The long-standing fears surrounding the future of Crystal Palace appear close to being resolved following confirmation businessman Jerry Lim has agreed to pay a figure of between £10m-£10.6m for the football club.
A deal is expected to take between two and three weeks, the time needed for all parties to accept the terms and conditions in the contract, before administrator Kroll, Buchler & Phillips winds down its running of the club after 15 months of control.
The news is the most positive the club has had since former chairman Mark Goldberg came to power. The club had debts totalling more than £8m but it now appears fears of the club disappearing forever over the summer have evaporated.BDO Stoy Hayward acted for creditors in the high-profile bankruptcy of Goldberg. He was forced into bankruptcy last December with debts totalling £20m when a petition was brought against him in the High Court by Knightsbridge company Allied Commercial Exporters.
Altogether only two football clubs have been in administration this year – as well as Palace, Swindon Town have also suffered. Officially Portsmouth and Chester City were also in administration at the start of the season but the respective parties had already received notice of discharge.Recovery specialists at Hacker Young led Portsmouth’s fight to stave off bankruptcy and the firm sold the club in a £4.6m cash sale by administrator HLB Kidsons was completed last summer.
Meanwhile Chester City were rescued by Begbie’s Traynor – based in Preston – also the during the summer.
Swindon Town like Palace are still in administration – with Kroll, Buchler & Phillips acting on their behalf – but unfortunately for them there does not appear to be any willing investors in sight.
When the administrator was called in on 3 February the club was close to £7m in debt and haemorrhaging money on a weekly basis.
It is understood the club needs £2m to pull it out of administration, but a further £3m is needed to meet liabilities.
The club is actively looking for investors to pump the money into the club to lift it out of administration. But Swindon management accountant Robin Humby is understandably reluctant to speculate on potential candidates.
‘The £2m will pull us out of administration, but we will need further funds to take the club forward,’ he says.
The team was relegated to the Nationwide Second Division this year but Humby does not believe they will suffer from reduced income from merchandise or ticket sales as a result, despite a 25% drop in attendences during this season.
‘Only the big clubs are making any money and the situation where clubs go into administration won’t change until they refuse to pay the going rate on wages and transfers,’ he says.
‘Football is unlike any other business because in order to compete on a level playing field you need to pay over inflated prices’.
Swindon Town were relegated to the Second Division but were able to stave off extinction also with the help of Buchler Phillips.
Lee Manning, administrator for the club and a partner at Kroll, Buchler & Phillips says a number of options including ‘property redevelopment and the capitalisation of assets’ are being looked at.
The club’s debts included millions of pounds in directors’ loans, £400,000 to the Inland Revenue and £200,000 in VAT bills.
However better things are round the corner, and according to the Football Association the trend towards the black cloud of administration may be lifting from the football world.
The FA is known to be renegotiating television rights to come into place in the 2001-02 season, which will generate a marked rise in the income of clubs.’A major part of clubs income is derived from television and we are currently at the end of year four in a five year fixed level deal,’ says the spokesman.’Administration is cyclical. The rising cost of wages is relentless, but the current television deal is fixed so more and more of the television income has gone out in wages.
‘We are in discussions concerning future television deals and hope the next deal will provide a stepping stone to bringing income and expenditure in line.’
The FA is also understood to be working with the clubs to find a solution to capping players’ wages, but so far a solution has proved elusive. But until these and other solutions are found administrators are unlikely to disappear from the football field just yet.
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