Around this time, Tim Fisher had also publicly mooted the prospect of Sisu building a new stadium and leaving the Ricoh.
ACL’s lawyer James Powell said the measure had been taken to stop the club entering liquidation, a move that would have meant a reformed club which would have had to start again after plummeting down the football pyramid. In other words, liquidation would probably mean Coventry City having to reform in the Evostik League Southern.
It would be a similar outcome to the one fans had recently endured at Glasgow Rangers.
ACL director and council finance chief Chris West said the timing of the administration should also allow for a ten-point deduction that season, rather than next season – something he viewed as preferable.
He added: ‘We’re doing this as [ACL] company directors to protect the interests of the company.
‘We want to preserve the Sky Blues and the Sky Blues playing at the Ricoh Arena.
‘One of the advantages of this legal action is it prevents the club being liquidated.
‘Tim Fisher has openly said this week the club is at a “tipping point and insolvent liquidation cannot be reasonably avoided.” It gives us the best possible chance for whoever to come in and re-stabilise the club in the interests of ACL, the football club and the city.’
ACL chairman Nicholas Carter said: ‘It is highly unfortunate that we have had to take this course of legal action. Had we not taken this action, then the alternative might have been catastrophic for CCFC.
‘We are owed a considerable amount of money in rent arrears. While it is imperative that ACL takes action to recover these arrears and to stop the arrears growing, it is important for us to find a solution that can provide for the survival of the Sky Blues.
‘We are, of course, well aware that under the current Football League regulations, CCFC will face a points deduction and we will do everything we can to ensure that the case is heard by the High Court before the end of the current season.
‘While this opens up the possibility of a ten-point deduction this season, the board believes this is better than leaving CCFC facing a much larger deduction at the start of next season.’
What would happen during an administration process at Coventry City was explained by Brendan Guilfoyle, who has acted as administrator for numerous professional sports clubs, including Portsmouth FC.
He told the Coventry Telegraph that if the club went into administration, the Football League would suspend its ‘golden share’ or league place.
He added: ‘Then, providing the club can exit through a Company Voluntary Arrangement [CVA], the league will restore that share – normally to a new company.
‘And the club’s league position, subject to sporting sanctions, will be reinstated. I don’t want to say ‘someone will always come forward’, but there are no reasons why there won’t be potential purchasers here.’
A CVA is an agreement between an insolvent company and its creditors to pay them back a specified amount within an agreed time period. But it emerged that, in an administration situation, Sisu would have the most power as the single biggest creditor, having invested tens of millions into the club as loans during this period.
Mr Guilfoyle explained this meant Sisu could attempt to block any takeover – but there could be severe consequences.
Mr Guilfoyle said: ‘Could Sisu as the largest creditor scupper the CVA by not agreeing to it? Yes, they could. But that doesn’t mean the administrator couldn’t sell the club.
‘There is a precedent with Leeds United whereby they couldn’t get the CVA through, so the new owners applied to transfer the club in ‘special circumstances.’
‘But in doing so, the Football League gave the club a second 15-point deduction. But I don’t know whether it will come to that with Coventry City.’
With fears over the future of Coventry City dominating talk on the terraces, the club’s chief executive Tim Fisher sought to deflect blame on to the stadium operators.
He said: ‘We have not applied for a court application, which could send the club into administration.
‘That has been done to us.
‘There is no benefit to the football club, its supporters or any other party to discuss financial and commercial details through the media. Why would we do that when we are at such a delicate stage in proceedings?
‘We are doing everything we can to work through this while at the same time running a football club that is doing very well on the field and in touching distance of the play-off places.’
On 21 March 2013, Coventry City’s owners took control of the situation when the club’s single biggest creditor – Sisu company Arvo – placed Coventry City Football Club Limited into administration. The owners then subsequently appointed their own administrator, Paul Appleton, of insolvency specialists David Rubin. ACL unsuccessfully challenged this move in court, preferring instead to appoint their own administrator in the shape of Mr Guilfoyle.
The administration triggered an immediate problem for the Sky Blues. They had three home games left to play, but their agreement to use the stadium had now effectively ceased to exist.
Frantic conversations were held as the club investigated possibilities which would allow it to complete the season – including playing at alternative venues.
But ACL insisted they had no intention of forcing the club elsewhere for the rest of the season. Tim Fisher immediately moved to reassure fans with a statement suggesting a short-term deal would likely be agreed for the League One fixtures against Doncaster Rovers, Brentford and Leyton Orient.
He said: ‘The long-term licence was terminated by the administrator, but we are hopeful that Coventry City Football Club [Holdings] Ltd can reach agreement with ACL to allow the team to play its final three games of the season at the Ricoh.
‘We appreciate that our supporters have been through a great deal of upset and uncertainty, and there is a responsibility on all parties to ensure that the question of where we play our remaining three home games is resolved as soon as possible.
‘Allowing supporters to watch the Sky Blues at the Ricoh for three games would be a sensible step forward. We have contacted ACL and hope to have some clarity in the next 24 hours.’
