TaxPersonal TaxIn the dying minutes

In the dying minutes

Can Portsmouth FC's new accountant chairman come back from #5m down and win the trophy? Damian Wild spectates.

The gulf between the football rich and poor has never looked wider.

Yesterday saw Deloitte & Touche name the wealthiest clubs in world football – led here, of course, by the moneybags from Manchester United.

It is a poignant irony that on the very same day, a second winding-up petition was due to be brought against Portsmouth FC by the Inland Revenue.

With help from corporate recovery specialists at Hacker Young, ACCA accountant Les Parris has been leading Portsmouth’s fight to stave off bankruptcy since December. It’s no easy job and passions are running high. Fans want results both on the field and in terms of financial stability.

Formerly the club’s finance director, Parris is now chairman, inheriting the poisoned chalice from the club’s owner, Martin Gregory.

Fans have accused Parris of being little more than a Gregory stooge, but he has assured them that the Gregory family – which owns 96% of the shareholding and has put around #3m into the club – will have no day-to-day involvement. Parris is understood to have taken over only on the basis that the Gregorys would sell their stakes.

‘Parris says he is going to do the best job he can to prevent Portsmouth from going under,’ says one local Pompey follower. ‘But is he going to be the captain that takes the Titanic down?’

Parris’ job is clear, if far from simple: keep the club afloat long enough to find a buyer. He has held talks with about ten prospective purchasers since he became chairman, but nothing has come to fruition yet.

Like many clubs outside the bright lights and rich rewards of the Premiership, Portsmouth is in real financial trouble. The club is #5m in debt and that deficit is rising at the rate of more than #30,000 a month.

In an embarrassing incident last month, Alan Ball, the club’s manager, had his company Mercedes car taken back by its local suppliers. Attempts by a consortium led by Warren Smith to buy the club foundered. Now Parris is said to have acknowledged that, unless the club finds a buyer before the High Court hearing, there would be ‘real problems’. That was far from certain as Accountancy Age went to press.

There are some encouraging signs, though. The club survived an earlier winding-up petition last month. The order was served on the club’s parent company Blue Star Garages by Try Build, a construction company which claimed it was owed #435,000 for building the club’s Fratton Road stand. It was settled for #430,000 with just hours to spare.

There is still the matter of the #405,171.40 owed to the Inland Revenue, thought to be for outstanding PAYE. It filed a winding-up order against the club in November. No-one at the club was available for comment and the Revenue remained tight-lipped about the details. Other directors like Martin Gregory are also among those thought to be owed money by the club.

Parris attempted to take the bull by the horns last week, when the club applied to the High Court to go into administration. The decision followed the club’s exit from the FA Cup at the hands of Premiership side Leeds, a defeat that denied Pompey the financial lifeline of a potentially lucrative cup run. Their other options for raising cash are limited to the sale of assets – namely, their best players. Many have already been sold.

The managing partner of Hacker Young’s London office is leading the club’s fight alongside Parris. Ladislav Hornan has specialised in insolvency and corporate recovery since the 1970s. And corporate recovery partner Andrew Andonikou, a licensed insolvency practitioner and chartered accountant, is working on Pompey’s behalf. The club has asked the firm to find ways of paying off the club’s debts and help transfer control to a new owner.

‘It is far more preferable the administration succeeds rather than the club be wound up,’ says David Buckler of Buckler Philips, a corporate recovery and insolvency firm that has worked with many clubs in the past. ‘It would allow the club protection from creditors and give them time to put a plan to creditors.’

It would, in effect, be a three-month stay of execution, during which time the club could not be wound up.

The gulf in football’s financial muscle is widening all the time. At one end are clubs like Portsmouth and Crystal Palace, which have had to learn to live within more impoverished means, after demotion to Division One, by releasing star manager Terry Venables and star striker Matt Jansen.

Football has changed beyond recognition. ‘Money,’ says Deloittes, ‘has become an irresistible dynamic at the heart of professional football.’

Football fans often complain it is the accountants, not the players, that rule the sport these days. In Portsmouth’s case, it is true. Whether that will be enough to save the club, though, depends on Parris.

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