Or to be more precise, the blazer bearing the clubs emblem.
It was a SISU controlled subsidiary, ARVO Master Fund, that placed CCFC Ltd and the football club into administration back in March 2013. According to its CEO, Tim Fisher, CCFC Ltd was a non-trading property subsidiary that contained no assets, apart from possibly holding last seasons golden share from the football league, but had somehow racked up over £70 million in debt over 18 years. After the SISU appointed administrator received four separate bids to take the company out of administration, another SISU controlled company, Otium Entertainment Group Ltd, was declared the successful bidder late on Friday afternoon. It does seem very odd that Otium should have even placed a bid for a company with no assets, particularly when you consider that a certain Tim Fisher is listed as a current director.
Essentially, SISU, as the ultimate parent company, will presumably lend Otium the money to purchase the debts at the level set down in the bid. SISU were also the major secured creditor of CCFC Ltd, via the subsidiaries CCFC Holdings Ltd, Sky Blue Sports & Leisure Ltd and ARVO Master Fund, all of whom are under the control of SISU. Otium will then take SISU’s investment to pay off all the debts agreed. To SISU and its related companies. The only notable exception will be ACL Ltd, a joint venture between the Alan Higgs Charity and Coventry City Council, the owner of the Ricoh and the clubs former landlords, who as an unsecured creditor will receive a portion of the rent that had been withheld for the previous year. When SISU took control of the club back in 2007, CCFC Ltd debts were negotiated down from £43.5 million to £8.6 million. Of the £8.6 million, it is far from clear how much of this actually ever was paid, with a balance of £6.4 million being written off the assets in 2011 after the company failed to meet the conditions required for it to fall due for payment. However, these ‘savings’ were only represented in accounts of the parent company SBSL Ltd, and not across the group of companies that include CCFC Ltd. They remain showing as outstanding in the last set of accounts. Will the same thing happen this time, so that the debts largely remain as before? SISU were owed £69.5 million at the time of the first administrators report in May 2013 via SBSL Ltd, Arvo Master Fund and CCFC Holdings Ltd. How much will actually disappear from the balance sheet?
The deal now only needs the green light from the Football league (FL), and then the company will sold and the club will be out of administration. So, what can we expect the reaction from the FL to this curious state of affairs?
The Department for Culture and Media & Sport (DCMS) have published two recent reports into the governance of football in England and Wales in the last couple of years. They describe the Football Association (FA) and FL as an ‘association of interests’. These interests are invariably those of the chairpeople and CEO’s of clubs in the Premiership, and to a lesser extent the football league. Both the structure and effectiveness of the boards at both the FA and FL have been heavily criticised, ‘declared as unfit for purpose’ with particular regard to the governance of the game that the organisations were set up to be custodians off. The second report highlighted that when they boards do hold meetings, which is infrequent, any decisions made are rarely informed by background papers. How informed will the board be on such an important matter for fans of the Sky Blues?
Before a company, major stakeholder or director can take over the running of a football club, the FA and FL insist that the owners pass ‘Owners and Directors Test’, commonly referred to by its previous name, the ‘fit and proper test’. The details are contained in appendix 4 of the FL regulations. Factors that can lead to a disqualification as an unfit and improper person include individuals that are involved with another club; those with a criminal conviction for activities such as corruption, perverting the course of justice, ticket touting or hooliganism. Another part of the regulations deal with improper financial histories – individuals that have been previously declared bankrupt; those involved with a club that has previously been declared insolvent or exited administration via a Company Voluntary Agreement (CVA); those that have been disqualified as company directors; or individuals that are excluded from membership of a professional body such as the Law Society. So what can we expect from the FL?
Firstly, the FL were very reluctant to publicly declare which of the companies behind CCFC held the elusive golden share – the certificate that effectively allows the club to be a member of the FL and participate in competitions. How difficult could it have been to check its own records and clearly state what results they have found? Secondly, it was emphasised in the report by DCMS that the FL do not have the financial resources to conduct independent enquiries to gather information that ensures that individuals pass the test, preferring to rely upon information presented by the clubs and check this against information in the public domain. Thirdly, the central tenet of good governance is transparency and so it is worth considering that the FL is unwilling to provide the information it holds on owners and directors to fans. It is worth remembering that SISU, and the undisclosed owners that invest in the hedge fund, have also previously passed the test.
There are of course some notorious examples of previous chairmen that have also successfully passed the tests of either the FA and FL. Take for example from former Thai Prime Minister, Thaksin Shinawatra at Manchester City, described by Human Rights Watch as ‘a human rights abuser of the worst kind’ that was able to purchase the club and became chairman. Carson Yeung, former chair at Birmingham City, charged with money laundering in June 2011. Or Owen Oyston, former chairman at Blackpool, who served three and a half years in prison for rape and indecent assault on a 16 year old girl. Stephen Vaughan, formerly of Chester City, holds the rather unfortunate position as the first person to actually fail the test, after a conviction relating to VAT fraud that occurred after he took charge of the club. All of these characters, and of course there are many others, at clubs such as Leeds United, Notts County, Portsmouth, York City, Blackburn etc etc were able to initially pass the test. With these examples here, it would appear it is simply a question of when, rather than if, the new owners will be given the green light.