The distinction in that statement of Coventry City Football Club (Holdings) sticks out like a sore thumb. But there’s a reason why it was worded this way.
Coventry City officials sought to avoid any penalty from the Football League by insisting the golden share was actually in Coventry City Football Club (Holdings) and that CCFC Ltd has merely been a non-operating property subsidiary.
A statement from the club at the time said: ‘It is important to stress that the football club itself is not under threat.
‘This is merely a property subsidiary which owns no material assets and has no employees, on or off the pitch.
‘The club can confirm that all staff wages, PAYE and all other creditor commitments will continue to be met as before by Coventry City Football Club [Holdings].
‘Unlike other instances of clubs being taken either wholly or partially into administration, there are no HMRC or VAT implications and the football club will continue to trade as normal without interruption.
‘Our main objective now is to remain competitive on the pitch and give Steven Pressley and the playing staff our full backing and commitment.’
The hunt for the golden share was on and clearly there was a difference of opinion over where it was hiding. Sisu insisted it sat in CCFC (Holdings) – the firm still owned by its Cayman Islands hedge fund Arvo and not in administration, while ACL claimed it was in CCFC Ltd – the company in administration.
ACL lawyer James Powell said: ‘We had a letter from the Football League confirming the share is with Coventry City FC Ltd. The FA also confirmed the FA share is with Coventry City FC Ltd.
‘That company is in administration, with an administrator appointed by Joy Seppala.
‘We held off our application for a few days to get to the bottom of key issues, i
ncluding Football League shares.
‘There were inconsistencies in statements from the club. It’s clear to us the whole club is in administration.
‘Coventry City FC Ltd is not a non-operating subsidiary, as the club claims. The club exists where Football League and FA shares rest, with CCFC Ltd.’
Why ACL were so keen to insist the share was in one company rather than the other would later become clear. The stadium firm hoped the administration process would allow new owners to swoop in and oust Sisu. New owners were only likely to be attracted if they were certain they could obtain the Football League share.
Off-the-pitch events were no longer just an unhelpful distraction. The fall-out was likely to have a very real impact on City’s play-off hopes with a points deduction looming. Furthermore, the club did not know where it would be playing its final home games that season.
Just over 24 hours before the Sky Blues were due to line up at home to league leaders Doncaster Rovers, the players, supporters and managers did not know where the game would be played. It was a farcical situation.
Manager Steven Pressley told the Coventry Telegraph all he could do was continue to work on the premise that the play-offs remained an option.
He said: ‘It’s a pivotal weekend. This will decide whether or not we have an opportunity for the play-offs or not.
‘There’s a great willingness from them to do well for the football club and we’ll work towards that and the players will be giving everything they can to ensure we stay in contention.’
He added: ‘I think it’s the ideal scenario to play the remaining home games at the Ricoh and beyond that it’s down to the various parties to find a solution. But I think between now and the end of the season, from a football department point of view, that would be the ideal solution.’
With just hours to go until the crunch game, a deal was struck for the club to play its last three games at the Ricoh Arena. A strange joint statement from the administrator and ACL confirmed the news.
It read: ‘Paul Appleton, Joint Administrator for Coventry City FC Ltd, and Arena Coventry Ltd are pleased to confirm a deal has been agreed which allows the Club to play the final three home fixtures of the season at the Ricoh Arena.’
A statement from the club read: ‘Coventry City Football Club Holdings Ltd are pleased that an agreement has been reached with ACL and the Administrator that enables us to play our last three remaining home matches at the Ricoh Arena. We apologise profusely to our fans about the confusion surrounding these fixtures and are delighted that this has now been resolved.
‘We can now look forward to playing current league leaders Doncaster in the hope of doing the double over them.
‘Moving forward, we hope that we can continue a constructive dialogue with ACL with the aim of securing a sustainable future for the club at the Ricoh Arena.’
But it appeared the Football League was unimpressed by the continuing attempts to distinguish CCFC Ltd from CCFC Holdings. Just hours after the announcement that the Sky Blues would be able to finish the season, the league finally extinguished any lingering promotion hopes.
A ten point deduction was imposed, killing off the Sky Blues’ play-off ambitions.
A brief statement from the Football League read: ‘The Football League can confirm that Coventry City Football Club have been deducted ten points, in accordance with its rules and regulations.
‘This sporting sanction has been implemented with immediate effect and the Sky Blues have seven days in which to appeal.
‘The League has now begun discussions with the administrator aimed at achieving a sustainable future for the club within the Football League.’
CCFC’s owners did appeal, but it was ultimately unsuccessful.
The issues were not just affecting the first team either. The administration of CCFC Ltd had meant the academy had not been able to pay its bills for use of the Alan Edward Higgs Centre and therefore had been told they were no longer able to use the facilities. The row escalated, primarily over the £12,000 costs of repairing a lawnmower used to maintain the pitches at the Allard Way site.
