Coventry City

by Simon Gilbert

‘They would have paid me off my guarantee, which was about £10m. I’ve lost more than £20m in the club.

  ‘He had a very good footballing man with him. They had £25m ready to invest on top of buying me out for £10m. They knew who they wanted to buy and everything.

  ‘Derek Higgs and Mike McGinnity had met him and agreed it was a good alternative. We met him in the House of Commons.

  ‘We agreed it wasn’t very clever what he did, but there was no crime.

  ‘But John McGuigan would not allow the sale. The council had the right of veto over who we could sell to.’

  ‘There was a requirement that the council had to endorse whoever the shares went back to.

  ‘When Sisu came in, there were about six bids.

  ‘One or two of the interested parties were simply interested in securing the Arena and said they’d find someone to run the football club, so they were quickly put aside.

  ‘Others, we were told, had a chequered history and were or had been interested in taking over other football clubs.

  ‘One group had tried to buy Nottingham Forest but most of the companies were not interested in the football club, they were interested in the property.

  ‘Another was a disaster management company with a big presence in Europe.

  ‘Sisu were the best of the bunch. Joe Elliott sweated blood to help Sisu take over.

  ‘They said they intended to get the club promoted and that’s how they would make money. They said ‘we find distressed companies, turn them around and then sell them on.’

  ‘They said ‘we haven’t got a football club but we have got about ten other companies.’ I said we needed someone who knows about football to run the club so then they turned up with Ray Ranson.

  ‘He was like a breath of fresh air.’

  Peter Knatchbull-Hugessen confirmed he agreed with the decision to reject the Windsor Group’s approaches, but said he was disappointed the Shapiro bid never got out of the starting gate.

  He said: ‘We told the Windsor Group we need proof of funding and Geoffrey said we would get it.

  ‘We were told it was with the Co-Op bank. But Kroll, the club’s financial advisers, who had been put there by the Co-Op to manage the club’s finances, put us in contact with someone at the Co-Op, who said they didn’t even have an account with them – and at one point had actually been refused one.

  ‘Shapiro was a big US firm with an office in Stoke-on-Trent. They would have been a good possibility from what we saw of them, and much more real than a hedge fund.

  ‘But they made the decision to walk away. They wanted the Ricoh for nothing, but neither the council nor the charity could give it away for nothing.’

  Sisu were the only game in town and, during conversations with those directly involved in the football club’s takeover, it became apparent that there were some early reservations over the sale of Coventry City to the hedge fund.

  Geoffrey Robinson said: ‘Ray was quite a good bloke from what I could tell, a good chairman.

  ‘But Sisu was not my choice. I doubted their financial strength, I doubted their commitment.

  ‘They were known to be distress buyers. I get on OK with Joy Seppala [chief executive of Sisu], but distressed purchases is what they specialise in. She picks things up for a song, does something with it and sells it on.

  ‘With that background, how could I think it was great?’

  But there seems to be little doubt that Sisu, at that time, presented the best opportunity to secure the future of the football club in the eyes of most involved. John McGuigan explained that Sisu’s chief executive, Joy Seppala, left the entire takeover process in the hands of her trusted employee Onye Igwe – or Onyechinaeduanaghaefuuzo Nnatuwereugo Igwe to give him his full name. The Swiss-educated Nigerian would go on to be Sisu’s main representative on the board for the next four years.

  But before the council gave the deal their blessing, John McGuigan said he had pushed Sisu on their business plan and had impressed on them the level of funding required to turn the club around.

  He also seemed to have some sympathy for Sisu, suggesting they had taken on more than they had bargained for.

  Conversations with various parties have suggested the new owners were somewhat surprised to learn, after the deal had been completed, that there was a £5.5m tax bill which needed to be paid almost immediately.

  John McGuigan said: ‘When we first met Sisu, Onye Igwe was leading. Throughout all my time involved with ACL and the Ricoh, I’ve never met or had any dealings with Joy Seppala.

  ‘My simple and fundamental question to Onye was ‘why does a hedge fund/venture capitalist want to buy a lower division football team which is in severe financial difficulties?’

  ‘Onye stated that Sisu’s objective was to buy companies in difficulty, turn them round and then sell on. Their strength was in the turnaround process and in being able to bring significant new money into the equation.

  ‘The deal between us, if they were the successful bidder for the club, was ‘we’ve delivered a Premiership facility; you deliver us a Premiership team, since without that you’ll never make any real money in the football business.’

  ‘That remained the unwritten understanding as the discussions progressed. I also helped CCFC by demonstrating to Sisu that their initial promise of at least £5m working capital for the club was hopelessly undercooked.

  ‘They really needed to have at least £20m up front to deal with the inherited problems and liabilities of CCFC that must be paid if they were to avoid administration and losing the Football League golden share [which grants teams the right to compete in the Football League].

  ‘They ultimately accepted this and, notwithstanding what they said was significant due diligence work, I think they found more problems when they took over CCFC than they had anticipated.’

  The issue of a share in the stadium to accompany the deal for the club was evidently raised prior to Sisu completing the deal for the Sky Blues. Peter Knatchbull-Hugessen also said he had warned Sisu in advance of the takeover of the club that the stadium issue might not be as straightforward as they had anticipated, following a change of leadership at Coventry City Council after a long battle in the public arena to get the project delivered.

