Coventry City Page 14

  ‘He had also had discussions with the Higgs Charity about buying their share in ACL.

  ‘That was, I thought, a reasonable offer to the administrator.’

  Former vice-chairman Gary Hoffman also said he believed the Haskell bid was serious, although it was always at a disadvantage due to the debt CCFC Ltd owed to Sisu-owned companies.

  He said: ‘Preston Haskell made an offer to the administrator with proof of funds for £20m.

  ‘Sisu always said publicly this guy hasn’t got the money. He sent proof of funds for £20m from banks and lawyers and made an offer.

  ‘It was much more than Sisu offered, but they had the debt to put on top.

  ‘They were always going to win unless they were prepared to write off the debt.

  ‘This football club is worth a lot less than £1. You have to fund it and there are no assets.

  ‘When I said we will give you £1, that was a damn good offer – because it would have stopped their losses and someone else would have paid for that.

  ‘The administrator seemed fine with the bid. But we always suspected that he didn’t really need it.

  ‘He was in a difficult position. I don’t blame him in that respect.’

  Somewhat unexpectedly, there was also an early bid submitted by Ricoh Arena operator ACL. This was arguably a controversial move as it could have paved the way for a firm jointly owned by taxpayers to run a hugely loss-making football club.

  But Peter Knatchbull-Hugessen, ACL director and clerk of the Higgs Charity, said the bid was only ever meant to be a fall-back option to preserve CCFC and protect ACL’s business if no other serious bids were entered.

  He said: ‘ACL had put in a bid, but it was obvious the reason we were putting in the bid was as a fall-back.

  ‘It would have been very difficult for us to put in a bid that seriously challenged.

  ‘But we were obviously very dissatisfied with the whole administration process.’

  Another challenger emerged in the shape of North Warwickshire businessman Michael Byng, who insisted he represented a consortium of Chinese and Asian would-be investors.

  However, his bid was never received by the administrator and Mr Byng initially indicated the offer must have got lost in cyberspace after being sent by e-mail.

  He later clarified the situation in an interview with the Coventry Telegraph in which he said: ‘The Chinese are looking to get involved with the Ricoh Arena and football club, but not in the middle of the argument.

  ‘They were extremely dissatisfied with what was going on. The reason they withheld their bid was they didn’t understand what was going on – they didn’t understand ACL’s motives for making an indicative bid.

  ‘They had understood ACL wanted to sell the Ricoh Arena.’

  Ultimately, it was Sisu-owned company Otium Entertainment which secured CCFC Ltd and the coveted golden share – a move which also removed any possibility of a legal challenge from Sisu.

  The administrator said the offer was ‘substantially more’ than other bids received. The result was largely unsurprising unless the existing owners decided to walk away with firms under Sisu control being owed tens of millions between them.

  It later emerged that part of the deal had involved converting £61m of debt into shares as well as a goodwill payment of £1. Total payments amounted to about £1.5m, according to Companies House documents, with £1 paid for business and intellectual property, £2 for Football League and FA shares, £466,742 for player contracts, £1 for equipment, £5,000 for the IT system, £1m for any debts, guarantees and security rights (including an impending business rates rebate), £1 for ‘contingent rights’, £1 for licences, £1 for the business records and £28,254 for property rights and assets owned.

  After announcing the winning bid, Mr Appleton said: ‘Following a stringent sale process, I can confirm a bid has now been accepted from Otium Entertainment Group Limited.

  ‘This offer allows me to achieve the purpose of the administration and, following discussions with the Football League, I am hopeful a completion of the sale can be achieved as swiftly as possible.

  ‘I realise and appreciate the end result of the sale process will not necessarily be welcomed by a large number of Coventry City fans.

  ‘However, the bid from Otium Entertainment Group Limited was substantially more than any of the other three bids received and was the bid which gave the greatest return to the unsecured, non-connected creditors of CCFC Limited by a considerable margin.’

  Speaking shortly after the result, Preston Haskell confirmed he would be walking away from attempts to purchase the club.

  He said: ‘Over the past few months, while working hard to acquire CCFC, I have developed a strong affinity with the fanbase of the club.

  ‘Of course I am disappointed by this afternoon’s decision but I am incredibly proud to have had the experience and unforeseen encouragement of a lot of dedicated supporters. I’m so appreciative of that.

  ‘I personally met with Paul Appleton and think he and his colleagues, bound by the laws and rules of an official legal process, have been very professional throughout this difficult undertaking. His job wasn’t easy but it was done according to the law, and appropriately managed.

  ‘I would also like to publicly thank the ‘good and great of Coventry’, Joe Elliott and the steadfast Gary Hoffman, for their unwavering support and hard work. These two gentlemen truly bleed Sky Blue.

  ‘Finally, I sincerely hope for the best at CCFC.’

  Coventry City (Holdings) released a statement after the result, which read: ‘We are pleased with the decision which helps to assure the future of the club.

  ‘Our absolute focus now is to exit CCFC Ltd from the administration process so we can get back to running a football club and make the decisions we need to in time for next season.’

