The raft of departures over the months eventually left John Clarke as the sole surviving director of the football club’s ‘best board ever’. He continued in his role as vice-chairman until March 2013 – just days before the club did finally enter administration.
On the pitch, the ‘best board ever’ had appointed chief scout Andy Thorn as permanent manager after he achieved some promising results as caretaker, although the decision was also widely viewed as financially motivated at the time – perhaps unsurprising against the backdrop of the club’s financial struggles.
He led them to safety in his first few months in charge, one of the few positives supporters could take from the period.
There were appointments off the pitch too during 2011 – including some faces which became extremely familiar to Sky Blues fans over the next few months and years.
First through the revolving door were investment bankers Tim Fisher and Mark Labovitch – the latter of whom had previously headed up former prime minister Tony Blair’s ‘Firerush Ventures’ as chief operating officer.
They were joined shortly afterwards by Steve Waggott, who had been persuaded to join the club by Tim Fisher after the two had worked together previously at Charlton Athletic.
Tim Fisher later revealed in an interview with the Coventry Telegraph the reasons behind his appointment – indicating Sisu boss Joy Seppala had decided to take a more ‘hands-on’ approach and that his role involved delivering promotion and securing a stake in the Ricoh Arena.
He said: ‘Joy Seppala is now hands-on. I speak to her every single day and, by the way, she comes to games and, by the way, she stood in front of the players and told them and has been very clear in what it is she expects, what the fans expect.
‘We presented a three-year plan to Sisu, including the funding requirements. That plan was signed off by Sisu. I have been asked to deliver the plan, certainly the first part of the plan, which I am relishing.
‘We are going to look to get promoted, become a community club and a club which has the academy at its cornerstone and leverages the talent that comes through.
‘If we don’t perform, do well, get promoted, complete the transaction, I don’t get paid.’
The raft of changes and strategy was a sign that the owners had not been happy with the way things had been run. Publicity-shy Sisu boss Joy Seppala has not given many public statements on the way things have unfolded at the the club, but in 2012 she did speak to the Coventry Telegraph and, in 2016, she met with fans to discuss issues of the past. She indicated that she had ‘put a lot of faith in the wrong people’, describing it as a ‘tragedy’.
During the 2012 interview, she was asked to reflect on the deal to take over the football club and said: ‘People did the due diligence and for all intents and purposes we took calculated risks.
‘What I can say definitively is that since I’ve become involved in the last two years, I have not regretted any of the decisions that we’ve made.
She added: ‘In a multitude of ways, this has been one of the most extraordinary professional experiences I’ve had. I’ve learned from it, and I don’t regret anything.
‘If I was asked, ‘Would I make the same investment again that we made in 2007, I would say, ‘No.’’
There would be plenty of activity to keep supporters interested elsewhere off the pitch during the next few months – not least thanks to former vice-chairman Gary Hoffman and life president Joe Elliott.
Hoffman had set about securing potential investors with the aim of launching a takeover bid for the club. He was being supported in his endeavours by the club’s life president, which did not sit well with those still on the board of Coventry City. Chairman Ken Dulieu ordered Joe Elliott to step down and, when he refused, the board took the decision to suspend the Sky Blues stalwart.
Speaking shortly after the club had decided to freeze him out, Joe Elliott said: ‘I am disappointed to have been asked to step aside but have agreed to do so in the hope that it helps our beloved Sky Blues find investment for the future.
‘I have not been stripped but it is a sort of suspension of duties.
‘I have always served the club with passion and love and share the hopes and dreams with all our fans, and I will continue in my many roles within the club.
‘As far as I am concerned, to step aside means on a temporary basis.
‘If I have stepped aside, I would hope to resume in that role. I would hope it is on a makeshift basis.
‘It’s down to them and I have agreed to conform with that while discussions are taking place.
‘I am not overly happy about it but I am prepared to do it to help the whole thing.’
In August 2011, Gary Hoffman lodged his first formal CCFC takeover bid. Secret meetings were held with a view to a £30m takeover which would have included securing half of stadium company ACL and strengthening the squad.
But the deal would have seen Sisu given just £1 to cut their losses and walk away.
At the time, the identities of those behind the consortium was kept secret. But details were eventually leaked and it emerged that Ken Bruce, a retired lawyer and a former chairman of the investment vehicle Investing in Sport, had been present at the meetings.
The football men behind the bid were former Coventry City player Sam Allardyce and Howard Wilkinson, who had twice been the England national team’s caretaker manager.
City fans looking on from the outside eventually saw what came to happen over the next few days as a farce, as the offer was seemingly mocked by club officials for not being presented ‘on headed notepaper’.
Gary Hoffman said: ‘We met confidentially with Ken Dulieu and Paul Clouting.
‘Ken Dulieu also met separately with me and said ‘I think I could get a deal through Joy as long as I stay on as chairman.’
‘At the end of a constructive discussion, we agreed that nothing would be said publicly and shook hands on that and on trying to find a way forward.
‘Within an hour, the names of some of the individuals had been leaked to the press and a formal statement from the club was put out saying nothing had been put forward.
