Did Southampton try the same trick? (1 Viewer)

AFCCOVENTRY

Well-Known Member
Reading between the lines, the Football League’s verdict on Southampton’s attempt to put their holding company into administration without incurring a points deduction makes for pretty damning reading. The League’s conclusion stops not far short of stating that there has been a deliberate attempt to play the system by the club. The holding company Southampton Leisure Holdings and Southampton Football Club are “inextricably linked as one economic entity”, according to the League’s independent review of the club’s finances, and it’s hardly surprising that they should reach this conclusion. There is nothing that the football authorities hate more than setting up what they think is a watertight new rule which may significantly benefit the game, only to see someone crash through it. Leeds played the system two years ago and got away with it (though the legality of their escape from insolvency remains open to question and is still being put through a court on the Channel Islands). The Football League wasn’t going to let that happen again.
Holding companies are, by their very nature, an inextricable part of the current problems that the game faces. Created in the first place to circumvent FA rules on club directors not being able to pay themselves sizeable dividends in the early 1990s. In recent times, they have become more and more commonplace and have been put in place for a variety of different reasons. They are, effectively, “shell” companies which do not trade in themselves but act as a cover for subsiduary companies operating underneath it. If, for example, you own three companies, you put all of them under the umbrella of the holding company so that if one of those three goes bust, the others are covered. The idea of a holding company in itself going into administration is a contradiction in terms.
In the case of Southampton FC, it would appear that the debt stems entirely from the construction of the St Mary Stadium. The football club has, as have so many, spent too much money on wages and transfer fees, but they have also benfefitted from some very high value player sales. The reaction of the league and their apparent insistence that Southampton will get the ten point deduction that hits them the hardest would seem to underscore their fury at the behaviour of the management of Southampton.
From an insolvency point of view, it has always seemed strange that so many football clubs have entered into administration. Administration, in all other walks of life – from IVAs and court adminstration orders for individuals down to CVAs for companies should be a last resort, but football clubs seem to use them in a subtly different point of view. Only the adminstrator will know for certain whether Southampton FC or Southampton Leisure Holdings actually is technically insolvent, but it’s difficult to not avoid the conclusion that this could be more about debt evasion than being unable to continue to trade when one tots up the figures from Sky parachute payments, television money and transfer fees that the club has earned over the last few seasons.
It is easy for companies in debt to claim that they are the affronted ones. It has already been said that Barclays Bank are to blame for not allowing Southampton enough time to reduce their overdraft to £4m. This, however, is only half of the story of insolvency. It is very easy, in the current climate, to get carried away with greedy banks, the evil of the taxman and worrying about football creditors, but the fact of the matter is that when Southampton’s list of creditors is made public, there’s a good chance – as with all clubs that find themselves in this sorry position – that there will be a long list of local businesses that are completely dependent on the comparatively small amounts of money that they are owed and, due to the way that CVAs are voted upon, will be left to pick up mere pennies when they need it the most because of the financial proclivity of, well, a football club.
It’s not just Southampton. They are likely to be the first of several. However, from a moral standpoint the practice of spending beyond ones means and then collapsing like a house of cards is morally indefensible. The Football League over-reacted in the case of Luton, Bournemouth and Rotherham United, but in this case they have fired a welcome warning shot across the bows of other clubs. The one thing that we can be certain of is that if Southampton had escaped administration on a technicality there would have been a sudden rush of football clubs setting up holding companies so that they could do likewise. Financially prudent clubs and those who cut their cloth to size deserve a level playing field, and this decision may put other clubs off following the route of spending in haste and repenting at leisure.
 

Nonleagueherewecome

Well-Known Member
Exactly what I was thinking AFC.
 

Grendel

Well-Known Member
It's not the same in the sense the holding company in this instance is not a provider of funds to the club.

That said a points deduction is likely but the owners remain in charge and they won't pay any rent.

Bit of a problem looming.
 

kg82

Well-Known Member
How many points did Southampton lose?

I'm confused, but now I'm also worried. I can see the league making an example of us.
 

Desperados

New Member
It's not the same in the sense the holding company in this instance is not a provider of funds to the club.

That said a points deduction is likely but the owners remain in charge and they won't pay any rent.

Bit of a problem looming.


Will that mean a break of the rental contract and no home to play in?
 

Grendel

Well-Known Member
How many points did Southampton lose?

I'm confused, but now I'm also worried. I can see the league making an example of us.

