LONDON (AP)—Portsmouth became the first Premier League team forced to seek bankruptcy protection from its creditors on Friday, enabling the insolvent business to restructure financially.
The bottom club in the world’s richest league was placed into administration by the High Court less than two years after winning the FA Cup because Balram Chainrai—its fourth owner this season—was unable to clear debts of around $105 million.
Although Portsmouth will still operate, relegation to the second-tier is a near certainty, with the nine-point penalty that administration brings leaving manager Avram Grant’s team 17 points from safety.
Court-appointed Andrew Andronikou has asked the Premier League to allow it to sell one or two players and advance a $16.7 million parachute payment that would be due after relegation to the League Championship.
“I am hoping to obtain some sort of concessions from them,” said Andronikou of accountancy firm UHY Hacker Young. “We are looking to immediately address the significant monthly cash burn of the club by implementing a strict cost rationalization program.”
By going into administration, a winding up order from the government’s Revenue and Customs authority over unpaid tax will be suspended.
But everyone from manager Avram Grant to the players at the club likely will see their wages slashed, while chief executive Peter Storrie said he will leave after the club’s future is secured.
Storrie described Portsmouth entering administration as “an extremely sad day for everyone connected with the club.”
Pompey have been in administration once before, in December 1998, when Milan Mandaric bought the then-second tier club.
The Premier League board will meet to invoke the nine-point sanction.
“The board will also meet the administrator at the earliest opportunity to receive their views on the financial status of Portsmouth FC and set out the conditions for the club to fulfill its commitments for the remainder of the season,” the Premier League said in a statement. “We understand the need to act as swiftly and transparently as possible; however there is a process which means we can only provide comment at the appropriate junctures.”
Chainrai is looking to recover a $25.8 million loan he made to the previous owners. The Hong Kong businessman took over the club this month as a short-term arrangement to protect his investment after becoming frustrated that several deadlines were missed to repay loans he had made to the club.
“He was told the club had certain debts but didn’t know that Premier League rules say football debts become a priority, that money owed on transfers must be paid first,” Chainrai spokesman Phil Hall said. “He asked the questions and was given answers and assurances that turned out not to be true.”
FIFA is set to discuss the plight of the 112-year-old club at its next executive committee meeting on March 18.
Prime Minister Gordon Brown had expressed concern about the high levels of debt in English soccer.
“It is a sad day for a great club and it is deeply regrettable if they do go into administration,” Brown spokesman Simon Lewis said Friday. “We remain concerned that fans and communities of football clubs like Portsmouth shouldn’t suffer because of the inability of clubs to manage their finances properly.”
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Originally Posted by westofyou
