Post by QPR Report on Oct 17, 2009 6:24:07 GMT
David Conn/Guardian -
How Portsmouth flew too close to the sunPompey are still bottom of the league and today they welcome back their most successful manager of recent times
It is a sly accident of timing that Harry Redknapp returns to Portsmouth today with his well-stocked Tottenham squad immediately after his former club skipped clear of financial collapse by a whisker. His visit, and the expected hostility it will provoke from the Fratton Park crowd, echoes the one he made a year ago, to receive the freedom of the city for leading Pompey to FA Cup victory in 2008. That ceremony did not go quite as swimmingly as the civic leaders had planned, because Redknapp had left for Spurs three days earlier, saying that Portsmouth's money had run out.
The FA Cup win may have been the club's greatest moment since they won a second consecutive League championship 59 years ago but it was, in hindsight, the Premier League's clearest episode of "living the dream" gone wrong since Leeds United held their hands up to £100m of debt. Last week's trauma at Fratton Park, which had left the players unpaid, HM Revenue and Customs fiercely chasing overdue tax said to amount to £10m, then a last-minute takeover, the second in 44 days, was a direct result of the overspending in Redknapp's time.
Even with £77m worth of players sold since the Cup winning team waved and smiled from their open top bus, Pompey are around £50m in debt and the new owner, a Saudi Arabian property investor, Ali al-Faraj, has a great deal of money still to find. The team, meanwhile, recorded the worst start to a season by a top flight-side in decades, losing their first seven matches before winning their last game at Wolverhampton.
This week the club's chief executive, Peter Storrie, and the former player Paul Walsh have been urging Pompey fans to restrain their venom against Redknapp today, with Walsh pointing out that the manager only spent money that was authorised. That is true: the spree that brought Redknapp a bristling squad including Sol Campbell, Jermain Defoe, Sylvain Distin, Lassana Diarra and Sulley Muntari was bankrolled by the club's former owner, Alexandre (Sacha) Gaydamak. After the credit crunch hit, he withdrew his funding.
Gaydamak has said very little during the recent near-collapse – or throughout the time he owned Portsmouth, which he did via a trust, Devondale, registered in the tax haven of the British Virgin Islands. This week, though, he authorised Glen Cooper, a corporate financier who represented the trust in the sale of the club to Sulaiman al‑Fahim, to speak on his behalf.
Cooper painted a picture of a young Russian-Israeli businessman, optimistic when he bought the club from Milan Mandaric in January 2006 but who lost significant money in the global economic downturn and decided he could not spare any more for Pompey. More than that, Cooper claimed, Gaydamak grew tired of football and its constant demands of cash for players. The cutting off of his support led to Redknapp going and left Storrie to fire-fight desperately to sell players and pay the ones who remained, stave off Standard Bank – which wanted a £30m loan repaid in full last summer – and keep HMRC from putting Pompey into administration.
"If you had to criticise Sacha," Cooper said, "you would say he was an absentee owner who failed to control the spending at the club. He is young and enthusiastic and was intrigued by the idea of being involved in football. Portsmouth did have success and won the FA Cup. But he was hit very badly when the markets crashed and could not fund incredible losses year in year out. Does he carry some blame for allowing the situation to get out of hand? Yes."
Gaydamak, who was 29 at the time of his takeover, was dogged from the beginning by the suspicion that his father, Arkadi, was really behind it. Arkadi, then living in Israel where he bought the Beitar Jerusalem club, had an arrest warrant issued against him in France, where magistrates wanted to question him in relation to alleged illicit arms trading to Angola in the 90s, which he denied.
Shortly before the takeover, Arkadi had been questioned by the Israeli police as part of an investigation into alleged huge money-laundering, and last week charges were brought against him. According to the Israeli police, he has now gone back to Russia.
Sacha Gaydamak, however, has denied throughout that Arkadi was involved at all; he said he invested his own money, made in investment banking and property in France and Russia, and he satisfied the Premier League that he was the ultimate owner of Devondale.
