|SJ MASKELL: It is Trust or Bust now. And here's why...|
Thu 06th Sep 2012 09:10 by SJ Maskell
Is it really Trust or bust? I believe it is. I believe it is because a number of indicators show that for Portpin to achieve the best and quickest return on their money, liquidation is their favoured option. The behaviour of their representatives over the last few weeks seems to indicate that. Otherwise why withdraw from the lists citing every reason under the sun from fan ‘negativity’ to Appleton’s scorn via a plethora of financial hurdles that they seemingly weren’t prepared to negotiate, only to return because of unsubstantiated claims that ‘everyone wanted them to?’
What changed in those eight days?
In those eight days the Trust’s bid gained a credibility that Portpin could not have believed it would receive. Support was widespread across the City and in the media. The Council’s loan was on track with the lack of a viable opponent. Pledges and crowds increased. And the Football League suspended the ten point deduction, for the time being at least.
In returning Chainrai aimed criticism not only at Pompey Supporters Trust, but at the whole Trust movement, decrying the lack of success of the Trust movement as a whole in rescuing clubs. Notwithstanding the fact that Trust success in this field stacks up pretty well in the light of the failure rate of businessmen owners of football clubs Chainrai, in levelling this criticism, shows how little he appreciates the mood and determination of football supporters in this country. Supporters Trusts are frequently the owners of last resort, mopping up the disasters created by unethical, dishonourable or ill-advised owners. The tide is turning against such business ownership and the Pompey Trust is riding the crest of the leading wave.
Of course, Portpin’s return has negated the effect of the Council promise of a loan to the Trust to help buy Fratton Park; as such a loan was conditional on no other bidder being in the frame. An interesting side effect of Portpin’s renewed interest.
No Trust has attempted a rescue requiring such a depth of funding before. Football is a risky business for the most hardened businessman, for supporters to take such a step into the unknown is a monumental task. Yet the Pompey rescue carries within it the enormous potential to build an ambitious and forward looking club, with its roots in the City community and its branches reaching out to influence the wider football business community.
It is this potential that has attracted attention from the property development world, not only in the announced shape of Stuart Robinson but also in expressed interest from other parties. Since news of such interest, along with the debunking of his claims to have been ‘asked by everyone’ to return, Mr Chainrai seems to have withdrawn himself from the lists.
He told the Guardian, ‘that he is no longer personally involved, that he is leaving the negotiations to Portpin but he does not want to lose too much of the money he loaned to the club.’ For Chainrai too, this is a rescue mission. But it is a rescue of as much cash and dignity as he can muster. It has nothing to do with the development of the potential inherent in the club. Currently, with £3m in the bank and the value of Fratton Park added on top, liquidation will see Portpin get the best and quickest return on their money.
It has to be born in mind that Levi Kushnir, Chainrai’s partner in Portpin, is no stranger to dealing with insolvency in his businesses. This propensity being further underlined by the strange maths that leads Portpin to think that a rent of £1m per annum is a sustainable one for a Trust owned Pompey. (Reported in the News here). Is this what they would be demanding if they took ownership of Fratton Park from a liquidation scenario? If so, it seems Portpin would rather have others work to make them money.
You have to ask, with a bid that was clearly described as not fit to proceed by the administrator last Friday and given the amount of time they have had to formulate it, whether there is a serious intention on Portpin’s part to actually take the club forward or whether there are more tactical reasons for returning to the fray. Portpin’s bid is certainly being closely matched by the Trust as evidenced by the administrator giving a contract to the Trust, thereby finally taking their bid to the same level as Portpin’s.
So, how far can the Trust go to save the club? How can they counter the various claims, from Chainrai amongst others, that they have not got the cash to sustain the club going forward? Of course they have the will to run the club in a sustainable manner, within its income, putting any profits back into the business - something Portpin seem unwilling to do – but that will be a tight programme to maintain. Spending within the limits of turnover is encouraged by the League 1 Salary Cost Management Protocol (SCMP) but this means for a club with any ambition those limits have to be extended. There is no doubt that lack of ambition will drain turnover, not sustain it – as Portpin’s involvement has demonstrated, crowd numbers having dropped significantly since their return to the fray. Development of the stadium is crucial to this.
Many other Supporters’ Trusts have struggled with this problem, some, like Brentford, having to sell out their shares to allow the club to move forward. However, the potential for development at Fratton is far greater than that available to any other attempted Trust buy out, particularly with the availability of the land held by Miland Developments as a result of their insolvency. This is something property developers in the area are beginning to latch onto, as discussions the Trust has had with a number of them illustrate.
Such development has always hinged on the football club being at the heart of it, due to planning restrictions placed on the area by the Council. This gives the Trust, as potential owners, useful bargaining powers and the potential to take on partners to its business plan. As Micah Hall says – if we are to build a stadium, it's going to be in conjunction with a property developer. Given our unique situation, such a relationship would be mutually beneficial. It offers something Portpin cannot - a contribution to the future well-being of the City as a whole. Current creditors might be interested in the opportunities such development would bring.
The Pompey Trust is truly breaking new ground with their bid. Like Swansea City Trust they have seen the need to bring on board more money than the fans alone can raise. There has been significant inward investment by High Net Worth Individuals. This has already enabled the Trust bid to match that of Portpin. The buyout is attainable but the figures are tight. This makes a watertight deal with a property developer as partner an attractive one, as long as it retains the club’s ownership of Fratton Park in the long term.
Trust influence will always be dependent on the will of the fans to contribute via the community share scheme. The greater the proportion of community shares that make up the bid – the stronger the fan influence. This was always intended to be the case. Swansea Trust own 20% of their club and aim to increase that stake. I believe Pompey Trust intend to hold a significantly higher proportion of influence.
To this end the Trust are still taking pledges towards the Community share scheme: Details here. This is not only Trust or bust, but also the chance of the club finally having a future worth fighting for.
The views of SJ Maskell are their own and do not necessarily reflect the editorial view of pompey-fans.com
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