Supporters Direct Self-destruct Part II

I reviewed in my last post recent history at Portsmouth FC, with an eye on the appointment of our former CEO at Supporters Direct.  More importantly than any single blogpost, there has been plenty of disquiet expressed by supporters about this state of affairs.  Many of us feel that while not everything that happened at Fratton Park in the last two years is any direct fault of David Lampitt, there were plenty of mistakes and lapses of judgment made by the management of the club, which he led.  If you missed my last post, it’s worth reading because although he responds to several criticisms with the statement reviewed below, there are a few things glossed over.

The disquiet about the appointment provoked a slightly startled, but determinedly defensive, response from Sports Direct.  Their initial bland announcement of Lampitt’s appointment provoked derision for the reasons I’ve already explained.  This and other criticism prompted David Lampitt himself to respond to some of the criticisms.  I don’t find it a convincing response, but judge for yourself.

He starts by dealing with the Football Creditor issue, and I think we will all be grateful for confirmation that he is only able to claim for past unpaid salary and not any future sum of money.  It is unfortunate that in view of what he admits is a relatively small sum of money owing that the Football League has withheld money due to Portsmouth FC, further imperilling it.  From the point of view of Messrs Lampitt, Redgate, and Byrom they have perversely increased the likelihood of the club being liquidated and themselves losing out completely.  There are plenty of staff at Fratton Park who are owed back salary.  If, as Mr Lampitt claims, all those people are football creditors we have to wonder why the League only stepped in when the three directors registered their claims explicitly a couple of weeks ago.  It suggests mainly that the Football League haven’t got a clue what is going on.

The charities who have lost money due to the problems at Portsmouth will appreciate his commitment to contribute towards any shortfall.  But perhaps it would be best of Mr Lampitt not to go into whether or not he is a wealthy individual when he is rebuilding his house in Kent and planning a new swimming pool.  Wealth is inevitably a subjective matter, and most of his past customers and the non-footballing staff whose livelihoods have been taken away from them will take a dramatically different view of things to him.

Mr Lampitt comes to deal directly with the issue of the non-payment of charity money.  I’ll reproduce the relevant text here to avoid misunderstanding:

I have commented publicly on this situation previously and do not propose to re-hash those comments here. However there are a few things to consider that may provide some further context: there are good causes that received donations earlier in the season that would not have benefited if we had not made the gesture of donating these funds;

In other words, the club promised to give some money to charity and actually did manage to give some money to charity.  I don’t see anything remarkable in that, perhaps pointing it out is meant to extenuate what happened afterwards.  I don’t see how it does.

[T]he funds were freely offered from the ticket revenues of the club; it was not a charitable marketing campaign and there was no point of sale information;

We had better agree to disagree with Mr Lampitt on what constitutes a marketing campaign.  This story went up on the official club website long before the club went into administration – let’s be clear about that – but if you headline it “Charity Starts at Fratton” and then subsequently claim there was never any kind of “charitable marketing campaign”, you are going to leave people wondering what you mean.

The decision to donate the £2 surcharge to charity was taken to pacify supporters who found it to be another unreasonable part of the ticket pricing policy Mr Lampitt had unveiled in April 2011.  Most people in business do their best to maximise impulse purchase – the sweets at the checkout – but Portsmouth took a conscious decision to penalise those who decided to try to buy a ticket on the day.  In the light of declining attendances in the earlier part of last season it looked like a very poor decision by the management.

Reading the next part of Mr Lampitt’s statement, it doesn’t look like he himself is at all sure what was going on:

In the few weeks prior to the collapse of the ownership last November, there were two games for which donations did not get paid over. The monthly reconciliation process was in hand at the point of CSI’s collapse which unfortunately happened before payments were made. Perhaps rightly, I have been criticised, along with others, for failing to get these payments out more quickly which I certainly regret. But I do not believe that should cast any doubt over my integrity, the integrity of my staff, or indeed the integrity of SD in appointing me.

First of all, I went out of my way in my last piece to say that the issue of non-payment was not one of personal integrity in my eyes.  But if he regrets not making the payments the “perhaps rightly” qualifier about the criticism is absolutely redundant.  The payments should have been made, and if you wear “two hats” as a charity Trustee as well, then that should additionally concentrate your mind.

The club carried on trying to trade normally after CSI collapsed into administration, from November all the way into February and PFC’s own administration.  Why did nobody from the club come clean about the problem at the time?  The issue might not be one of personal integrity, but it certainly is one of judgement of those taking decisions.

