Takeover News no.3 – response to the bid

The terms for Mr Eisner’s proposed takeover of our club have now been published. Takeover News looks at the key issues involved.

Do Mr Eisner’s proposals meet the Trust Board’s conditions?

The Trust Board focussed on five key points. They achieved reassurances on some points but critically Mr Eisner’s proposals exclude a continuing community shareholding in our Club. They also exclude continuing fans’ representation on the Club Board.

What sort of investment do we need?

The information pack for PST members includes a lot of newly published financial information. The PST Board comments include:

‘The club is capable of maintaining an average League 1 budget based on current income levels’ (page 18)

New information includes an estimate of £5m for essential safety work at Fratton Park. The PST Board comments:

‘Between the Tesco monies remaining, a new PST share issue and presidents contributions, the PST Board believe that safety critical maintenance can be afforded as well as a significant amount of the general maintenance.’ (page 19)

If shareholders are hoping that Mr Eisner’s proposals will provide our Club with a modern ground they should be aware:

‘A full rebuild of Fratton Park would cost at least £50m. ……. There is no commitment from Tornante (Mr Eisner’s company – editor) to carry out this work’. (page 19)

Re-building our Club after years of neglect by previous ‘investors’ may be proving even more challenging than expected, but Mr Eisner’s proposals do not guarantee a short cut.

As Tony John commented on The News website (25/03/17):

‘It isn’t about whether Eisner is a ‘good chap’. It is about the fact that there is only one Portsmouth FC and once it is sold to anyone… they can sell it on to whoever they wish.’

We need owners for the long term, which we have now with fans ownership.

We also need financial fair play. This will not be achieved through more multi-millionaire owners but by helping more clubs to become fans owned.

Who is in favour?

Neither the PST Board ‘The PST Board do not have a specific recommendation on how you should vote’. (covering letter) or The Presidents and Club Board ‘The Presidents and the Club Board have not made any specific recommendations on the offer’. (page 23) make a recommendation to accept this bid.

The PST Board set out proposals to address the short term safety issues at Fratton Park. A wider debate is needed about options to address long term issues. Mr Eisner does not provide proposals on this issue.

No To The Takeover believes that we should retain control of our Club. In four years we have come a long way. We believe that we can make further progress by looking at the examples of other fans owned clubs.

FC United of Manchester have just completed their second season at a ground they funded themselves. Work has started on site for AFC Wimbledon’s new ground which can have a 20,000 capacity. They have also demonstrated that a fan owned club, with a quarter of our regular support, can compete in League 1. If they can compete in League 1 we should be able to compete in the Championship.

No To The Takeover believes that this bid should be rejected. This would allow time for the Trust Board to develop proposals for the next stages of the development of our Club while retaining the accountability and community control which currently exists under community ownership.

Who are We?

Takeover News and our blog No To The Takeover have been produced by a group which includes fans who have supported Pompey for over 50 years, from the fourth division to the first and back again. We believe in a sustainable fans-owned club playing at the highest level and support the wider development of fans-owned clubs.

We provided details of who we are to The News. Our spokesperson, David Maples, has regularly stood in Trust elections.

If you have concerns about the proposed takeover and want to retain community ownership, contact us at Notothetakeover@hotmail.com and our regularly updated blog notothetakeover.wordpress.com.

Farewell to Leyton Orient

In July 2014, the wealthy Italian businessman Francesco Becchetti bought East London’s less-fashionable club, Leyton Orient, for £4 million. He was reported to be a billionaire, had previously shown interest in buying Reading and Birmingham City, and promised great things for the Os. He did spend money, a lot of it unwisely. Less than three years on, the club is on the verge of extinction. No one is suggesting that Michael Eisner is another Becchetti, but the important point is that once you lose control of your club you can’t influence its future in any meaningful way. The experience also shows that no matter how wealthy your owner is, there’s no guarantee that he will continue to spend his cash if he loses interest.

Dave Knight, from Leyton Orient Fans’ Trust (LOFT), takes up the sorry story.

Orient have been playing professional League football in Leyton for the last 80 years, having moved to the borough from Clapton in 1937. Now they are about to be relegated out of the English Football League and recently faced a winding-up petition as a result of the current owner not paying HMRC the PAYE tax that is due.

In those 80 years, Orient have established themselves as a family friendly football club. The O’s don’t win trophies and are not glamorous but they are loved by their supporters and they have become an asset of real community value. Shops, cafes and pubs along Leyton High Road all do a bit of extra trade as a result of the three or four thousand football fans who come to Leyton to watch their team every home game. It was Leyton Orient who originally established the Community Sports Programme, now an independent charity (Leyton Orient Trust) working out of the Score Centre. The Leyton Orient Trust has done sterling work on community sport, health and education issues for young people and vulnerable groups. The Trust receives money from the League as a result of its association with Leyton Orient FC, money that will be lost or reduced should the O’s drop out of the League as they are almost certain to do.