‘I had also agreed with Ken Dulieu that anything in writing should be in the form of an outline proposal for him to discuss with the board and not naming the parties, although he was aware of who was involved. He then publicly criticised us for producing a proposal in this form ‘not on headed notepaper’.
‘Soon after the meeting, Ken Bruce received a lawyers’ letter accusing individuals of breaking Football League rules and asking about my relationship with any potential deal in terms of position and financial interest.
‘This goes to the core of the misunderstanding of motives – I have already said I would never take a penny from CCFC. Indeed, I left my associate director a £50,000 ‘gift’ in the club despite having the associated privileges confiscated.
‘Unsurprisingly, eventually, Ken Bruce and associates gave up given how they were treated.
‘Other potential investors that we nurtured, and which Coventry fans would have been excited by the identity of, were given similar treatment and short shrift.’
Speaking shortly after the meeting, Ken Dulieu indicated talks had fallen apart. He also raised questions over whether those already involved with other clubs could realistically complete a takeover – suggesting it would be against Football League rules.
He said: ‘There have been several meetings with Gary Hoffman on this matter. He and Joe Elliott attended along with four other people.
‘We had been led to believe by an e-mail from Gary on 8 August that this would be a meeting with his principal investors. We were therefore surprised and disappointed to learn that no principal investors were present and there is still no transparency as to their identity.
‘There was a frank exchange of views. No formal offer was put on the table, which is what we had been asking for. Gary’s previous indicative offer of £1 for the club is totally unacceptable. I can fully
understand people being frustrated at the outcome of this meeting as it is becoming a long and drawn-out saga.
‘It cannot go on forever because it is not fair on our supporters, who have been led to believe that something concrete will happen.
‘We have a business to run and want to put 100 per cent of our efforts into supporting Andy Thorn, Steve Harrison [then assistant manager] and the team, and turning the club around. Therefore the position remains the same – Sisu continue to fund the club.’
With the identities of the potential investors leaked and questions raised over the legality of the takeover bid, those involved walked away.
But Hoffman and Elliott were not willing to give up the fight to buy Coventry City. Talks continued with potential investors behind the scenes, and by January 2012 Gary Hoffman had apparently attracted a group of Chinese billionaires who had declared an interest in the Sky Blues.
They were the Wanda Group, which had assets of £20bn and were headed by Wang Jianlin, a 57-year-old entrepreneur whose personal fortune of £4bn made him the sixth richest person in China.
Wanda had a commercial and leisure-based portfolio. They owned 49 shopping malls, 40 department stores, 28 five-star hotels and 80 cinemas in China and had created the world’s largest chain of cinemas by buying America’s AMC group for £1.64bn.
Acquiring a League One club would not seem to be a tempting prospect for a conglomerate of their size, but they presumably saw it as a chance to give their brand a UK foothold on a prime site in the heart of England with space to develop hotel, commercial and leisure facilities. At the time, they employed over 50,000 people.
Wanda, which translated as ‘a thousand roads lead here’, also already had an interest in football. In 1994 they acquired Dalian FC, changing their name to Dalian Wanda and becoming national champions in the first fully professional season in China.
Wang had pulled out of the game in 2000 after criticising Chinese referees for match fixing, but Wanda continued to sponsor the Chinese Super League with a £50m package.
At the start of 2012, Gary Hoffman had begun official talks with the club over his second takeover offer.
A statement from Tim Fisher, chief executive of Coventry City, confirmed: ‘We have had a proposal letter from Gary Hoffman and his associates looking to discuss the future of the football club.
‘We have agreed to meet in the near future to talk through both their intentions and plans and to share our own plans for the future of Coventry City.
‘We will devote appropriate time and effort to these discussions – but it will not distract us from our ongoing efforts to improve things on and off the field.’
But those talks ultimately fell away by early 2013, with Gary Hoffman suggesting the investors were put off by the legal row which erupted in the following months over the Ricoh Arena.
He said: ‘They were put off by all the litigation which was ongoing. Everyone is, aren’t they?’
In 2015, the Wanda Group bought a 20 per cent stake in Athletico Madrid. At the time of writing, they were linked with a potential takeover bid for Coventry City’s Midlands rivals West Bromwich Albion.
On the pitch, things had taken a turn for the worse – not helped by the fact a transfer embargo had been slapped on the club after they failed to file their accounts on time.
Andy Thorn was unable to repeat the miracles performed at the end of the previous season and the team were relegated to League One on 21 April 2012 after rolling over at home to Doncaster Rovers and suffering a 2-0 defeat.
They bowed out of the league with a hefty 4-0 defeat to Southampton at St Mary’s – perhaps the clearest indication of how far the club had fallen at that time. The Saints were seen as a similar club in many ways, and one with which many City fans feel an affinity after many years of battling relegation together in the top flight. Coincidentally, Sisu had unsuccessfully attempted to take over Southampton before taking the reins at Coventry.
Now the two clubs found their futures on wildly different trajectories, with Southampton heading back to the Premier League and the Sky Blues relegated to their lowest level in nearly 50 years.