By the summer, office equipment had been removed and club signage taken down, and the academy’s players moved to train at the club’s Ryton training base.
Peter Knatchbull-Hugessen launched a scathing attack on the club’s owners at the time over the issue.
He said: ‘They got the grass pitches for nothing but they had to maintain them and they used our equipment to do that. These mowers are very expensive bits of kit and the capital cost of the equipment there was £100,000.
‘They paid rent for the offices and the all-weather pitches. They paid a discounted rate because they paid quarterly in advance.
‘It couldn’t have been better for them. There’s no capital recovery, no fee for use of pitches and it would have cost them more if they owned it.
‘They wouldn’t pay for pitch renovation, so they consume and use and don’t pay, and as a charity, which is what The Higgs is, that can’t go on.
‘I don’t understand; presumably they know what they are doing.’
Steve Waggott, then the club’s development director, moved to reassure fans.
He said: ‘Nobody should underestimate just how important the academy is to Coventry City Football Club and our future plans are geared towards identifying the best possible talent and developing it through our system.
‘This is something that has required strong investment in terms of time and money but, again, is vital to the future of the football club.’
Events away from football continued, and administrator Paul Appleton announced his findings in a report issued on 15 May.
Figures in the report showed Sisu firm Arvo was owed more than £10m.
It also calculated that ACL was actually owed a ‘net liability’ of £600,000 at the start of the year, after taking into account that ACL had removed £500,000 from a rent deposit account.
At that point, fees for the administrator had already reached £163,294 plus VAT for 475 hours’ work since his appointment. The administrator’s solicitors, Stephenson Harwood LLP, had incurred another £143,646 costs plus VAT. At the end, the total legal, professional and administrators fees totalled well over £1.2m – money which would come out of the proceeds of the sale.
The report also concluded that CCFC Ltd’s total liabilities stood at £69m.
It said Sisu’s parent company of CCFC Holdings, Sky Blue Sports and Leisure, was owed £14m; Holdings £44m; ACL £636,381 (which deducted matchday costs paid to ACL over the previous year); while Arvo was owed £10.2m.
There was some debate over where player contracts and registrations sat, and it later emerged there had been errors made when registering players.
The club’s owners contended that the Football League ‘golden share’ sat in Holdings – the club not in administration – as a result of players being registered in that firm. But the Football League and the administrator appeared to disagree and Mr Appleton insisted the ‘rights, title or interest’ of the company – including the golden share – was up for grabs.
That meant Sisu could face a challenge for ownership of the club, and they did.
A formal takeover bid was submitted to the administrator by Preston Haskell.
The US tycoon had been supported in his bid by suspended life president Joe Elliott and former vice-chairman Gary Hoffman. For the first time, exactly what was contained in that bid can be revealed after a copy of the offer document was sent to me as I compiled research for this book.
In relation to the purchase price, the offer letter read: ‘The aggregate consideration for the purchase of the target business will be £7.5m payable one-time upfront. £750,000 from the above purchase price will be utilised to cover the administrators’ fees.’
The offer also outlined a number of additional benefits. It pledged additional payments for the next five seasons, but only one qualifying payment per season.
They included £100,000
if the club was in the League One play-offs; £250,000 if the club was in the League One play-off final; and £1m if the club was promoted to Championship.
Over the next ten seasons, it promised one additional payment a season of £250,000 if the club reached the Championship play-offs; £500,000 if CCFC reached the Championship play-off final; and £5m if promoted to Premier League.
Furthermore, there would be payments of £2.5mif Premier League status was retained for each of the next two seasons and £5m for two consecutive seasons following after the initial one.
There were also payments promised for cup competitions over the next five seasons, including £250,000 for reaching Football League Trophy Final; £100,000 for reaching League Cup semi-final; £250,000 for reaching League Cup Final; £100,000 for reaching FA Cup quarter-final; £250,000 for reaching FA Cup semi-final and £500,000 for reaching FA Cup Final.
Over the next 15 years, it promised payments of £2mif the club qualified for the Europa League and £3m if they ever reached the Champions League. The offer was subject to certain conditions, including due diligence and being awarded the ‘golden share’ by the Football League.
Preston Haskell signed off the offer with a short statement, which read: ‘I believe that my proposed offer is highly favourable and attractive to CCFC.
‘I am enthusiastic about this opportunity and committed to dedicating substantial time and financial resources with a view to concluding a transaction as soon as possible.’
Asked just how committed to the cause Preston Haskell was, Joe Elliott replied: ‘Preston wanted the lot, the club and the stadium. He offered almost £8m up front to the administrator for CCFC Ltd and a further option of £18.5m on achievement over the next ten years.
‘That was based on how the club performed in the league and whether it reached cup semi-finals and so on.
‘That was an indicative offer sent to the administrator in writing the day before the final offers had to go in. He had a substantial budget to buy the club and the Arena if he could.
‘He showed us very substantial proof of funds, which we showed to the administrator. The proof of funds was also signed off by a well-known group of legal experts in Birmingham and London as being in order.
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