With the club facing potential extinction, the Leyton Orient Fans’ Trust, an independent group of supporters who believe football supporters should have a greater say in the management of football and football clubs, have been organising to prepare for any eventuality that results from the total mismanagement of the club by the owner, Mr Francesco Becchetti, the Chief Executive, Alessandro Angelieri and the Chief Operating Officer Vito Miceli. Between them they have brought the club to its knees. As well as failing to pay the tax they have also failed to pay staff and players, failed to pay their bills to the club photographer, the programme publishers and many other businesses that have dealings with the club.

The management of the club remain silent while the chaos at the club grows, and they have done no better on the football side of things taking us from third in League One to near certain relegation out of the League in three seasons, getting through 11 different managers in the process and reducing the playing squad to such an extent that our youth team players are having to play in the first team.

What has happened at Leyton Orient over the past three years is criminal – one man has been able to destroy a local community asset and the football authorities seem unwilling or powerless to do anything about it. But we are not the only football club suffering from mismanagement and it has been heartening to receive support from other clubs and supporters’ organisations. We would like to see changes to the national management of the game to protect football clubs from mercenary businessmen across the country.

Postscript – Leyton Orient employees issued this statement in mid-April:

“We have become hugely concerned by the lack of communication issued by owner Francesco Becchetti and directors. Having not received our wages for the month of March 2017, staff were told to expect payment on 6 April. However, on the eve of the date promised, staff were informed that they would have to wait a ‘few more days’. We appeal to the club’s directors to communicate the current situation and provide us with an update regarding our pay.”

On 22^nd April, Leyton Orient were relegated from the Football League.

Bulletin 2 – Eisner’s proposals – our view – 16th April 2017

Eisner’s proposals – our view
Mr Eisner has now outlined some of the fundamentals of his bid to buy our Club. It is clear that he has done considerable research and is more serious and credible than recent ‘investors’.
Key points of his bid include:
Club Board – Only his own appointees
Heritage Board – A veto over name, colours and moving more than 15 miles
Fratton Park – A commitment only to essential safety work
Financial – Not disclosed
The Trust Board statement (20 March 2017) said ‘The 3 PST Directors….. will be fully involved in discussions’, however Mr Eisner’s media offensive however raises concerns. Why were the Trust Board ‘unaware this article (News article on bid 11 April 2017) was going to be published’? If Mr Eisner is leading the Trust Board a merry dance when he needs its’ support, what will happen if he has complete control of the Club?

 

No To The Takeover’s views on Mr Eisner’s bid
Club Board – At present all the members of the Club Board are Pompey fans. Mr Eisner isn’t even guaranteeing token fans representation and is proposing board members living in a different continent!
Ground Location – Mr Eisner could move the ground up to 15 miles without any ability for the Heritage Board to object. That’s three-quarters of the way as the crow flies to………… St Mary’s and within the Southampton City boundary!
Safety Works – It says a lot about previous owners’ that a commitment to essential safety work is necessary. However, the key point is that Mr Eisner is not making any commitment to either develop Fratton Park or build a new stadium in Portsmouth.
A dated ground with a small capacity does not provide the basis for the Club to thrive in the Championship.
Financial – Mr Eisner has not outlined financial information. He has stated that PST shareholders will get our money back, but this is not the point. We didn’t invest to get our money back .We invested, with no guarantees, because we needed the Club to survive.

 

Our Alternative
No To The Takeover has outlined that the immediate priority of rebuilding the Milton End, to increase the operational capacity of the ground, has been costed at about £3million. The Club’s most recent published accounts (June 2016) showed £1.9m available cash. There is also approximately £1m held by the City Council for the Club from the Tesco development. So a new Milton End could be financed now with the resources available to the Club.
This would introduce better facilities, increase matchday revenues and provide positive investment with no change of ownership.
FC United of Manchester raised over £6m to build a new ground and AFC Wimbledon have advanced plans for a new ground. In both cases this has been without diluting fans’ ownership. Pompey is a much bigger Club than either of them. We can redevelop our ground in stages, enhancing income and the level the Club can be sustained at.
A new Milton End, the re-instatement of unused seats in North Stand G Section and an extended Fratton End could take Fratton Park’s capacity to 23,000 which is close to the typical capacity of a Championship club.

