This year, my firm helped another historic football club, Plymouth Argyle to survive. At times I thought we would have to admit defeat. Without doubt it was the most challenging rescue of my career.
This month I sat down with colleagues and we took the whole process to pieces. What lessons could we learn, what has changed in insolvency and would we take on another football club in crisis again?
As with any football club, Plymouth Argyle's fans are passionate and wanted the best deal for their club. I'm a football fanatic myself and I completely understood their concerns, their comments and their criticisms. But parts of the insolvency process make it almost impossible to communicate openly with fans and others in the way you want. I was tied by confidentiality clauses and hated standing up in front of fans and not being able to tell them the whole story.
In this blog, I've pieced together thoughts about the past and the future. The big question the fans asked was - why did the process take so long, which in turn penalised wages of players and staff?
1. Could the football club rescue have been achieved quicker?
These were the facts of this rescue:
- We only had one buyer who was prepared to show the colour of any money for the rescue. Heaney put down a deposit of £300k in return for exclusivity to negotiate - and insisted on secrecy. He has lost his £300k because he could not deliver the rest of his promise.
- James Brent, the ultimate buyer, initially said he and his backer could only 'compete with the liquidator'- i.e. if and when the club was about to be closed. He was a reluctant buyer.
- When you negotiate a sale out of an insolvency, you have to make judgements which are based on years of knowledge and experience. The bank was at the crux of any deal. It held security over the stadium which it said was watertight. I would have put money on them not shifting from this position. In the end, they took a very large haircut to make the deal work and save the club - but only when all other options had been exhausted.
- We had five other potential buyers but no-one else committed money as Heaney did. Two withdrew because of campaigns run by the fans - they have families and businesses and the risks of the deal became personally too much for them.
So could we have rescued this club earlier? I hold my hands up and admit I thought Heaney would deliver the balance of money and buy the club. I got that wrong. But in anyone's language, £300k is a big commitment of money to lose - this was not a fairy-tale bid. And at that time the bank was holding its position, no other rescue was possible - and this was the only deal in town other than liquidation.
2. What were the pressures of this football club administration?
There were three aspects of this administration which nearly brought the club down:
- Secrecy - the inability to be transparent and open with fans, who rightly wanted to know what was happening
- Social media - the fans used Twitter, forums and blogs to get their messages out quickly. While understandable, this created a feeding frenzy and put additional pressure on everyone involved, particularly potential buyers
- The protracted timescales - you could argue that in theory a rescue would not have happened without allowing time for everyone to realise how serious the options were. However, it meant considerable sacrifices for everyone - particularly players and staff.
3. How will we handle future football club administrations?
What will we do differently in future? Can we still make a football rescue work? We really hope so, but this is what we will do differently another time
- At the outset we will be realistic with everyone - fans, creditors, players and staff, prospective buyers - we will spell out exactly what the prospects are for a rescue. The market has changed and is getting worse, we can no longer assume we can find buyers for football clubs. We also need everyone to understand what could scupper a potential purchase
- We won't sign any confidentiality clauses - that way we can keep fans involved and have open discussions
- We will create a website for the administration process and keep fans informed about what is happening and allow them to discuss, ask questions and give feedback
- There will be a short deadline for bids - probably a month. We either get the money in full for the deal - as with other administrations - or the club has to be shut down
It is clear there will be more football clubs in dire straits next year. Should we still believe in rescues or are there many failing clubs that should be shut down? What do you think?