On Wednesday, the Coventry Telegraph released details of a proposed ‘secret’ meeting set to take place on Friday between ACL, the landlord at the Ricoh Arena, and representatives from Coventry City Football Club. The two sides are set to finally sit down and discuss the possibility of the Sky Blues remaining in Coventry for the forthcoming season. The following day, the newspaper goes on to report that an undisclosed company on behalf of the club had ‘secured a provisional deal’ on the purchase of a piece of land currently home to Coventry Bees Speedway and the greyhound racing track, on the outskirts of the city in a village named Brandon. Further discussions are apparently set to continue on the acquisition of a further second site on behalf of SISU, the hedge fund which controls the club. It seems unlikely that a city the size of Coventry neither needs nor can support three new elite sports venues, particularly with the football club about to vacate the city, albeit temporarily. So just what exactly is going on?
The importance of the CVA and the transfer embargo
Coventry City are set to leave the Ricoh to play ‘home’ games in Northamptonshire. The contracts have apparently already been signed. Yet ACL, the landlords at the Ricoh, and representatives on behalf of Coventry City Football Club, are set negotiate to see if the club could actually play at home, at the Ricoh, next season. The newspaper reports that the club, most likely through the Administrators preferred bidder, Otium Entertainment Group Ltd, will now look to agree a deal for the club to remain in the city of its name and origin, rather than force a hugely unpopular relocation 35 miles away at Sixfields, the home of Northampton Town FC. The Telegraph speculates that
It is understood Coventry City owners Sisu/Otium have reluctantly agreed to negotiate because they desperately want ACL to sign Mr Appleton’s proposed Creditor Voluntary Arrangement (CVA) to enable the club to exit administration.
The Telegraph is normally very cautious in its approach when discussing SISU, but has inserted ‘desperately’ into the narrative. There is little surprise in the inclusion of the word ‘reluctantly’. They go on to cite the transfer embargo imposed by the Football League that restricts the ability for the current manager, Steven Pressley, to add to a first team squad, that currently numbers around 20, as a major factor. However, a transfer embargo was placed on the club prior to the administration due the failure to submit financial accounts on time. And this offence has occurred on several occasions in recent seasons and had not worried the owners unduly. In any case, the club would be able to offer contracts to players that have been released by other clubs as no transfer fees are applicable, but have not even offered trials to any significant number. The PFA currently list 454 players currently out of work since the end of last season, after contracts were either terminated or not renewed. With only one recognised central defender, time is of the essence.
CCFC Ltd may have a transfer embargo imposed upon it, but CCFC Ltd apparently does not hold any players registrations. According to Tim Fisher, CEO of Otium and listed as a director of CCFC Holdings Ltd, it is Holdings that registers the players. This opinion is backed up by Paul Appleton, the SISU appointed Administrator. If we accept the argument put forward by Fisher and Appleton, any transfers would not involve CCFC Ltd. Holdings is not restricted on activity in the transfer market through being in administration, it is only restricted by its failure to submit accounts on time and so not reliant upon the signing of the CVA and the exiting of administration. So just why are SISU apparently so desperate to ensure the CVA is signed?
Earlier in the week the press reported that they would only consider opening discussions once the CVA was signed off by ACL. It is not unreasonable to expect this as an item on the agenda, but to insist on the completion prior to even re-opening negotiations is somewhat aggressive, particularly in light of the breakdown of negotiations that led to the club being put into administration. Once the CVA is signed, investigations are complete, the matter closed and monies can be released to pay the Administrators fees. You can imagine that could be an incentive for Appleton. The longer this drags on, the longer he is forced to wait. Questions are now beginning to be asked at the highest levels, with Bob Ainsworth, MP for Coventry North East (Lab), questioning the administration process in parliament.
Hedge funds appear to have the ability to acquire companies, to empty them of their assets, to appoint administrators of their choosing and to proceed without fear of being pursued vigorously. That certainly seems to be what is happening at Coventry City football club.