 

A Fundamental Conflict
The Trust Board statement (20 March 2017) included ‘We understand how much owning your club means and retaining an ownership stake will be central to any discussions we enter into’ but Mr Eisner stated ’I don’t want to do it (the takeover and management of our Club) with handcuffs on, or an impossible structure to manage.’
PST members have a veto on Mr Eisners’ bid because we currently own more than 25% of the shares. In other words we own the ‘handcuffs’. If we owned less than 25%, a majority owner could sell it to anyone he chose. As Tony John commented on The News website (25/03/17):
‘It isn’t about whether Eisner is a ‘good chap’. It is about the fact that there is only one Portsmouth FC and once it is sold to anyone… they can sell it on to whoever they wish.’
What happens if the takeover does not take place?
Club Chairman Iain McInnes has stated ‘It’s the board’s responsibility to assure we are in a position to maintain a steady and progressive club’ (Pompey Programme Board Talk 08/04/17). This applied before Mr Eisner interest and will apply if he walks away.
Our Club’s most recent account were signed off on 22 March 2017. They demonstrate a well controlled business capable of developing within the resources it is already generating. There is no mention that external investment is a necessity. Indeed it states ‘The future is firmly in your hands’ (Chairman’s Statement Financial Statements year ended 30 June 2016)
What should the Trust do now?
No To The Takeover believes there is a key choice to be made. We can either continue the patient progress of the last four years under our own control or we can take a punt on Mr Eisner who has given no legally binding commitments.
The Trust Statement (12 April 2017) stated ‘It is important to re-iterate that PST is a democratic organisation.’ We believe that prior to considering Mr Eisner’s bid the Trust should call a meeting to consider the pros and cons of relinquishing community control. If community shareholders are prepared to consider relinquishing control, consideration of Mr Eisner’s bid would be a second stage.
If you agree with this strategy please contact No To The Takeover using the contact form on this site and include your mobile number.

Bulletin 1 – The need for investment and democratic debate – 9th April 2017

The announcement that the Club board is in discussions with Michael Eisner has provoked considerable debate. There is near universal agreement that the Club needs considerable investment, but what sort of investment and under whose control?

 

As Tony John commented on The News website (25/03/17):

 

‘It isn’t about whether Eisner is a ‘good chap’. It is about the fact that there is only one Portsmouth FC and once it is sold to anyone ……. They can sell it on to whoever they wish.’

 

Ownership by a successful businessman is no guarantee of a successful football club. Randy Lerner presided over Aston Villa’s relegation from the top division after 41years. Francesco Becchetti, a waste disposal and recycling multimillionaire, is breaking the hearts of Leyton Orient fans by taking them out of the Football League after 112 years.

 

Milan Mandaric had a highly successful business record but his decision to sell after only eight years of ownership set in train a catastrophic set of events which meant the club nearly folded.

 

We need owners for the long term, which we have now with fans ownership. No To The Takeover is opposed to the loss of fan ownership and control of our club.

 

The need for investment

 

This is not a new issue. A motion passed at the Trust’s AGM in 2014 recognised that ‘the further development of our club will require significant funds’ and instructed the Trust Board ‘to prepare a report for next year’s AGM outlining options to fund future capital projects’.

 

The Trust’s Stadium Working Group, which includes professionally qualified members, has produced two detailed reports on options to develop a modern stadium in Portsmouth and redevelopment of Fratton Park. These should be made available so all supporters can read them.

 

Fratton Park has been effectively full for two-thirds of daytime league matches this season. The immediate priority of rebuilding the Milton End has been costed at about £3million. The Club’s most recent published accounts (to June 2016) showed £1.9m available cash. There is also approximately £1m held by the City Council for the Club from the Tesco development. So a new Milton End could be financed now with the resources available to the Club.

 

This would introduce better facilities, increase match day revenues and would provide positive investment with no change of ownership.

 

FC United of Manchester raised over £6m to build a new ground and AFC Wimbledon have advanced plans for a new ground. In both cases this has been without diluting fans’ ownership. We are a much bigger Club than either of them. We can redevelop our ground in stages, enhancing income and the level the Club can be sustained at.

 

We also need financial fair play. This will not be achieved through more multi-millionaire owners but by helping more clubs to become fans owned.

 

Democratic Debate

 

No To The Takeover believes that the Trust should hold a members meeting now to discuss whether fans want to relinquish ownership. If members are prepared to consider a change of ownership, the meeting could discuss what conditions should attach to this.

 

In 2013, fans invested in the Club with no guarantees because we needed the Club to survive. If the Club Board do recommend a change of ownership, then we believe that the Trust Board should, in the best democratic traditions, circulate equally arguments for and against.

 

No To The Takeover includes fans who have supported Pompey for over 50 years, from the fourth division to the first and back again. We believe in a sustainable fans owned club playing at the highest level and support the wider development of fans owned clubs.