Portsmouth FC

[GridGirl]

So the inevitable is about to happen and Portsmouth FC is going to be put into administration today in a last ditch effort to save the football club. If it didn't go into administration today there would be a good case for it to be wound up and cease existence completely on Monday. It will be the first time that this has ever happened to a Premier League club. The main reason for the potential wind up are huge VAT and PAYE/NI debts which HMRC are now calling in, but they also owe money to various other football clubs and have paid their players and staff late on numerous occassions this season.

From my point of view, I don't feel that sorry for the people running the club but I do feel for the fan's. Although at the same time it the fan's desire to win that may have somewhat contributed to their downfall anyway. One of my clients is a football club and I've even had my own dad having a go at me about the way it is run and how they should be spending more money, doing this and doing that to get better results. My favourite is when I hear people on the terrace's saying they same thing but having absolutely no idea that I know everything about how the club is run and enjoy listening to their thoughts.

I've posted a new thread on this rather than post in the football thread mainly because the same thing could happen to any team in almost any sport. OK, so this is happening to Portsmouth FC right now and most people really couldnt give a damn but would your feelings be any different if something similar happened to say the Williams F1 team or a your favourite rugby or hockey team for example?

Discuss.

[Dave B]

It's just been announced officially:
http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/8538457.stm

Sad news, but a sports team is no different to any other business in that it needs to pay its way. It's tough in the Premiership if you've come from the lower leagues as you find yourself competing gainst much larger clubs with huge budgets and an established squad of expensive players. Yes you get more revenue, but it takes a while to come in and for its effects to translate to results on the pitch.

[Brown, Jon Brow]

From my point of view, I don't feel that sorry for the people running the club but I do feel for the fan's. Although at the same time it the fan's desire to win that may have somewhat contributed to their downfall anyway. One of my clients is a football club and I've even had my own dad having a go at me about the way it is run and how they should be spending more money, doing this and doing that to get better results. My favourite is when I hear people on the terrace's saying they same thing but having absolutely no idea that I know everything about how the club is run and enjoy listening to their thoughts.



Most clubs fans are the same. My local team Preston North End (who I don't support) always has their fans complaining about how the chariman has no ambition to get promoted as they always sell their top players. They seem to ignore the fact that Preston, despite having great history, is now a small club (average home attendance is only around 15,000) punching above its weight by being in the Championship. They have to sell players simply to break even.

[Mark]

They are just like any other business. If they owe excessive amounts to the government, then they'll be shut down and their assets taken.

[GridGirl]

I don't actually understand why they would owe so much money in VAT to HMRC in the first place. HMRC are s*** hot on tax investigations and there is an unwritten rule where all clubs pay the VAT on a player sale immediately and worry about the net and published player sale price later. It ends up getting stupid when VAT payments are flying in and out of bank accounts because the VAT has been paid in advance and then the sale doesn't go through. VAT on player sales will be their biggest VAT receipt so if they get that money instantly I fail to see see how they can't afford to pay their VAT bill each quarter.

[Mark]

Funny to think that they need to pay VAT on buying a player! Of course, as it should be.

[MrJan]

We need this to happen more often so that sports teams realise that the wages they pay are not sustainable. My team did pretty much the same thing back in 2003 but were saved by entering a Corporate Voluntary Agreement whereby 75% of creditors agreed to being paid 10p in the pound. This reduced our debts from around £5million (after two chairmen commited fraud) and with the help of supporters and two cup games against Man United we are in a much healthier position.

In our case a lot of the money was owed to a stadium developer but it goes to show how deep the issues run when there are so many clubs from all over the leagues experiencing troubles.

More recently Leeds, Charlton, Southampton and many others have had difficulty and it's unbelievable that we haven't already seen a serious shake up within the sport.

[MrJan]

I don't actually understand why they would owe so much money in VAT to HMRC in the first place. HMRC are s*** hot on tax investigations and there is an unwritten rule where all clubs pay the VAT on a player sale immediately and worry about the net and published player sale price later. It ends up getting stupid when VAT payments are flying in and out of bank accounts because the VAT has been paid in advance and then the sale doesn't go through. VAT on player sales will be their biggest VAT receipt so if they get that money instantly I fail to see see how they can't afford to pay their VAT bill each quarter.