  But this was not the end of the road. There was still the small matter of the Company Voluntary Agreement which would decide how much each creditor received from the debt recovery process.

  But ACL and HMRC both voted against the CVA after a ten-minute meeting on 2 August, leading to fears the club would be hit with a new 15-point deduction ahead of the new League One campaign following precedents at Leeds United and Luton Town. But in the end, the Football League settled on a further ten-point deduction ahead of the new season.

  Speaking after the imposition of the penalty Greg Clarke, Football League chairman, said: ‘Once again, it is a source of immense frustration to everyone involved that the two parties in this dispute have failed to reach any agreement. The board is dismayed at the level of intransigence being shown.

  ‘Nonetheless, the league will continue with its efforts to get the two parties to enter into meaningful negotiations.

  ‘The board’s decision means that these attempts can now be conducted against a backdrop of Coventry City as a continuing member of the Football League, rather than it having to bring an end to the club’s 94 years in league football.’

  If ACL had agreed to the CVA, they would have seen a £590,000 return on the Sky Blues £1m-plus rent debt. Instead, they would later recoup £470,000 after a further year of wrangling.

  The stadium firm said it rejected the deal because it wanted the administrator to include guarantees in the CVA, including those which would have ensured CCFC continued to play at the Ricoh Arena.

  A statement from ACL read: ‘This decision was based on ACL’s twin aims: first, to keep Coventry City Football Club playing in Coventry; and second, to ensure that Coventry City Football Club is financially viable for the next few years and beyond.

  ‘This last point is especially important given that CCFC has been the subject of a ‘catastrophic insolvency’ in the hands of its previous owners.

  ‘The CVA proposals put forward by Mr Appleton simply do not address these obvious concerns. And these concerns are not only the concerns of ACL – they are the concerns of all Sky Blues’ supporters and should be the central concerns of both th
e Football League and the Football Association.

  ‘Mr Appleton has the ability to put forward new proposals, and we would welcome these as soon as possible.’

  But Paul Appleton said what ACL was asking was not within his power.

  He said: ‘Put simply, we do not understand the comments being made by ACL with regard to the ability to put forward new proposals. As I said , the proposals ACL required simply did not comply with the law.

  ‘They were offered the chance to submit modifications which did comply with the law, yet for reasons best known to themselves, they chose not to do so.’

  Following the meeting, Coventry City Football Club issued a statement expressing ‘great regret’ that ACL had rejected the agreement and highlighting that the Alan Higgs Centre Trust had voted in favour of it.

  An important distinction here is that the Alan Higgs Centre Trust is a different organisation from the Higgs Charity – which is a 50 per cent shareholder in ACL. The Alan Higgs Centre Trust was responsible solely for the Alan Higgs Centre, in Allard Way, and was a creditor in relation to debts owed as a result of the academy using the facilities.

  The Higgs Charity had no direct vote or interest in relation to the CVA, although it was a 50 per cent shareholder in ACL.

  To confuse matters further, Peter Knatchbull-Hugessen had two votes – one as a board member of ACL and one as a board member of the Alan Higgs Centre Trust (not the Higgs Charity).

  While representing the Alan Higgs Centre Trust (which, remember, is not the Higgs Charity and was simply responsible for CCFC’s academy base), he voted to accept the CVA.

  When representing ACL, he voted to reject the deal.

  I asked him to explain his reasons for this seemingly odd voting pattern and he told me: ‘The Alan Higgs Centre Trust, as a separate entity and with separate directors, voted with Sisu.

  ‘That was because, in terms of continuing business, we thought it was better for the Centre Trust to get the CVA because that would see the academy continue at the Higgs Centre.

  ‘The directors who decided on that were Joe Elliott, John Mutton and me.

  ‘But then you have to change your hat as you have different responsibilities. ACL was against the CVA because we would have lost vast amounts of money.

  ‘That’s just directors acting as directors. It’s not inconsistent, it’s just people realising their responsibilities and acting properly and legally.’

  Chapter Nine

  Highfield Road II

  IN May 2013, Coventry City Football Club’s chief executive Tim Fisher made an announcement which would shock and divide Sky Blues fans.

  He said that Coventry City had played their last game in the city which gave them their name and that plans were being progressed for a new stadium in the ‘Coventry area’.

  Talks over a deal to continue at the Ricoh Arena had failed after Sisu boss Joy Seppala had pulled the plug on a new rental deal provisionally agreed in January with the Sky Blues. Ms Seppala was adamant that any deal for the club to remain at the Ricoh Arena had to involve some form of stadium ownership.

  Few bought into the vision at the time, with many questioning how a club in such a dire financial situation could possibly afford to build a new ground. Others insisted it was nothing more than a negotiating tactic as Sisu sought to agree a better deal at the Ricoh Arena.

  But Mr Fisher remained typically bullish, and even insisted the process of acquiring land had already begun with a view to having the stadium completed during 2016.

  Speaking during an interview with the Coventry Telegraph at the time, he said: ‘People have to understand we do not posture, we do not threaten, because that is not how you do business. You only do business in good faith. Always.

