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Thursday, March 15, 2012

Article : Portpin's "£17m debt"

What is Pompey's biggest problem? The prospect of relegation to League One? Not at all. Quite simply it is Portpin and their claimed £17m debt.

Fans keep on saying that someone ought to strike a deal with Balram Chainrai to repay his debt over a long period, as Antonov and CSI agreed to do. No businessman with any sense is going to do this though. Here is why :-

By their own admission, Portpin invested money in Pompey hoping for a quick profit. The money disappeared. Where it went, either into the black hole of debt, whether it was siphoned back out as described in this Telegraph story here is irrelevant. It went. Money gone. Finito. No profit. No return on investment. Money lost. The business was owed money but that money was earmarked for other creditors, ie the football creditors we have literally just finished paying.

So Messrs Chainrai and Kushnir cannot get their money BACK. It's gone. Lost. Finished. Kaput. Like a South American Trade Unionist – disappeared.

A section of fans have continued to swallow this propaganda, saying “They just want their money back. They are entitled to it” No. They aren't. They made a really bad business decision, and they lost their money.

What is Pompey worth right now? There is a Government's guide to valuing a business. Here it is. By any sensible measure, Pompey is worth nothing. It is bankrupt. It is loss-making, with a major loss to come next year. Previously, a CVA was agreed and costed at approx £16m. That will have to come down to a maximum of £2m. There are renewed football debts of £4m which take priority over everything. There is £2m in secured debt to be paid to Sacha Gaydamak. There is no money for anyone in Pompey. In fact, it needs people to put money into it just to keep it alive. Therefore, it is worth nothing.

Mr Chainrai has had two goes already at owning and selling Pompey, once placing it into administration and having a major say in it going into administration most recently. If he hasn't managed to “get a penny back” yet, how on earth does he think he is going to get it now that it is slipping into Division 3 (in the old money) and utterly bankrupt?

Let me spell this out for anyone struggling with this: You can seek it here, you can seek it there, but Portpin's £17m ISN'T THERE. It is not in the business. It hasn't returned from wherever it went in 2009. It isn't sitting in a cupboard. There are no assets to justify it. There are no revenues to justify it. There is not one single shred of business rationale to believe that there is one penny left for Portpin. If you don't believe me, read again the guide mentioned above here and do your own calculation of how buying Pompey stacks up against the criteria.

Which only leaves the plan suggested by some – that someone buy the business and repay Portpin once it becomes successful. This is the most ludicrous suggestion of all and anyone who agreed to it would be, in that famous Pompey phrase, “a din”. (Of course, someone recently did do that deal and quel surprise, their business disappeared within six months).

In order for there to be £17m of value in Pompey you would need to take the club back to the Premier League, be scheduled to make a profit and have secured planning permission and development partners for a new stadium. To get there is going to be tough and require many years of really clever business brains and financial muscle. So why on earth would anyone bother to do it just for the privilege of handing over it to Balram Chainrai and Levi Kushnir? Why work your nuts off and risk a pile of cash only to hand over the vast bulk of your proceeds to someone who has done precisely nothing to earn it?

Portpin has no money in Portsmouth FC. They recklessly gambled that money by putting it into a bankrupt football club run by people they continue to claim to know very little about. They lost that money. It's gone. Chainrai can wave all the bits of secured loan paperwork at anyone he wants, but unless one of them is the 'bad bets/secured debt' fairy then he is wasting his time and ours.

Had Portpin's secured loan not been hanging round Pompey's neck like an enormous albatross for the last two years, there is every chance we would have been bought by someone credible who wanted to make a go of things. As it is, we are stuck in the 'incredible' end of the buyers market, looking for someone who will agree to pay £17m for a business that is worth the same as the Norwegian Blue Parrot Michael Palin sold to John Cleese.

Until someone has the guts to hand Portpin back their betting slip and tell them they have lost and could they now vacate the premises, Pompey have no future. If the only way to get the message across is liquidation then so be it, because relegation to League 1 won't bring stability. It will take time, money, infrastructure development and back breaking effort to get us back on the upward curve as a sustainable business. No-one who CAN do it WILL do it for the future profit of someone else. If Portpin once again emerge as Pompey owners we simply extend the cycle of relegation/administration for a few more years while they cross their fingers and hope, like Mr Micawber, for something to turn up.

The one thing destabilising Pompey, the one major barrier to the club's future is Portpin's fairytale dream of recouping their money. It's time Trevor Birch slapped their faces and got their attention.

Micah Hall


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