MP Calls for Transparency re Coventry's Ownership

Guardian/David Conn

Coventry City's silent owners come under pressure to speak up

Confidentiality is the name of the private equity game but an MP says City's supporters are entitled to know who owns their club

Tuesday 27 September 2011

Coventry City's owner, the private equity firm Sisu, specialises in turning failing companies around and making a profit for investors.

Damian Collins, a key member of the parliamentary culture, media and sport committee, has written to the sports minister, Hugh Robertson, expressing concern about Coventry City's ownership after the Football League said it does not know who owns the Championship club.

Since a takeover in 2008 which rescued Coventry from collapsing under £40m of bank debt, the club has been owned by unnamed investment funds, managed by a private equity company based in Hanover Street, Mayfair – Sisu Capital. A Sisu partner, Onye Igwe, manages the fund and is an active Coventry City director but he confirmed in an interview with the Guardian that the investors in Sisu's fund have not been publicly declared: "The funds for Coventry City are from institutional investors, some European, some American, some from overseas and some high-net-worth individuals," he said. "They are professional investors and they want confidentiality, which is normal practice in private equity."

Collins said he believes this is unsatisfactory because supporters have a right to know who ultimately owns their clubs. In his letter to Robertson the Conservative MP said the Football League should demand clubs say who owns them: "The football authorities should reframe their rules on club ownership to require a greater degree of transparency."

Collins took a lead during the committee's inquiry into football governance this year, questioning the structure of Leeds United, which was owned by trusts registered in offshore tax havens for six years until in May the club announced its chairman, Ken Bates, had bought it. The committee published its report in July, saying of Leeds's previous ownership: "There is no more blatant an example of lack of transparency."

Football League rules, identical to those in the Premier League, require clubs to make public the names of anybody "owning or controlling 10% or more of the interests in a club". The league told Collins that at Coventry no individual controls more than 10% and therefore nobody had to be identified, the same position the league adopted over Leeds when it was owned by the offshore trusts.

Collins recommended in his letter that Her Majesty's Revenue and Customs supports the football authorities "in trying to discover the ultimate ownership of football clubs". That echoed the committee's call in its report for the FA to carry out "a thorough investigation" into who owned Leeds between 2005 and this year and "if necessary to seek the assistance of HMRC". The FA has not responded, choosing to wait for the government's response, which Robertson's office said he is expected to finalise next month.

Collins, though, has gone further than calling for an investigation into ownership, saying the Football League should require all clubs to say who owns them, "as a condition of playing in the competition" – and be excluded from the league if they refused. "This is another example of football fans not knowing who owns their club," Collins told the Guardian. "I think this is wrong and have written to Hugh Robertson asking him to consider this when he responds to the select committee's report."

The sudden focus on the undeclared investors behind Coventry has taken Sisu somewhat by surprise at a time when, having spent £30m to no greatly positive effect, Igwe has acknowledged he needs to take more of a public role and explain their plans to supporters.

He said the investors are not mysterious, mostly not offshore, and many are "significant institutions" with which the public would feel comfortable but the nature of private equity investing is that they remain confidential. Igwe said they are "passive investors" who leave him to manage the fund and Coventry City: "We are not being anonymous: the funds and club are under the management of Sisu Capital, I am the fund's manager and a partner in Sisu, that is public."

An investment firm known for taking over debt-distressed companies and others they believe they can turn round, Sisu became interested in buying a Championship club around five years ago. They considered Southampton and Derby County before taking over at Coventry, in partnership with Ray Ranson, the entrepreneur and former Manchester City right-back, who became the chairman. Igwe said the investors in Sisu's funds are "agnostic" about what the firm would buy; they were interested in making a profit from their investments, although this could be delivered in eight to 10 years rather than rapidly. Championship clubs have increasingly become a target for buyers from afar, who see potential windfalls from winning promotion to the Premier League's multi-million pound honeypot.