  ‘We have started the process of procuring land so that we can shift the new stadium build forward at a pace. The stadium will be in the Coventry area in accordance with Football League rules.

  ‘We have left the Ricoh Arena. We were told categorically by ACL and by the council that there was no commercial deal to be done and, in actual fact, they would only ever work with the administrator.

  ‘We were very, very clear in our minds as to exactly what was intended. Given the position, we have had to make contingency plans to fulfil our fixtures on an interim basis while we deliver the long-term vision.

  ‘That long-term vision has us playing in the Coventry area in a new stadium that will be designed and delivered in three years.

  ‘All this will be in full consultation with the fans – starting with the upcoming forums.

  ‘In consideration of financial fair play, then we will own all the revenue streams that come from matchday and non-matchday activities, and therefore we will have every chance of becoming a solid, vibrant club.’

  ACL, of course, disputed that there was ‘no deal to be done’ and insisted the doors to the Ricoh Arena remained open.

  The firm’s lawyer, James Powell, also raised questions about how a club in Coventry’s situation could afford to build a new ground.

  Speaking to BBC Coventry and Warwickshire, he said: ‘I was surprised and taken aback. My personal impression was that this was an announcement made on the hoof.

  ‘There’s not been any suggestion of another stadium in and around Coventry in anything Mr Fisher or the club have been saying over the last few months.

  ‘The Football League are looking for a whole host of things. A ground in the vicinity of Coventry is one of those things, but a club with financial stability is far more important.

  ‘Mr Fisher is a director, or the director, of a company that, according to the administrator’s report, is £70m in debt and was described as a “catastrophic insolvency” by the administrator’s own barrister.

  ‘You’d be asking the question “Mr Fisher, where are you getting the money from, given that you’ve managed to lose £70m over the last few years?’’’

  But Tim Fisher continued to provide details of the plans and said the club had even hired specialist advisers to help complete the project.

  He told the Coventry Telegraph: ‘We retained specialists some months ago to advise us on where to build a new stadium for the club in the immediate Coventry area. We are not leaving Coventry in the long term.’

  Further details began to leak to the press, including a clever piece of PR which involved labelling the new stadium project ‘Highfield Two’.

  The reference was a nod back to Coventry City’s home of 106 years and a clear attempt to pull at the supporters’ heart strings and foster an emotional connection with the new stadium proposals.

  It was a shrewd move. Many fans were unhappy with the club leaving its historic former 23,000-capacity Highfield Road stadium in Hillfields, near the city centre, for the larger 32,000-capacity Ricoh Arena on the city’s outskirts, which was more difficult to get to.

  But there were still more questions than answers. Where would it be? How big would it be? How much would it cost? Do you need to have seen Highfield Road One to enjoy the sequel?

  Details leaked to the Coventry Telegraph by club officials in the early weeks after the announcement disclosed that the new stadium would be in a secret location just outside the city boundary, but that it would also be closer to the city centre than the Ricoh Arena.

  Initial plans were said to be based on Rotherham United’s 12,000-seater New York Stadium, which took four years to build.

  Club directors claimed they were impressed with the South Yorkshire club’s ground as it was completed at a cost of just £20m.

  It was also viewed as a suitable model to follow as it was a ‘modular’ project – meaning more capacity could be added if the club achieved promotion and increased attendances.

  Club officials also told the Coventry Telegraph that they had kept the Football League fully informed about the plan.

  There would, of course, be hoops to jump through. The Football League usually only allowed clubs to play home fixtures outside their home town or city if any tempor
ary ground-share arrangement was within a 30-mile radius - and the club has a clear business plan to return to their home city within a designated period.

  Rotherham United were given four years, but Coventry City were claiming their plans could be completed within three.

  The location of this new stadium would become a topic of much focus over the coming months and years.

  Initially, the club said five sites just outside Coventry’s administrative boundary had been identified by property agents employed by Sisu and CCFC Holdings Ltd, headed by Tim Fisher.

  But they insisted – even at this very early stage – that one site had already become the preferred option and a bid put in to compete with other offers.

  Club officials were already indicating that sites outside the Coventry boundary were being explored due to the bad blood between the owners and Coventry City Council.

  This stance seemed odd from the outset as Coventry City Council’s planning committee, as with any other council’s, is strictly legally obliged to vote based on ‘material planning considerations’, not on prejudices or party political lines. In other words, the council could not turn down a planning application because councillors didn’t like the person applying – and if they did the council could potentially face severe legal repercussions and their decision could be overridden.

  Another hurdle the club would face is that any site chosen would likely be green belt land. But they pointed to planning guidelines issued relatively recently which instructs council planning committees to make decisions with a ‘presumption in favour of sustainable development.’ Sports grounds were also given special treatment in the new planning regulations.

  Some fans questioned the need for a new stadium while the Ricoh Arena, built for the football club less than a decade ago, would be sitting empty.

  But Tim Fisher suggested the move to the Ricoh Arena was a mistake from the beginning.

  In June, he told a fans’ forum: ‘The accounts have been a mess, an absolute mess.