Today Coventry City and their owners Sisu were in the High Court in London to face an administration order application from Arena Coventry Ltd. (ACL), the operating company of the Ricoh Arena, but events have taken an unexpected turn. The latest news is that the hearing has been adjourned until Tuesday as it is evident that some complex issues have arisen which require further consideration.
Today Coventry City and their owners Sisu were in the High Court in London to face an administration order application from Arena Coventry Ltd. (ACL), the operating company of the Ricoh Arena, but events have taken an unexpected turn. The latest news is that the hearing has been adjourned until Tuesday as it is evident that some complex issues have arisen which require further consideration.
Free Radio (formerly Radio Mercia) were planning to broadcast from outside the court today and yesterday I was doing some pre-records for them to cover a range of eventualities. One point we were discussing related to the complex structures involved with the club and the options that this might offer. However, we didn’t envisage what has happened and have had to re-record this morning.
Overnight Coventry City Football Club Holdings have announced that a non-operating subsidiary of the club has been put into administration. A spokesman for Coventry City told the BBC, ‘This is merely a property subsidiary which owns no financial assets and has no employees, on or off the pitch.’
‘The club can confirm that all staff wages, PAYE and other creditor commitments will continue to be met as before by Coventry City Football Holdings. Unlike other instances of clubs being taken wholly or partially into administration, there are no HMRC or VAT implications, and the football club will continue to trade as normal without interruption.’
In essence what has happened is that a ‘bad’ company that owes the money to the Ricoh has been put into administration, making it much more difficult for ACL to get all of their money back. The football club continues to operate and holds the ‘golden share’ in the Football League. This may prevent any points deduction taking place, although the football authorities will want to investigate further.
Of course, the whole operation could be put into administration today over the £1.3m rent claimed by ACL, but this looks unlikely and the hearing could be adjourned. For their part, Sisu consider that the legal validity and fairness of the lease is open to challenge.
The Ricoh could evict the football club, but apparently they have contingency plans to share elsewhere in the West Midlands (Walsall?) Also, if they are evicted, they may never return.
It seems that Sisu did not like the ‘get out of town’ vibe coming from the City Council. In fact the City Council may have out manoeuvred Sisu by taking on the Ricoh’s mortgage from the Yorkshire Bank who were becoming very uneasy about the situation. This is pure speculation, but if ACL had gone into administration, Sisu might have been able to negotiate a very favourable deal with the administrators, better than the rent reduction and share in match day revenues that was on the table.
In the longer run it is more than possible that a big entertainments company like AEG which has expertise in running arenas might be interested in taking over the Ricoh. It does have a lot of potential. However, that would probably depend on the Higgs Trust taking a haircut in selling their stake which they have been reluctant to do in the past.
The City Council would also have to relinquish their stake and they might be reluctant to go for a fully privatised solution, especially now they are in effect ACL’s bankers. On the other hand, a company like AEG would probably want more than just a share in the Arena, although everything can always be negotiated.
Many think that it would be better to build a smaller stadium close to the city centre, a Highfield Road Mark II. The problem with Highfield Road was that it was not fit for purpose as a Premier League stadium and re-developing it would have been expensive and would have been constrained by the fact that the site was hemmed in by houses.
It had been thought that a step forward would be taken in resolving the issues today, opening up the possibility of a new buyer coming in. Instead the story has taken another twist and there will be no speedy resolution.
The Ricoh was built with a Premiership club in mind, but unfortunately Coventry City eventually lost their battle against relegation and then found themselves in League 1. It’s a sad tale and one can only hope that administration leads to a new chapter in the club’s history and to new owners. When I came to live in Coventry in 1971, the vibrancy of the Sky Blues reflected that of the city (reputed then to have some of the highest wages for skilled workers in the country) and it would be good to see both regained, building on the efforts that have already been made.