Although made under parliamentary privilege, Ainsworth has made further accusations which when challenged, he has refrained from repeating outside of Westminster, but this level of interest and possible investigation could well cause a certain level of anxiety to the Cayman Islands registered hedge fund. Companies based off shore do so for a number of reasons, with the lack of scrutiny into their dealings high on the list of advantages. Ministers are now taking an interest in the process and the DCMS are sure to be watching. This would explain why SISU are anxious for ACL to sign the CVA and could put them at a disadvantage in negotiations about remaining at the Ricoh.
What is preventing the club playing at the Ricoh?
Fisher has been very adamant that the club would not return to the Ricoh under any circumstances. ACL have offered CCFC Ltd the right to play at the Ricoh rent-free whilst in administration, passing on expenses incurred for hosting games at cost. The Coventry Telegraph reported that ACL
has indicated it is only prepared to speak through the administrator, not directly to Holdings
This offer made on 27 June 2013 to the administrator of and, was subsequently rejected, with Appleton stating that the offer
was based on the mistaken belief that Limited had the ability to field a team. However, as I’ve stated on many occasions, it is Holdings which employs the players and, consequently, Limited was never in a position to take up the offer.
The club were able to participate in FL competitions at the Ricoh last season, on behalf of CCFC Ltd as the holder of the golden share, with players allegedly employed by Holdings. The Administrator even agreed to allow the club to play its final three remaining games there once the administration process had began. ACL were proposing a similar arrangement for this season in this offer. So it is difficult to see why the administrator rejected the offer of negotiations at that point, as nothing had fundamentally changed. This football league did not consider the dislocation of the share and players contracts an issue – nor did SISU.
The proposed meeting to reopen negotiations
Discussions between the two sides has been conducted by senior personnel in the past, with Joy Seppala, the founder of SISU, and Fisher battling against Peter Knatchbull-Hugessen, director of ACL along with senior figures from Coventry City Council. However, this proposed meeting will be a new start with fresh representations. This time, the Telegraph suggested that
It is thought the club could be represented by director Mark Labovitch, finance director Steve Brookfield and development director Steve Waggot.
This could present an opportunity for a new united vision which takes the talks forward. However, the negotiations could well turn out to be a tick-box exercise, allowing the FL, FA and owners to make claims that attempts have been made to resolve the issue but that agreement could not be reached. It is alleged by ACL that an agreement had been reached previously on the issue of the rent, sealed with a handshake, which was subsequently vetoed by more senior management at the hedge fund. Will these individuals actually be vested with any power to agree binding terms this time? If not, then it points to SISU merely going through the motions for the authorities, able to make the claim that all avenues have been explored but resulted in no viable outcomes.
Cards on the table? Attempts to disrupt the process.
The announcement the day before negotiations are set to be restarted of the possible purchase of two sites in the Coventry area appears to apply pressure on ACL to lower expectations, and terms, placing them firmly on the back foot. However, any purchase of the site at Brandon is complicated by the existence of a lease that runs for another ten years for the current tenants to continue to operate on the site. Brandon owners were quick to respond
The freehold remains available for sale and, whilst we have had several parties show interest in securing the freehold for the site, only one has continued to show interest given the existing leases for speedway, greyhounds and stock cars … However, to stop further speculation from fans of the various sports which take place in the stadium these will all continue to operate at the Brandon site until 2023 and hopefully well beyond that date.
This would explain why the search for an additional site continues. It hardly makes economical sense to build not one but two stadiums, one for the football club and another elsewhere for the speedway and greyhounds. Any sale is further complicated by the current investigation by HMRC into the current stadium owner. The Telegraph reported that
HMRC said in November that the Brandon Stadium was a frozen asset and could not be sold following the conviction for money laundering by gambler Jatinder Singh Batth – also known as Micky Singh – who it claims owns half of the £1million venue
The proposed site is situated under the jurisdiction of Rugby Council, and officers responded by confirming that no approach had been made on behalf of the club, nor any planning application submitted. Any application is likely to be met with widespread opposition. But this makes it perfect for SISU at this point. There is little chance of actually purchasing the site and works starting in the near future, which would involve substantial investment. Is this announcement by SISU simply posturing before the negotiations start? If so, don’t the fans of Coventry City deserve better? Hopes and expectations are high for the club to remain at home at the Ricoh. Will SISU deliver?