  He said: ‘The charity had a separate meeting from the council with Sisu. Onye was with Laura Deering and Walter Bosco from Sisu, who were obviously very bright. But Onye didn’t listen.

  ‘He said we’re going to do this and that with the stadium and I said ‘it won’t work like that.’

  ‘The place had only just opened under Coventry City Council Conservative leader Ken Taylor, and now Labour had just got back in. There was no way the council, who had taken all the sticks and stones for getting it through, were not going to enjoy it for a while.

  ‘I said the most important people for you to make friends with are the city council because they are really pleased with it at the moment.

  ‘They were talking about taking the whole of ACL. People say it’s not for a football club to develop a site, but it is if you want to be bigger and better than other football clubs.

  ‘If you don’t have revenue for 365 days a year, you aren’t going to cut it.’

  Geoffrey Robinson also said that Sisu had even made an initial payment with a view to securing a share in the stadium for £4.5m.

  He said: ‘They did have an interest in taking over ACL at the time because they paid £1m for the option to buy back the charity’s share in the company.

  ‘They thought they were getting it at a snip. They thought they would get 50 per cent of that stadium for £4.5m – that’s a fabulous deal. That’s what they bought into.

  ‘It’s not a fabulous deal if you just own a football club that’s losing money.’

  It’s unclear what Sisu’s view on the situation was at the time, but incoming chairman Ray Ranson did confirm that Sisu had an option to pick up a share in the stadium soon after the takeover was announced.

  His p
redecessor as club chairman, Joe Elliott, also said he was left under the impression that a deal for a share in ACL was all but agreed prior to the hedge fund completing the takeover of the club.

  Peter Knatchbull-Hugessen confirmed a meeting with all the key players was held shortly before the football club’s takeover to discuss the stadium issue.

  He said: ‘There was no timeline. There was an arrangement in principle that they could take over the charity’s shares in ACL by exercising the option.

  ‘The council shares were always considered a second step. Anybody who came along was always told the charity would go out first and then the council.

  ‘The council wanted to make sure it wasn’t asset stripped. We wanted to ensure its future.’

  Joe Elliott also recalled the meeting. He said: ‘I was called to a meeting, not long after we had been in touch with Sisu, with Mal Brannigan [club finance director at the time]. It was quite late one evening, I had been at the club 18 hours a day trying to keep everything running.

  ‘Mal and I were in the office pouring over figures and issues the club had when we got a call from Daniel Gidney [ACL chief executive], who asked us if we could come up to the executive room at the Ricoh.

  ‘In that room was John McGuigan [then development chief for Coventry City Council], Peter Knatchbull-Hugessen [Higgs Charity clerk], Daniel Gidney, Onye Igwe [Sisu Capital] and Laura Deering [Sisu Capital].

  ‘They said the stadium was a big issue and of interest to the football club and Sisu.

  ‘They said they had agreed Sisu would be able to buy the half share in ACL from the Higgs Charity if they buy the football club, so go on and see if you can get the deal for the football club over the line.

  ‘The fact they came in and said they wanted to buy the stadium was what made me want to get the deal done. It was the best thing for Coventry City.’

  And he did get it over the line – but not before many a tear was shed by scores of Coventry City supporters.

  One of Sisu’s conditions for going ahead with the purchase was that all of the 55,000 shares in the club must be handed over to the new owners.

  Families who had held shares in their beloved football club for years – in some cases passed down from fathers and mothers to sons and daughters – would now be forced to part with them. Few would have held on to them in the hope that some day they might be able to sell them on for a profit, but while the monetary value was inconsequential the sentimental value was immeasurable.

  An appeal was launched for Sky Blues fans to hand over their shares or risk the extinction of the club. Joe Elliott was tasked with clawing back the shares on behalf of the new owners. Even Mr Coventry City himself, Jimmy Hill, gave up his one share as a public demonstration that all the great and the good connected to Coventry City believed that this move was in the best interests of their football club.

  He was followed by club legends Bobby Gould and Gordon Milne, as well as former chairman John Poynton.

  The appeal worked and, over the next few months, all the shares came into the possession of Sisu Capital.

  But, while the battle to secure the shares was won, the mental scars of leading that appeal clearly remain with Joe Elliott until this day – and will likely stay with him for the rest of his life.

  He said: ‘When they bought the shares from the directors they had 74 per cent but they made it very clear unless they got the rest then the deal would not happen.

  ‘My treasured shares, along with everybody else’s, were handed in for fractions of a penny to make sure it all happened.

  ‘Probably Jimmy Hill giving in his one share showed the fans the way forward and to hand their shares in so the deal could be completed.

  ‘It was tear-jerking. Very often the shares had been in families for generations. It was a very hard decision but it was for the benefit of the football club and the chance for a new beginning.

  ‘Most people handed the shares over reluctantly but with a smile on their face wishing the club well for the future.’

  With that, the new owners of Coventry City were firmly installed.

  The club had a new chairman in the shape of Ray Ranson and he was making all the right noises.

