Portsmouth FC have 11 days to secure further investment and pay off the estimated £12.1m that they owe Revenue and Customs, or the club faces being placed into administration , or worse still, a winding up order after the Companies Court granted a temporary adjournment of the winding-up petition brought by HMRC.
In a nutshell, this means that Portsmouth have until next Wednesday to find funding of over £12m to pay off the full debt owed to HMRC. Should they fail to do that, then the club will either enter administration, which will immediately see it docked 9 points by the Premier League and thus without doubt be relegated at the end of the season. Worse still is the prospect that the club could be issued with a winding up order, in which case it would go out of business immediately.
Gregory Mitchell, QC, who represented HMRC stated “It’s quite clear beyond any doubt at all that this company is insolven. They have failed to provide any evidence at all as to their solvency. There are many debts and they continue to accrue.”
The scale of Pompey’s debts can be broken down into the following terms;
£28m is owed to former owner Alexandre Gaydamak
£17m is owed to Balram Chainrai, the current owner of the club.
£12.1m is owed to Revenue and Customs
£6.8m is owed in VAT and surcharges incurred. (which the club is appealing against)
£5.3m is owed in PAYE and National Insurance payments
£3m is owed to a variety of football agents and
£1.8m is outstanding on instalments on transfer fees for players.
Portsmouth’s request to have the ruling put back until they had their appeal against the VAT bill heard, was dismissed by HMRC as a “delaying tactic” and that even if the appeal was successful, their other debts would remain outstanding. A similar request for a 28 day adjournment was also turned down by Registrat Christine Derrett who warned;
“I am very concerned about the financial status of this company. It seems to me there is a very real risk that this company is undoubtedly trading while it is insolvent. I’m obviously conscious that, by making a winding-up order, it would have very severe consequences not only for the company as a business but for the supporters,” before adding ominously “but that’s not a consideration that I can strictly take into account.”
Unless further investment can be found by next week’s deadline, the game with Stoke City on the 20th February could be the last the club can fulfil in the Premier League.
It is a tragic situation, however it is one that has been predicted by financial experts for many years now as clubs have lived far beyond their means. Indeed former Premier League clubs such as Southampton and Leeds United have suffered similar financial collapses in the past, which has led to a rapid demotion through the divisions and a radical overhaul of the financial situation at the club in order to afford itself a degree of sustainability.
Of course Portsmouth’s loyal fans don’t deserve this, it is the folly of a succession of owners and managers, overpaid players and their agents that have brought about such a collapse and while the people involved over the years may wash their hands of the current situation, they are every bit as culpable for the mess the club finds itself in now as any of the current staff.
Let’s hope for Portsmouth fan’s sake, that the next time we here the Pompey chimes, it won’t be the death knell for this proud and historic football club.