. They should now definitely still be in existence to face Birmingham in that quarter-final on 6 March.
Portsmouth’s current owner is Balram Chainrai, owed £17m by the club, but the certainly of administration at least now allows for the possibility of building again. Andronikou’s background is in “turnaround and recovery” and according to his firm’s website, “is particularly interested in undertaking corporate reconstruction work.”
This should mean as swift as conclusion as possible to the search for new buyers to pick up the pieces, restructure the debt and move forward. Administration offers effective protection from bankruptcy and the club will not now be wound up over its current problems.
A spokesman for Chainrai said this afternoon: “We have to be realistic and having the club wound up is not an option as far as we are concerned. They are the victims of circumstance, having injected funds in the form of a short-term loan to the [former owners] Al Faraj Group, who subsequently invested the money in the club.
“The partners have put £17m of their own money into the club and have a responsibility to ensure it survives. Administration would mean the club re-emerging as a healthy financial entity. The club would then become an attractive proposition for a potential buyer who could invest new funds in rebuilding the club’s future.
“The serving of this [administration] notice means the winding-up order is automatically suspended. It means the club is safe, can fulfil its fixtures and as far as is possible it is business as usual. Mr Chainrai hopes the supporters will get fully behind the team as usual for their Premier League match at Burnley on Saturday and the following weekend’s FA Cup quarter-final at home to Birmingham.
“He has agreed to continue funding the club going forward until its long-term future is decided. He will also pay for the administration process out of his own pocket.”
No Premier League club has ever entered administration while an active member of the Premier League although many have done so after leaving. Most of these meltdowns have been partly or wholly because of the financial damage of the drop from top flight to second tier.
More details about such Premier League “victims” can be found in the “mind the drop” section at the bottom of our Premier League guide page.