Portsmouth's road to Wembley was paved with £55m spent in wages in 2007‑08; and a loss of £17m. The debts were £57m, £13.7m of it loaned directly from Gaydamak's trust companies, the other £43.4m owed to Standard Bank and Barclays, which Gaydamak was guaranteeing. "Nobody could foresee the credit crunch, and Sacha was obviously not immune to it," Storrie said when the meltdown began. "It was all a risk, and we were over-stretched, especially with only 20,000 people in the stadium."
The exits began with Muntari and Pedro Mendes in the summer of 2008. Pompey did find £9m to sign Peter Crouch, but Redknapp knew Gaydamak had withdrawn his funding and left in October, with the parting barb that the club was happy to receive £5m compensation for him. In January, Diarra was sold to Real Madrid for £20m and Defoe bought by Redknapp at Spurs for £15m. Storrie explained later that was "to balance the books", but even though Portsmouth survived in the Premier League under Paul Hart, a flood of exits followed: Glen Johnson, Crouch, Niko Kranjcar and Distin were sold, Campbell and four others released.
The club was up for sale throughout but with debts, falling fortunes and the need for a new stadium, nobody found them an attractive proposition until Fahim announced in July that he had agreed a deal with Gaydamak. Fahim had garnered celebrity status in Dubai for hosting the United Arab Emirates version of The Apprentice, and was the chief executive of Hydra Properties, a company beset by complaints from disgruntled investors after delays at one of its development projects. Here, he was sprinkled with the glamour of having brokered Sheikh Mansour's purchase of Manchester City, but after the brash early talk that his backers had "very deep pockets" to sign a side of galácticos, he had no further involvement at City.
Shorn of Mansour's stamp, there were doubts about how deep his own pockets were. At first Fahim said the money was coming from "investors in the Middle East and the Far East", which led to speculation that the former Manchester City owner Thaksin Shinawatra was involved. Thaksin had been convicted of corruption offences in Thailand and would not have been a "fit and proper person" to own more than 30% of a Premier League club.
Thaksin, while acknowledging Fahim as "a close friend", denied being involved. Fahim then clarified that the money would be coming from his own resources and borrowings. Yet confidence in him faded as he continued due diligence while players sprinted for the door.
The drama that still rankles with those involved came on 16 August, after Storrie had worked with a "group" including Faraj, introduced by the agent Pini Zahavi, who would buy the club instead of Fahim. Storrie believed they had a deal, then Gaydamak sold the club to Fahim.
Storrie had kept a positive face on the situation throughout a dire year but after that he cracked, saying he was "absolutely shattered" and revealing, finally, the extent of the crisis. "I've kept this club alive the last 12 to 14 months," he said, "with the banks demanding payments for reasons outside our control." Storrie added that the Faraj group "would have taken the club on to a level you would not quite believe".
Cooper insisted that the trustees did not do the deal with the Faraj group because the group never proved they had sufficient money, and not enough was known about them. Local inquiries in Riyadh had found the Faraj family were people of "moderate wealth", unlikely to have the millions required. Mark Jacob, Faraj's lawyer and who is now on the Portsmouth board, said they are "solid business people, from an established Saudi Arabian family, who mostly invest in property", and that the money was available in August.
The club went, instead, to Fahim, who paid £1 for it, but he put £5m in, apparently to deal with the most immediate financial demands. In order to ensure that a takeover could happen, Cooper explained that Gaydamak's trust directly took on the debt owed to Standard Bank, which was then down to around £25m. The club owes that money in turn to Gaydamak's trust, plus other amounts, making a total of £33.5m. He had already written off his £13.5m loans, demonstrating that funding a Premier League club to overachieve is a very expensive venture. Fahim, according to Cooper, had the option to buy from Gaydamak 51% of the land around Fratton Park for £1 once Fahim had refinanced an initial £12m. The £33.5m the club owes Gaydamak is due for repayment in stages by 2012, at which point he would sell the remaining land, for around £4.5m.