For Coventry and Sisu, however, the course of securing that return has been far from smooth. Relegated from the Premier League in 2001 after a remarkable 34 years in the top flight, the Sky Blues had latterly sunk into £40m debts under the previous owners, who included Geoffrey Robinson, the Labour government's former paymaster-general. Although a high-quality new stadium, the Ricoh Arena, had been built and in 2005 Coventry moved to it from Highfield Road, home since 1899, the club itself does not own even a slice of the new ground.

The arena is owned jointly by Coventry City Council and a charitable trust named after the father of Sir Derek Higgs, a former club director, and the club pays close to £1.2m in rent to play there. All the income from the arena's sponsorship, and from food and drink bought by fans, goes to the arena company, not the club. This, Igwe says, makes it difficult for City to make enough money to compete, a problem set to worsen with financial fair-play break-even rules due to be applied in the Championship. "We do have a long-term plan to buy 50% of the stadium," Igwe said. "It is a very important part of our strategy to make the club successful."

Stripped of income sources that its Championship rivals do their best to milk, Sisu has spent £30m and haemorrhaged losses, £6m in the year to 31 May 2010, £8m the previous year, yet made no impact on the league. In March this year Sisu marshalled a "reorganisation" of the club which saw Ranson leave and have his £1.6m loans repaid, together with interest of £310,000.

Under the management of the former chief scout Andy Thorn, and the coach Steve Harrison, Igwe said he believes the changes have been positive, although the club face Blackpool on Tuesday in 22nd place, having started the season in relegation form.

For the Mayfair private equity firm, investment in football sees it a long way still from delivering a Premier League return to fans or investors – and now facing unfamiliar demands to state who those backers are.





www.guardian.co.uk/football/david-conn-inside-sport-blog/2011/sep/27/coventry-city-ownership-sisu-damian-collins

The previous shower asset-stripped the Club, the outside owner or landlord pockets whatever comes in, and the Club is left with their failure and their losses.

The goons that 'run' the game and the Clubs become ever more laughable. 'Our strategy to make the Club successful'.

Yeah, and what is that, precisely?

Some faceless drone loses tens of millions, and as long as it's the CLUB'S money, the football authorities are delighted. Screw Coventry City and their supporters - oh, you did?

Love to see how long any mob would be around if they 'invested' in making Clubs like Coventry City 'successful', and all the losses were theirs.

They can't even make money out of the half-time tea.

If they had the balls, they might, Hogan. I wonder if they do. The politicians seem very reluctant to do anything on principle, especially where 'business' is concerned. If someone can make themselves money out of almost anything, they're afraid to intervene and say 'it's wrong'.

Does the answer lie elsewhere? Are we getting to the point where the mess simply doesn't work any more?

Like the present economic crisis, will we wait until the wheels come off (hoping they won't). In football, it doesn't take much to allay suspicion. A new owner says things are in hand, hints at shedloads of cash somewhere down the line, waves the prospect of glory around, and things go quiet.

But will the numbers lie down as easily as the people?

Does football have the equivalent of the world economic watchdogs we hear about on 'Newsnight' to steady the ship? Or will it go on expecting so much, and delivering so little.

Like Greece. And the economic institutions and nations which tried to prop Greece up even as they profited from its difficulties.

If Greece can't complete its fixtures, and other countries follow, could it be that, one day, a football club will be in the same boat?

So that, one day, one small thing, one little incident, will cause people to back off. The matchday supporters - happening already at some Clubs - moneylenders, 'investors', even the TV audience.

Is English football untouchable by such things? Maybe. It is out of the question that the world might just get bored? Find it dated? Too risky. Too sleazy. And one day, it would be over. Leaving the Clubs scattered around football's graveyard like the rock casualties of the swinging sixties? Or leave the golden goose of the Premier League as scarred by the kind of sleaze and economic unsatisfactoriness that brought down the Thatcher-Major and Blair-Brown governments which - between them - won seven straight election victories including 4 landslides, before the redundancy of their vision - at least in the eyes of others - snuffed them out.

One minute they were strutting, the next, they were yesterdays' men.