Is Portsmouth Football Club down and out?

The truth is, that at present, no one knows, but if the reported debts in today’s Daily Mail of £82-£86m are true, the future is certainly not a bright one. The fact is that for Portsmouth FC to come out of administration an agreement with the majority of it’s debtors will need to be found quickly. Who on earth would invest now in a football club in the current climate? Especially not maybe the “former” Nationwide Blue Square Premiership Chester City Football Club, or the Coca-Cola Football League’s oldest club Notts County FC, or Southend United FC, Cardiff City FC, Crystal Palace FC and AFC Bournemouth Football Club? – to name but a few!!

Take my own football club, Coca-Cola Football League One side Wycombe Wanderers FC. It has reported debts of over £8m, although its compact Adams Park stadium and other assets are apparently worth less than this at present. The situation is far far worse at Premier League Pompey, with the Fratton Park assets being only worth a fraction of the apparent debt. Sadly, for the fans of Portsmouth FC, if any other clubs are interested in any of their players, they will now be able to “purchase” them for less at the end of the season, plus entice them away more easily now it is certain Pompey will be playing in the Championship next season if they manage to avoid liquidation. Selling players is not an option to help towards reducing the debt whilst the transfer window remains shut.

It is frightening that less than two years ago in 2008 Portsmouth won the FA Cup under former Pompey Manager, and current Spurs boss Harry Redknapp, which goes to show even success on the pitch is not necessarily a remedy for poor financial management and bad senior management decisions off it. It is not so much a case of “Up Pompey”, but rather “Down Pompey” at present, until a viable financial solution can be found, but found quick!

My understanding is that when a company enters into administration, as Portsmouth Football Club have now done, it is protected from angry creditors intent on getting their money back and further legal action. Administration is designed to buy a company time (a maximum of eight weeks?) and enables an emergency strategy to be formulated.

Under administration a Licensed Insolvency Practitioner is appointed and has the job of deciding the company’s future. If the company is fundamentally sound (and from what seems to be in the public domain we know Portsmouth Football Club is not), the Insolvency Practitioner would look to implement a recovery plan aimed at streamlining the business and maximizing profits. If it is apparent Pompey has no future then it can be sold or liquidation can commence.

The three outcomes from Portsmouth Football Club’s adminstration appear to be a) a Recovery Plan b) a Company Voluntary Arrangement or c) Liquidation. Whilst it would be massively disappointing for the fans and a major embarrasement for the Premier League, liquidation would be a massive wake up call to the dozens of other football clubs chasing the dream admist growing debts.

The football industry needs to bring in rules to force clubs to live within their means or do something drastic as the entire system seems on the point of collapse, and in my view rather morally bankrupt looking. Will the players lose out? No because the PFA will ensure they don’t suffer too much hardship. The big losers are the fans and the rather foolish “investors” who have sunk money into an industry that makes “the black hole” in space seem a prudent alternative.