Fahim could not borrow the necessary money quickly enough. The players were not paid at the end of September, and HMRC was demanding payments for unpaid tax and VAT. The Premier League, concerned for its image and that one of its clubs could fold during a season, called Fahim to a meeting with the chairman, Sir Dave Richards, the chief executive, Richard Scudamore, and the secretary, Mike Foster. Fahim told them he expected to raise the money by the second half of October, but they are understood to have said that was not acceptable.
Fahim passed to Faraj, again for £1, the prize he had craved, a Premier League club, after less than 50 days in charge. Faraj bought 90% of the club, Fahim retaining a 10% stake and the position as chairman, although that may be uncertain with Faraj understood to be unhappy with comments Fahim made to a Saudi newspaper. Faraj paid £1.8m wages immediately, and took on the obligations to repay Gaydamak, HMRC, agents and other clubs whom Portsmouth owe, around £50m in total. "If we hadn't come in then and paid the wages," Jacob said, "the club would have gone into administration."
Faraj is understood to have obtained access to credit to enable the club to pay its way for now. He has a brother, Ahmed, who is in the UK more, but Jacob said Ahmed is not formally involved, and there are no other investors. Ali has been submitted to the Premier League as the 100% owner of the holding company, Falcondrone, also registered in the British Virgin Islands. The Premier League, whose rules require the names of all owners of more than 10% of a club to be published, is understood to be still examining aspects of that ownership structure before clearing it. A league spokesman said: "Checks are ongoing."
Faraj is understood not to be a billionaire with the money instantly to wipe all Pompey's troubles away, and is talking to banks about how to refinance, but Jacob claimed there will be investment in January. "It is going to be done with sound business principles," he said. "My client is very passionate about the Premier League, and sees this as an opportunity to invest in a great club, with a very loyal fan base, and a new stadium to build."
Storrie, asked for his views, said this week: "I don't want to talk any more about the club. I've done enough. I just want to get on and run it." There is plenty still to do, with Portsmouth bottom of the Premier League and £50m in debt, just 17 months after Redknapp took them up the Wembley steps to their highest point in football's modern, moneyed, era.
www.guardian.co.uk/football/blog/2009/oct/17/portsmouth-al-fahim-faraj-harry-redknapp
How Portsmouth flew too close to the sunPompey are still bottom of the league and today they welcome back their most successful manager of recent times
It is a sly accident of timing that Harry Redknapp returns to Portsmouth today with his well-stocked Tottenham squad immediately after his former club skipped clear of financial collapse by a whisker. His visit, and the expected hostility it will provoke from the Fratton Park crowd, echoes the one he made a year ago, to receive the freedom of the city for leading Pompey to FA Cup victory in 2008. That ceremony did not go quite as swimmingly as the civic leaders had planned, because Redknapp had left for Spurs three days earlier, saying that Portsmouth's money had run out.
The FA Cup win may have been the club's greatest moment since they won a second consecutive League championship 59 years ago but it was, in hindsight, the Premier League's clearest episode of "living the dream" gone wrong since Leeds United held their hands up to £100m of debt. Last week's trauma at Fratton Park, which had left the players unpaid, HM Revenue and Customs fiercely chasing overdue tax said to amount to £10m, then a last-minute takeover, the second in 44 days, was a direct result of the overspending in Redknapp's time.
Even with £77m worth of players sold since the Cup winning team waved and smiled from their open top bus, Pompey are around £50m in debt and the new owner, a Saudi Arabian property investor, Ali al-Faraj, has a great deal of money still to find. The team, meanwhile, recorded the worst start to a season by a top flight-side in decades, losing their first seven matches before winning their last game at Wolverhampton.
This week the club's chief executive, Peter Storrie, and the former player Paul Walsh have been urging Pompey fans to restrain their venom against Redknapp today, with Walsh pointing out that the manager only spent money that was authorised. That is true: the spree that brought Redknapp a bristling squad including Sol Campbell, Jermain Defoe, Sylvain Distin, Lassana Diarra and Sulley Muntari was bankrolled by the club's former owner, Alexandre (Sacha) Gaydamak. After the credit crunch hit, he withdrew his funding.
