Can Portsmouth’s case be regarded as a one off or does it form part of a wider set of financial problems likely to affect Premiership clubs? Portsmouth’s financial crisis is the first test of new Premier League rules agreed last September to ensure clubs paid creditors promptly, submitted independently audited accounts and kept the league informed of financial issues.
Can Portsmouth’s case be regarded as a one off or does it form part of a wider set of financial problems likely to affect Premiership clubs? Portsmouth’s financial crisis is the first test of new Premier League rules agreed last September to ensure clubs paid creditors promptly, submitted independently audited accounts and kept the league informed of financial issues.
The view taken by sources close to the Premiership is that its actions stopped the drain of money out of the club by imposing a transfer ban and distributing Portsmouth’s TV revenues to debtor clubs. However, it is acknowledged that the main purpose of the reforms is prevention and to be an early warning system when clubs run into trouble. The reforms came too late for the case of Portsmouth.
In March the Premiership’s powers are due to widen and it will be able to impose cash controls such as a wage freeze on clubs that run up debts to the taxman or have their accounts qualified. Of course, the problems can vary from too high level of debt to insufficient due diligence.
Many believe that the real weakness is the league’s fit and proper person test which is focused on questions of probity. It does not really examine the financial fitness of a potential owner. Of course, investigations into these questions could be regarded as intrusive and might put off potential owners who were in good financial shape. They are also quite difficult to conduct when companies are registered in offshore jurisdictions.
Meanwhile, minutes of a meeting between Premier League Richard Scudamore and Portsmouth last week suggest that given the small amount of money it would take to buy the club it could be possible for local businesses or supporters to take it over. The Premer League has subsequently emphasised that this does not mean it has gone off the idea of foreign investment in foorball, noting that they do not favour any particular ownership model.
Voluntary administration is looking increasingly likely at Pompey. George Mitchell QC, for the Revenue, told the High Court hearing, ‘It is quite clear this club is insolvent. They have failed to provide any evidence at all as to their solvency.’