Analysing the club’s downfall at the time Andy Turner, the Coventry Telegraph’s Coventry City reporter, said: ‘There is more talk of liquidation than administration.
‘Sisu are estimated to have spent £35m to £40m on the club since they took over in late 2007.
‘At that time, the club was losing about £500,000 per month. Those losses have come down through cost-cutting – but that hasn’t helped the team. Sisu came in with good intentions. But instead of building a squad, outstanding prospects were sold, including Danny Fox and Scott Dann. New contracts for Keiren Westwood, Aron Gunnarsson and Marlon King were never agreed, meaning they all left for nothing.
‘The great killer was last summer – nine players out, three in. You can’t survive by doing that. Had Marlon King still been here, Coventry would still be a Championship club. He was offered five grand a week more by Birmingham but the owners were not willing to match the terms.’
Chapter Six
Charity begins at home
BY early 2012, it was clear the owners of Coventry City had changed their strategy. The ultimate aim was to drive down losses and secure an asset which could provide some security to their investment.
Perhaps partly due to focus being taken off the pitch, the team had sank to its lowest level in almost half a century, with the club’s relegation to the third tier of English football.
Conspiracy theories circulated at the time that the owners had stuck with Andy Thorn as manager, despite the club plummeting towards relegation from the Championship, because they wanted the club to be relegated. Fans took to online message boards to cite elaborate theories about reduced running costs in the lower leagues.
But not everyone bought into this tin foil hat conspiracy theory. The rewards for being in the Championship – financial and otherwise – clearly far outweigh any perceived benefit from the lower running costs associated with League One football.
But the cost-cutting drive continued and Tim Fisher, an experienced investment banker, was the man tasked with getting the club’s finances in order – and leading on the stadium talks.
The stadium issue was not entirely straightforward, of course. In summary, the situation was this.
The freehold of the Ricoh Arena (the land itself) is owned by Coventry City Council.
Arena Coventry Limited (ACL) operated the Ricoh Arena and was the business side of the Ricoh Arena. ACL was jointly owned by Coventry City Council and the Alan Edward Higgs Charity, who both had 50 per cent stakes in the company.
Something that will prove important later on is this: ACL had borrowed approximately £22m from Yorkshire Bank in order to fund the purchase of a lease to operate the arena from the council. This loan, mentioned in Chapter One, started life as a loan from the council before the bank took it on shortly afterwards. But let’s move on for now.
The ACL company was originally envisaged as being a joint partnership between the council and Coventry City FC, but financial difficulties forced the club to sell its shares to the Higgs Charity for £6.5m in 2003.
Coventry City retained an option to buy the charity’s shares at any point in the future, with the value determined by a formula – believed to be 75 per cent of the 50 per cent at the original price and two per cent annual interest on the remaining 25 per cent.
Coventry City FC also paid ACL about £1.3m in annual rent. The rent was set to comply with European state aid rules and was based on how much financing would have cost if the club had paid for the stadium part of the Arena on its own.
The club had a lease to play at the Ricoh Arena, but it had sacrificed its right to income from non-matchday events and matchday revenue such as parking, food and drink when it sold its share in ACL to the Higgs Charity.
The original model envisaged that the club would be in the Premier League, be a shareholder in ACL and therefore s
hare in profits. Initial forecasts predicted the club’s income from ACL would far outweigh rent payments.
But the club had never reached the top flight or become a partner in ACL and the rent was now a huge issue for a club struggling in the lower reaches of the Football League.
In 2012, after almost a decade, Coventry City appeared to be seriously interested in buying back their stake in ACL for the first time. They were desperate to find a solution to their financial problems with the club on the brink of insolvency.
Tim Fisher, who was then chief executive, and Joy Seppala, Sisu chief executive, took the lead on the stadium talks from the club’s perspective while a possible rent reduction was also on the table. Negotiations with Higgs Charity bosses to discuss a potential deal began in March 2012 with charity trustee Paul Harris and clerk Peter Knatchbull-Hugessen heavily involved.
But there was an immediate bump in the road as the club stopped paying its legally agreed £1.3m annual rent to the stadium company. The rent money was an important income stream for ACL as they needed to make regular payments to Yorkshire Bank in order to service the £22m loan they had taken out.
This move by the football club has been hotly debated in courtrooms ever since – with Sisu’s lawyers insisting it was a ‘rent holiday’ agreed with ACL, while lawyers for the council have branded it a ‘rent strike’.
The fact ACL’s shareholders were entertaining talks with the club’s owners while the football club was putting the Ricoh Arena firm under financial pressure by not paying the agreed rent clearly did not sit well with everybody involved.
ACL chairman David Allvey quit the board in May as the crunch talks with the Sky Blues continued.
David Allvey was widely understood to be against a deal with the football club’s owners, not least because he was unhappy with the way Sisu had approached the rent dispute.
It was also understood that Allvey was extremely upset and concerned about the future of Coventry City FC and the relationship between Sisu and the stadium.
Coventry City Page 8