Player sales are usually done in installments so very few clubs get the money for a sale until months after. For example when Defoe went back to Spurs they just wrote off a lot of what Portsmouth still owed. This means that money to pay V.A.T bills isn't always as readily available as some might think. especially given the costs of day to day running.

[christophulus]

Zero sympathy from me, they paid silly money for players and the bubble burst. I fear this could be the tip of the iceberg though, most of the big clubs are built on loans and debt. I'm a Burnley follower (not die hard fan), and they've got practically zero debt. We may get relegated due to not spending the big money on players, but I'd rather still have a club in ten years time.

There's an excellent piece on exactly what's going to happen in administration on the BBC website:

http://www.bbc.co.uk/blogs/mattslater/2010/02/portsmouth_fc_in_crisis_qa.html

[GridGirl]

Player sales are usually done in installments so very few clubs get the money for a sale until months after. For example when Defoe went back to Spurs they just wrote off a lot of what Portsmouth still owed. This means that money to pay V.A.T bills isn't always as readily available as some might think. especially given the costs of day to day running.

Yes I know clubs maybe paid in installments but the VAT element in my experience is always paid upfront regardless. It's just an unwritten rule that you pay it straight away and don't mess up the other club in terms of it's quarterly VAT submission and more often that not payment. For example my client made a £25m profit in player sales in 6 weeks a couple of years ago. If the other clubs hadn't paid the VAT immediatly my client simply wouldn't of had the funds to pay the bill and HMRC could have done the same thing to them that they have done to Portsmouth. No club wants that to happen so they all play together nicely in that respect.

Writing off debts is an entirely different issue.

[V12]

I just hope this

a) Acts as a lesson to other clubs to run themselves more responsibly (but then this isn't the first time this has happened...Leeds anyone?)
b) Doesn't lead to nanny-state regulations to save the clubs from themelves such as salary caps and so on, we've had enough of that type of BS in F1 without ruining football as well. There are plenty of clubs who run themselves very well without the need for this sort of meddling, Arsenal and Aston Villa are two who spring to mind, and there's plenty of others throughout the leagues too.

Yes, the whole "feel sorry for the fans" (if not the club itself) is repeated, but maybe the best thing would have been for Pompey to have gone to the wall and be resurrected in the hands of the fans themselves Wimbledon-style.

And I'm not just saying that as fan of a club (Liverpool) who stood to benefit if Pompey's results got annulled, since they beat us earlier in the season.

Actually, now that I've nailed my footballing colours to the mast so to speak I must acknowledge that yes, failure to qualify for Europe this year could kick start a financial chain reaction that sees us deep in the brown stuff too, although our debt comes from another source - a leveraged buyout from our American owners (identical to Man U in fact), that is something that SHOULD be regulated against, and by all means make clubs submit annual accounts to at least flag up an "early warning", so that the league could be more proactive in measures such as transfer embargos to stop further spending.

But like I said, not salary caps, apart from not sitting right with me from an ethical standpoint, there are plenty of loopholes in much the same way with Max's F1 budget cap idea.

[emporer_k]

I have no sympathy for the club or the fans who enjoyed the good times winning the cup and enjoying a stay in the premiership on the back of a squad they couldnt have afforded had they lived within their means.

[AndyRAC]

We need this to happen more often so that sports teams realise that the wages they pay are not sustainable. My team did pretty much the same thing back in 2003 but were saved by entering a Corporate Voluntary Agreement whereby 75% of creditors agreed to being paid 10p in the pound. This reduced our debts from around £5million (after two chairmen commited fraud) and with the help of supporters and two cup games against Man United we are in a much healthier position.

In our case a lot of the money was owed to a stadium developer but it goes to show how deep the issues run when there are so many clubs from all over the leagues experiencing troubles.

More recently Leeds, Charlton, Southampton and many others have had difficulty and it's unbelievable that we haven't already seen a serious shake up within the sport.


Quite right, why should they get away just because they're a sports club. About time Football lived in the real world. Basically, all these teams in debt, are spending money they don't have - aka financial doping! It has to end.