Tuesday, 1 June 2010

Palace on the brink

Crystal Palace are, it seems, on the brink of going out of business.

Despite Palace not being my team (and we had to share their ground for a number of years during which time we came to dislike them and their stewards with a passion), it is clearly not in the interests of football as a whole for the club to go into liquidation.

Palace are horribly in debt and need to be sold. A consortium has come forward wanting to buy the club but the ground - Selhurst Park - is owned by Bank of Scotland and a separate deal needs to be done for this. The bank wants a deal whereby they will sell for less than market value but they will get an unlimited return if the ground is sold again in the future. The consortium says that the amount they might get in the future should be limited.

And so we are in a stand off with the administrator saying that everything needs to be sorted out by this afternoon or he will start selling players to pay debts and, at that point, everything will start to fall apart.

Palace fans are asking the Government - which part owns Bank of Scotland - to step in to secure the future of the club.

The Palace situation is typical of the mess that a number of clubs have got themselves into. Clubs get over ambitious and have run up debts that massively outstrip their income. In some cases they area clearly living in cloud cuckoo land as they set their sights on the Premiership. In others, they are simply prey to the wheeler-dealers and foggy business practices which infest our national sport. I always thought that Palace - under Chairman Simon Jordan - were a bit more realistic than many clubs, but they too have fallen victim.

I'm pretty sure that we won't see any last minute government intervention. Not only is it bad practice for the PM to step into (comparatively small) company failings, but it would also set a huge precedent for the future.

But what the Government has done already is to set down a marker. In the coalition agreement they said:

We will encourage the reform of football governance rules to support the co-operative ownership of football clubs by supporters.

And that's a vital step forward for the game. We need clubs which are not beholden to the whims of a sugar daddy chairman who invests until he either gets bored or goes bust leaving the club and its fans high a dry. The case of Gretna, with their meteoric rise to the SPL followed by complete disappearance is a case in point.

Other clubs get 'marble halls disease'. The bosses want the best of everything and forget to balance the books. Darlington built a magnificent 20,000 seater stadium - but are now playing conference football.

There are many and varied ways football clubs have found to get things spectacularly wrong. Even at the top end, clubs which have traditionally been hugely profitable have managed to find trouble - being used as debt leverage vehicles by owners who see them purely as businesses and fans as customers.

The likes of Arsenal - who at least in business terms seem to have got things more right than wrong - are under pressure because they have not won a trophy recently. Buy success now, worry about the debt later is often the mantra.

Getting more mutual and fan ownership will help to temper these excesses. In the UK we already have a number of fan owned clubs. Some are more successful than others - both on and off the pitch - and I wouldn't want to claim that a fan owned club will never go bust. But at least they will never be used as debt vehicles and they won't have tens of thousands of pounds spent on fish tanks.

There is a step short of full fan ownership. That is having fans represented on the board and at every level of the club's structures. They may not be able to rule the day, but they have the club's best long-term interests at heart and will curb the excesses. Fans stay loyal to a single club their entire lives - unlike some chairmen who, having failed with one club seem to be able to take over another at the drop of a hat.

The argument against fan ownership is that it stifles clubs. If high risk deals and financing options are curbed, it is said, English clubs will be less successful in Europe and the money coming in from TV deals around the world will be less.

It is true that the English Premier league is currently the most successful there is. I would not want to cut that success without good reason. But Barcelona and a number of other Spanish clubs (fan owned) and the entire German league (which has its own fan owned structure) show that you do not have to trade success for good governance.

We will have to wait to see how the Government takes this particular initiative forward. But I'm very glad that it has made this commitment and, until we hear more from ministers, I would commend the excellent Supporters Direct organisation to you. Run by Dave Boyle - a friend of mine from AFC Wimbledon - they have been the pioneers of supporter involvement in football clubs and they have a conference in a couple of weeks which will discuss the current options in greater detail.

For Palace, I hope that the bank, the administrator and the consortium are able to see sense and put together a long term deal. For football more generally, I hope that they put pressure on the government to act swiftly to make good on its promise to wade into the murky depths of football governance sooner rather than later.

1 comment:

mark said...

Good article Alex. As a Palace fan i have a more vested interest, and believe that there IS a way that the government counld intervene, without being seen to being involved.

as the owner of the Bank, i am fairly certain someone from DCMS would be able to 'bend the ear' of the person responsible for selling Selhurst, and remind them of a very true adage, "a bird in the hand, is worth two in the bush", and to make the deal happen.

a lot of people benefit from this fairly simple decision:
1// the bank itself. it realises a book asset for a good price now, and the potential to make more omney in the future which automatically makes it a good deal for its creditors.
2/ the staff at crystal Palace. they will all keep their jobs, as would the 39 that lost their jobs last week.
3/ finally, and in my eyes the most important, the fans of Crystal Palace get to keep their beloved club. you can chose your friends, but you dont choose a club - its your lifeblood. The fans dont deserve to be here - at the hands of a short sighted and greedy hedgefund, who could end up losing everything by their own actions - and i no many that were in tears last nite, as the gravity of the situation started to sink in.

i will keep my fingers crossed that common sense will prevail, but have a heavy heart already incase it doesnt.....