A justification for not making the payments would be if Lampitt and Redgate were advised they were “connected persons” for the purposes of the Insolvency Act.  Since Lampitt and Redgate were both Trustees of Pompey Sport & Education Foundation, it may be they have been advised that they are “connected persons”, and so at risk of legal proceedings if those payments had been made.  It may be that is what he means by

It should also be remembered that subsequently, our obligations as directors prevented us from treating any single creditor or class of creditors in a preferential way.

But what that implies is that there was an unresolved conflict of interest for Lampitt and Redgate, and yet surprisingly they are both at the time of writing still Trustees of PSEF.  Whatever happened here, it looks embarrassing for all concerned and will do as long as they are both Trustees.

The process of how SD came to appoint him and the repercussions of that for the Board can wait until next time.  But let’s allow Mr Lampitt’s own words, from his “January [2011] Diary” from the club website do some talking on the subject of corporate integrity:

I’ve said before that the only way for the club to win back any sort of trust and credibility after what has happened in the past, is for us to keep our word and deliver what we say we’re going to – I’d like to think this is another small step along that road. Similarly the fact that we have now paid in full the three main charities (Tom Prince, Harbour Cancer Trust and Faith & Football) that were owed money by the old company is part of that same process. We said that we wanted to have this done by Christmas and we have now, I hope, put to bed one of the most shameful aspects of the legacy we inherited. Our best wishes go out to each of those charities for the coming year.

Fair enough to him for ensuring that the last of the old charity debt was paid up.  His comments about “trust and credibility”, and rightly identifying the previous charity dishonour as “shameful”, do however make it all the more extraordinary that the situation recurred on his watch.  The next part of the Supporters Direct statement deals with his relationship with CSI:

Let’s be crystal clear on this point – Portsmouth FC went into administration for one reason only and that was the extraordinary overnight collapse of the business interests of its principal shareholder and funder.

It wasn’t an overnight collapse, it was a slow-motion disaster right from the point Antonov was refused permission to operate a bank in this country by the FSA.  It sped up a bit once the FL waved CSI through, before you could say “Fit and Proper Person’s Test”, but to suggest that nobody could have seen it coming is naive.  Business is mainly about managing and minimizing risk.  Football is one of very few careers where you can do neither and still move from one job straight into another one.

When the club came out of administration in 2010 it was always going to require funding for at least three years whilst it recovered from the legacy issues and contractual obligations of the previous regime. Inspite of this, we managed to get the club into a financially relatively stable state with losses of less than £1m on our P&L in the season to 2011. This compares very favourably with other clubs in the same division. However, it also masks the fact that there was still a cash funding requirement to keep the club going.

He has a point in relation to inherited contractual issues, which were numerous.  More openness with supporters about the situation would have lessened the shock when the second crunch eventually came, more prompt attention to boosting attendance in the face of disappointing attendances, more focus on non-football revenue generation, all these things would have helped.  But note that several of our expensive current squad (Huseklepp on £18k p/w, anyone?) were signed after CSI took over and there was never any questioning from the management of the club about relying on a foreign benefactor of dubious background.  I do, however, want to recall some more of Mr Lampitt’s January 2011 Diary piece, and invite you to compare it with the quoted section above:

In terms of our transfer activity this month we have to be prudent. I don’t intend to put the club’s future at risk by pursuing a spending policy that cannot be supported, that significantly increases the club’s indebtedness or risks the intervention of the Football League, who oversee and approve all our player trading in line with the business plan. After everything that the club has been through this would be unthinkable – we must learn to live within our means knowing that, by operating in this way, any success we achieve will be hard-earned but untainted. We also have to be mindful of our responsibilities to pay creditors under the terms of the CVA which is obviously a burden most other clubs do not have to contend with.

I’d dearly love someone from the League to tell us what exactly their oversight of PFC amounted to at this time, and subsequently in view of their waving-through of another set of basket-case owners.  There is plenty of sensible talk in that piece from Mr Lampitt, yet somehow every thing that he said must not be allowed to happen again did happen again while he was CEO.

Writing this as Cardiff City are seemingly on the edge of one of these fantasy foreign takeover binges (are they still called Cardiff, or have the Malaysians changed the name as well as the colours?) I can only repeat a few words of advice which I always find useful, and which most people in football ignore:  “If it seems to good to be true, it usually is”. 

I’ll discuss Supporters Direct themselves as an organisation in the final part of this trilogy later sometime later in the week.  

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One Response to Supporters Direct Self-destruct Part II

  1. “There are plenty of staff at Fratton Park who are owed back salary. If, as Mr Lampitt claims, all those people are football creditors we have to wonder why the League only stepped in when the three directors registered their claims explicitly a couple of weeks ago. It suggests mainly that the Football League haven’t got a clue what is going on.”

    Or maybe it suggests that the Football League are interested only in directors and everyone else can whistle!

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