  Sisu had previously failed in their attempts to purchase Southampton and eventually turned their sights to Coventry. But the deal for the Sky Blues clearly wasn’t a straightforward process, and Ray Ranson paid tribute to those who made the deal possible when he was interviewed in the immediate aftermath.

  Speaking to the Coventry Telegraph soon after his appointment as chairman, he said: ‘I am delighted. It has been nerve-racking at times. Many times it nearly fell over but thankfully all parties were very positive.

  ‘Special thanks go to Geoffrey Robinson and Joe Elliott for having the stamina to see it through. Without their support, it would never have been done.

  ‘But we got there in the end and hopefully it will be all worthwhile, because we are in it for the long term.’

  Asked why Sisu had chosen Coventry City, Ray Ranson explained that the club had a number of the key ingredients the investors were looking for – not least that Coventry was a ‘one-club city’ and that it had a ‘finished stadium’.

  Crucially, a pledge to invest £20m in the club was made – but the new chairman was crystal clear about his priorities now he had his feet under the table. Focus would be on the playing side, with promotion the ultimate aim.

  Any thoughts of stadium ownership would sit quietly on the back burner under Ray Ranson, who even suggested stadium ownership was not necessarily part of Sisu’s long-term plan.

  He told the Coventry Telegraph: ‘It ticked all the boxes for us – a one-team town with a finished stadium, a loyal fan base and we think there is a real chance of developing things here.

  ‘We have a very good relationship with ACL.

  ‘Daniel Gidney and John McGuigan have been very supportive and we thank them for that.

  ‘There is an option to acquire a 50 per cent share holding by way of acquiring the football club and we fully intend to take up that option and move forward and develop the relationship.

  ‘I don’t know when that will happen but let’s get the priorities sorted out, trying to get the team up the league and, dare I say it, promotion, and we will worry about that later.

  ‘I wouldn’t say the long-term plan is to own the whole of the stadium but, certainly, we see ACL as a valuable asset to both Coventry City Football Club and the people of Coventry, and we will be part of the development of that.’

  At the time, the stance of not seeking ownership of the stadium in the long term raised few eyebrows. The Sky Blues had a new owner promising to invest £20m into the playing side of the club and return them to the top flight. It was a huge turnaround from the noises coming out of club just weeks before, when the very existence of the Sky Blues was called into question. So who can blame anyone for taking their eyes off the ‘stadium issue’ back then?

  For the first time in almost a decade, Coventry City fans could look to the future not just with hope, but with expectation.

  Ray Ranson added: ‘I want to see us promoted as soon as possible. This is a Premiership club – that is why I am here. I’m in it for the long haul.

  ‘There is a hell of a lot of work to be done here and Sisu want to make a success of it.

  ‘I am in the football industry and have been all my life, and a natural progression of that is to try my arm at ownership and trying to assist Sisu in developing a successful football club.

  ‘There has been a lot of talk about them being a hedge fund.

  ‘Yes, they have a hedge fund but they have various funds and this is coming out of the private equity fund and, by its very nature, they are long-term investors.’

  But it seems perhaps Sisu didn’t realise at the time just how long-term their investment would turn out to be.

  Chapter Four

  Held to Ranson

  COVENTRY City fans thought they had got one of
the best Christmas presents of all time in December 2007, following the takeover by Sisu and the installation of a new chairman who apparently had £20m burning a hole in his pocket.

  Ray Ranson wasted no time stamping his authority on the club and made his first major decision when he sacked popular manager Iain Dowie after a 1-0 defeat to fellow Championship strugglers Preston North End.

  The former Charlton Athletic boss had suffered a run of five defeats in his previous six league matches prior to getting the chop, but it wasn’t the form book which led to the end of Dowie’s spell as manager. It was no secret that the two did not see eye to eye over the direction the club should be taking. Ranson was big on youth and developing players, while Dowie tended to favour more experienced heads.

  Despite the differences of opinion, and the form book, the timing of the sacking was odd. The Sky Blues were just days away from their biggest game in recent seasons – a fifth-round FA Cup clash with West Midlands rivals West Bromwich Albion. Many fans saw the tie at the Ricoh Arena as extremely winnable, not least because it was against fellow Championship opposition who City had demolished 4-2 at the Hawthorns just two months previously.

  But many pointed to the disruption Ranson had caused by dismissing Dowie as one of the major reasons why the Sky Blues eventually crashed to a 5-0 defeat in front of 28,163 supporters.

  It was a bumpy start for the new chairman.

  He had to act fast to restore the faith of the Sky Blue Army and swiftly appointed former Fulham boss Chris Coleman.

  Off the field he worked to assemble his board, which included appointing Coventry kid and former Northern Rock chief executive Gary Hoffman as vice-chairman.

  Joe Elliott was rewarded for his efforts with a seat at the boardroom table, while Sisu man Onye Igwe was there as the owners’ eyes and ears. Finance chief Mal Brannigan also kept his position – although he was forced to move on just over a year later when a restructuring of the club by the owners ended with him being made redundant.

  Gary Hoffman offered his insight into the situation at the club under the new ownership in those early days, weeks, months and years.