Real fears are being expressed that Southampton Football Club may not exist by the end of the season. This is despite the fact that it has a new stadium and plays in a large and relatively prosperous city. The club’s mountain of debt incurred as the result of building St.Mary’s, which required continuing Premiership status to service it, makes the club unattractive to a potential buyer, even if there were any around. This is not a situation where a consortium of fans can easily bail out the club, although that may be what eventually happens.
Real fears are being expressed that Southampton Football Club may not exist by the end of the season. This is despite the fact that it has a new stadium and plays in a large and relatively prosperous city. The club’s mountain of debt incurred as the result of building St.Mary’s, which required continuing Premiership status to service it, makes the club unattractive to a potential buyer, even if there were any around. This is not a situation where a consortium of fans can easily bail out the club, although that may be what eventually happens.
The shares of the holding company, Southampton Leisure, were suspended on Wednesday after the company failed to secure additional funds ahead of a 31 March deadline. Southampton Leisure Holding’s most recent financial results for the year to June 2008 showed that £23.1m stadium financing from the 2001 move to St.Mary’s was still owed to Norwich Union. At the same time, Barclays was owed £4.4m. It is only with reluctance that Barclays continued to help pay player wages, with extended credit, in recent months. The holding company has now gone into adninistration and three directors, including Rupert Lowe, disliked by many Saints fans, have resigned with immediate effect. Wealthy Saints fans have offered cash to help the club remain afloat, but the total debts of an estimated £30m are beyond most of them. The last three remaining home games also represent an opportunity to replenish the club’s funds.
Staying in the Championship is crucial to the club’s future and one unresolved question is whether the Saints will face a ten point deduction given that it is the holding company and not the club that has gone bust. The Football League will consider the matter at its next monthly meeting. Some other clubs are complaining that it is wrong that clubs can use a parent company to escape penalties when things go wrong. However, the league rules are very specific. It has to be the club which goes into administration for points to be decucted. It looks as if Southampton will escape the usual penalty for ‘bad management’ and in their case that could make the difference between survival and oblivion.
Uncle Rupe Blames Barclays – 03/04/2009
The former chairman of Southampton Leisure Holdings, Rupert Lowe, has blamed Barclays Bank for the troubles of Southampton Football Club. He has launched a scathing attack on the bank, saying its decision to reduce its loan facility amounted to ‘sentencing the club to financial death.’ Mr Lowe said that his ability to steer the Saints to financial health had been undermined when the bank decided in November to cut its overdraft facility from £5m to £4m. Mr Lowe, who is also chairman of brokers W H Ireland, told the Financial Times, ‘This is a bizarre situation and should have been avoided. I am frankly amazed that Barclays have done what they have done. I don’t consider £4m to be a very substantial sum in terms of salaries paid to people like Bob Diamond [Barclays president].’ Mr Lowe told the pink ‘un that last week Barclays had agreed to raise the overdraft facility above £4m to enable players and staff to be paid last month’s wages. But the company’s lawyers advised that administration was inevitable when a misunderstanding led to Barclays bouncing three cheques.
Mark Fry, joint administrator, said that there had been a number of enquiries in the past two days, but admitted that the club was in jeopardy. Banker bashing is currently popular, but Mr Lowe’s remarks may not resonate with Saints fans who have often been critical of his stewardship of the club. Ironically, Southampton play the Championship’s bottom club, Charlton Athletic, tomorrow. Charlton have had their overdraft facility withdrawn, although most of their loans are ‘friendly’ ones by directors. As a consequence, a group of directors have bought and leased back the club’s large training ground to provide working capital.