Gaydamak has said very little during the recent near-collapse – or throughout the time he owned Portsmouth, which he did via a trust, Devondale, registered in the tax haven of the British Virgin Islands. This week, though, he authorised Glen Cooper, a corporate financier who represented the trust in the sale of the club to Sulaiman al‑Fahim, to speak on his behalf.
Cooper painted a picture of a young Russian-Israeli businessman, optimistic when he bought the club from Milan Mandaric in January 2006 but who lost significant money in the global economic downturn and decided he could not spare any more for Pompey. More than that, Cooper claimed, Gaydamak grew tired of football and its constant demands of cash for players. The cutting off of his support led to Redknapp going and left Storrie to fire-fight desperately to sell players and pay the ones who remained, stave off Standard Bank – which wanted a £30m loan repaid in full last summer – and keep HMRC from putting Pompey into administration.
"If you had to criticise Sacha," Cooper said, "you would say he was an absentee owner who failed to control the spending at the club. He is young and enthusiastic and was intrigued by the idea of being involved in football. Portsmouth did have success and won the FA Cup. But he was hit very badly when the markets crashed and could not fund incredible losses year in year out. Does he carry some blame for allowing the situation to get out of hand? Yes."
Gaydamak, who was 29 at the time of his takeover, was dogged from the beginning by the suspicion that his father, Arkadi, was really behind it. Arkadi, then living in Israel where he bought the Beitar Jerusalem club, had an arrest warrant issued against him in France, where magistrates wanted to question him in relation to alleged illicit arms trading to Angola in the 90s, which he denied.
Shortly before the takeover, Arkadi had been questioned by the Israeli police as part of an investigation into alleged huge money-laundering, and last week charges were brought against him. According to the Israeli police, he has now gone back to Russia.
Sacha Gaydamak, however, has denied throughout that Arkadi was involved at all; he said he invested his own money, made in investment banking and property in France and Russia, and he satisfied the Premier League that he was the ultimate owner of Devondale.
Portsmouth's road to Wembley was paved with £55m spent in wages in 2007‑08; and a loss of £17m. The debts were £57m, £13.7m of it loaned directly from Gaydamak's trust companies, the other £43.4m owed to Standard Bank and Barclays, which Gaydamak was guaranteeing. "Nobody could foresee the credit crunch, and Sacha was obviously not immune to it," Storrie said when the meltdown began. "It was all a risk, and we were over-stretched, especially with only 20,000 people in the stadium."
The exits began with Muntari and Pedro Mendes in the summer of 2008. Pompey did find £9m to sign Peter Crouch, but Redknapp knew Gaydamak had withdrawn his funding and left in October, with the parting barb that the club was happy to receive £5m compensation for him. In January, Diarra was sold to Real Madrid for £20m and Defoe bought by Redknapp at Spurs for £15m. Storrie explained later that was "to balance the books", but even though Portsmouth survived in the Premier League under Paul Hart, a flood of exits followed: Glen Johnson, Crouch, Niko Kranjcar and Distin were sold, Campbell and four others released.
The club was up for sale throughout but with debts, falling fortunes and the need for a new stadium, nobody found them an attractive proposition until Fahim announced in July that he had agreed a deal with Gaydamak. Fahim had garnered celebrity status in Dubai for hosting the United Arab Emirates version of The Apprentice, and was the chief executive of Hydra Properties, a company beset by complaints from disgruntled investors after delays at one of its development projects. Here, he was sprinkled with the glamour of having brokered Sheikh Mansour's purchase of Manchester City, but after the brash early talk that his backers had "very deep pockets" to sign a side of galácticos, he had no further involvement at City.
Shorn of Mansour's stamp, there were doubts about how deep his own pockets were. At first Fahim said the money was coming from "investors in the Middle East and the Far East", which led to speculation that the former Manchester City owner Thaksin Shinawatra was involved. Thaksin had been convicted of corruption offences in Thailand and would not have been a "fit and proper person" to own more than 30% of a Premier League club.
Thaksin, while acknowledging Fahim as "a close friend", denied being involved. Fahim then clarified that the money would be coming from his own resources and borrowings. Yet confidence in him faded as he continued due diligence while players sprinted for the door.
