An Administrators role is defined by independence, regardless of who and how appointed. The Insolvency Act 1986 states that ‘An administrator is an officer of the court (whether or not he is appointed by the court).’ How independent is Mr Appleton in the case of Coventry City Football Club Limited (CCFC Ltd)? The administrators report of 15 May 2013 noted that
The current owners inherited certain contracts, which have added a significant strain to the financial position. In particular, there was a lease and Licence, which, since 2005, allowed the club to occupy the Ricoh. These documents are held in the name of the company.
This is quite telling. In the Administrators opinion, the problems of the company relate to the lease on the Ricoh. This is a view which, according to press reports, is shared by SISU the hedge fund that controls both the club and its associated companies. Of the total deficiencies of £69,727,625 the problem is the inherited contract which is an annual charge of around £1.2 million for the lease of the Ricoh Arena, which would total around £8 million of the £70 million liability – around 10%. Why has he neglected to reflect on the effects of the other contracts, both inherited and more recently negotiated, that contribute to the other 90%? The auditors report to the financial statements for the year to May 2011 includes the lease along with the need to reduce payroll costs and other overheads as a cause for concern over the company continuing to trade as a going concern. The staff costs in that year totalled £10.3 million on a turnover of £10.2 million. This alone seems problematic and will have contributed far more significantly to the deficiencies of £70 million than the rental agreement yet are not mentioned in the report.
In the Administrators report, the statement of affairs as of 21 March 2013 lists the player registrations as an asset, valued at £466,742. The administrator is uncertain how much value these registrations will ‘realise’ – essentially how much they will bring to the company in cash terms when sold. Yet in the statement of 24 May 2013, he now suggests that
the players contracts are in their [CCFC Holdings Ltd] name, together with many other important elements. This has seemingly been endorsed by the Football League who have completed all current player registrations in the name of Holdings.
So the Football League have allowed for the Golden Share to be issued to CCFC Ltd and have now allowed all current player registrations to be held in the name of CCFC Holdings Ltd. When did this transfer take place? It is reasonable to assume the transfer must have taken place some time between the date of the Administrators first report of 15 May 2013 and his statement released on 24 May 2013. Were the registrations offered as part of a tendering process on the open market, and if so, which contracts were taken by other clubs? Why was neither the tendering process nor the take up of the newly agreed contracts reported in the press? Why were interested parties, such as the courts or ACL, not informed of such activity? What amount of cash was received for the contracts with a book value of around £460,000?
The Football League, as the governing body, has been strangely silent throughout the process. There has yet to be a clear and defining statement from them, or the Football Association, as to where the Golden Share resides. It is easy to assume that their position is to remain external to the process, leaving the courts and administrator to decide the outcomes. And yet, it looks as though they have allowed the wholesale transfer of player registrations from CCFC Ltd to CCFC Holdings Ltd. In allowing this transfer to take place, are they now complicit in deciding the outcome? The breakdown of costs in the joint Administrators report shows that no time charged relates to the trading activity of CCFC Ltd. As the recent statement suggests, all activity is now transferred and being conducted by CCFC Holdings Ltd. So when did this transfer take place? I would suggest it is time for the silence to be replaced with a clear and concise statement. It is time now for some transparency and good governance from the Football League.