We won't lose any more than the 25 points that was inevitable anyway. 10 now and 15 next season may now be 10 only but unless we get a buyer there is a problem.
 

Grendel

Well-Known Member
Will that mean a break of the rental contract and no home to play in?

I would think this now is a major problem. The council will be forced to drop the case or lock the club out.

The situation is beyond repair so lock out may be the only alternative now.
 

kg82

Well-Known Member
We won't lose any more than the 25 points that was inevitable anyway. 10 now and 15 next season may now be 10 only but unless we get a buyer there is a problem.

Let's hope if we get one the first thing they sort is that rent - or they actually buy their share.
 

chiefdave

Well-Known Member
on the face of it very different to what Saints did but we only have the club statement to go on. With Saints it was the holding club that wholly owned and operated the football club, to all intents and purposes they are the same entity. With this is will come down to what this country is, on the face of it SISU have shifted some part of the company they don't want (the part with the lease agreement?) and then put it into admin. Until we know what this subsidiary is and what it contains it's all just guesswork. Key point could be that they continue paying all wages, PAYE etc. Can't remember if Saints did that or not.
 

Waldorf

New Member
If that's what Southampton did, then it's exactly the same here. CCFC(Holdings) is the parent company, CCFC the "property company" that SISU had put into admin, is its wholly owned subsidiary. I think, but I may be wrong, that it wasn't just the FA but the High Court as well that took the view that the two were inextricably linked. If I remember rightly, the judgement in ACL's favour was against both companies..
Tomorrow will be interesting!
 

Skyblueweeman

Well-Known Member
As soon as I saw this, it reminded me of when I worked at SFC when this happened. We're defo gonna lose 10 points. The league will say that the two companies are something like inextricably linked so therefore a points deduction will apply.
 

Brighton Sky Blue

Well-Known Member
All that is needed is for someone to pay the £1 necessary to see CCFCH's last filed accounts and see if any other subsidiary companies are listed-I reckon the only one is the club itself. What is odd is that CCFCH is a subsidiary of Sky Blue Sports + Leisure itself.
 

Black6Osprey

New Member
It wouldnt matter if this was totally different to the Southampton situation. The league won't allow any club to bend the rules and get away with it. 10 pts is the minimum we are going to lose and I expect this saga to result in more pts being deducted than just the 10.
 

chiefdave

Well-Known Member
Jan has said that the golden share is with CCFCH and that a deduction would occur regardless of whether CCFCH or CCFC entered administration.

It's not going to be straightforward that's for sure. Imagine if you had CCFCH with a group of companies under it, one of which was CCFC and another which ran some random buiness, let's say a sweet shop. If the sweet shop went bust would you really expect CCFC to get a points deduction? If it was the same as the Saints scenario it would be CCFCH i admin which would affect every company under it, in the case of Saints I believe it was only the football club. Don't think even the FL will know at this point, it will need to be looked into in much more detail.
 

coundonskyblue

New Member
It's not going to be straightforward that's for sure. Imagine if you had CCFCH with a group of companies under it, one of which was CCFC and another which ran some random buiness, let's say a sweet shop. If the sweet shop went bust would you really expect CCFC to get a points deduction? If it was the same as the Saints scenario it would be CCFCH i admin which would affect every company under it, in the case of Saints I believe it was only the football club. Don't think even the FL will know at this point, it will need to be looked into in much more detail.

It looks like what they have tried to do is transfer all outside debts to CCFC Ltd. If it can be proven that those debts are related to the running of the club then I think the points deduction is a certainty.
 

Brighton Sky Blue

Well-Known Member
It's not going to be straightforward that's for sure. Imagine if you had CCFCH with a group of companies under it, one of which was CCFC and another which ran some random buiness, let's say a sweet shop. If the sweet shop went bust would you really expect CCFC to get a points deduction? If it was the same as the Saints scenario it would be CCFCH i admin which would affect every company under it, in the case of Saints I believe it was only the football club. Don't think even the FL will know at this point, it will need to be looked into in much more detail.

In this case it's patently clear that CCFC has everything given to it through CCFCH so the businesses are more or less intrinsically linked. Tim Fisher is the Grim Reaper for CCFC and even now we have posters backing his actions.
 

chiefdave

Well-Known Member
But normally you would have players not being paid, tax not being paid, staff laid off etc. that's not happening at CCFC. My suspicion would be the only debt this company in admin holds is to ACL. Not saying they would get away with it but they could def make an argument for it and quite a compelling one.
 

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