The drama that still rankles with those involved came on 16 August, after Storrie had worked with a "group" including Faraj, introduced by the agent Pini Zahavi, who would buy the club instead of Fahim. Storrie believed they had a deal, then Gaydamak sold the club to Fahim.
Storrie had kept a positive face on the situation throughout a dire year but after that he cracked, saying he was "absolutely shattered" and revealing, finally, the extent of the crisis. "I've kept this club alive the last 12 to 14 months," he said, "with the banks demanding payments for reasons outside our control." Storrie added that the Faraj group "would have taken the club on to a level you would not quite believe".
Cooper insisted that the trustees did not do the deal with the Faraj group because the group never proved they had sufficient money, and not enough was known about them. Local inquiries in Riyadh had found the Faraj family were people of "moderate wealth", unlikely to have the millions required. Mark Jacob, Faraj's lawyer and who is now on the Portsmouth board, said they are "solid business people, from an established Saudi Arabian family, who mostly invest in property", and that the money was available in August.
The club went, instead, to Fahim, who paid £1 for it, but he put £5m in, apparently to deal with the most immediate financial demands. In order to ensure that a takeover could happen, Cooper explained that Gaydamak's trust directly took on the debt owed to Standard Bank, which was then down to around £25m. The club owes that money in turn to Gaydamak's trust, plus other amounts, making a total of £33.5m. He had already written off his £13.5m loans, demonstrating that funding a Premier League club to overachieve is a very expensive venture. Fahim, according to Cooper, had the option to buy from Gaydamak 51% of the land around Fratton Park for £1 once Fahim had refinanced an initial £12m. The £33.5m the club owes Gaydamak is due for repayment in stages by 2012, at which point he would sell the remaining land, for around £4.5m.
Fahim could not borrow the necessary money quickly enough. The players were not paid at the end of September, and HMRC was demanding payments for unpaid tax and VAT. The Premier League, concerned for its image and that one of its clubs could fold during a season, called Fahim to a meeting with the chairman, Sir Dave Richards, the chief executive, Richard Scudamore, and the secretary, Mike Foster. Fahim told them he expected to raise the money by the second half of October, but they are understood to have said that was not acceptable.
Fahim passed to Faraj, again for £1, the prize he had craved, a Premier League club, after less than 50 days in charge. Faraj bought 90% of the club, Fahim retaining a 10% stake and the position as chairman, although that may be uncertain with Faraj understood to be unhappy with comments Fahim made to a Saudi newspaper. Faraj paid £1.8m wages immediately, and took on the obligations to repay Gaydamak, HMRC, agents and other clubs whom Portsmouth owe, around £50m in total. "If we hadn't come in then and paid the wages," Jacob said, "the club would have gone into administration."
Faraj is understood to have obtained access to credit to enable the club to pay its way for now. He has a brother, Ahmed, who is in the UK more, but Jacob said Ahmed is not formally involved, and there are no other investors. Ali has been submitted to the Premier League as the 100% owner of the holding company, Falcondrone, also registered in the British Virgin Islands. The Premier League, whose rules require the names of all owners of more than 10% of a club to be published, is understood to be still examining aspects of that ownership structure before clearing it. A league spokesman said: "Checks are ongoing."
Faraj is understood not to be a billionaire with the money instantly to wipe all Pompey's troubles away, and is talking to banks about how to refinance, but Jacob claimed there will be investment in January. "It is going to be done with sound business principles," he said. "My client is very passionate about the Premier League, and sees this as an opportunity to invest in a great club, with a very loyal fan base, and a new stadium to build."
Storrie, asked for his views, said this week: "I don't want to talk any more about the club. I've done enough. I just want to get on and run it." There is plenty still to do, with Portsmouth bottom of the Premier League and £50m in debt, just 17 months after Redknapp took them up the Wembley steps to their highest point in football's modern, moneyed, era.
www.guardian.co.uk/football/blog/2009/oct/17/portsmouth-al-fahim-faraj-harry-redknapp