Cash Crisis Haunts English Soccer Club as Banker Owner in Court
December 22, 2011, 1:12 PM ESTBy Tariq Panja
Dec. 16 (Bloomberg) -- Fans of Portsmouth thought their luck had turned when Vladimir Antonov bought the English soccer club. The Russian banker pumped millions of pounds into the team that a year earlier became the first ever from the Premier League to seek bankruptcy protection.
Now Portsmouth, which was demoted in May 2010 to the second-tier, is in crisis once again. It’s facing another cash shortage and is looking for its fifth owner in less than two years. Antonov is fighting extradition to Lithuania where he and a business partner are facing fraud and embezzlement charges linked to about $1.6 billion missing from banks he controlled there and in Latvia. The 36-year-old denies any wrongdoing.
“The thoughts of the Portsmouth fans in general is ‘Oh no here we go again. Why us?’” Ken Malley, vice-chairman of Pompey’s supporters trust, said in a telephone interview. “It just seems to go on and on, doesn’t it?”
While the arrival of a wealthy Russian owner echoed the hopes of Chelsea after its purchase by Roman Abramovich in 2003, Portsmouth is now back where it was a year ago.
Convers Sports Initiatives Plc, or CSI, the U.K.-based investment vehicle used by Antonov to buy Portsmouth, entered administration, a form of bankruptcy protection, on Nov. 29 when it defaulted on an interest payment owed to former owner Balram Chainrai. Hong Kong-based Chainrai sold the club to Antonov for 17.2 million pounds on June 1, according to the sales agreement.
Chainrai seized the club in February 2010 when its former Saudi owners also defaulted on a loan to his company Portpin, Chainrai said in interviews at the time. He declined to comment on current events when contacted by Bloomberg.
Still Afloat
The soccer club itself hasn’t entered administration this time because it’s still able to pay its bills, CSI’s administrator Andrew Andronikou said in a telephone interview.
Antonov, who is scheduled to appear in court in London today, loaned the team 10.2 million pounds ($15.8 million), according to a mortgage document.
“For the short term it’s okay but in the New Year it will need additional working capital and for that reason we need to find a buyer for it,” Andronikou said. He ran the club when it last fell into bankruptcy.
The 113-year-old team’s fans have watched from the sidelines as it went from winning the 2008 F.A. Cup, its first major trophy in 58 years, to losing a roster of international stars including England strikers Peter Crouch and Jermain Defoe and ultimately demotion from the elite Premier League after being hit with a nine-point penalty.
Points Risk
Another bout of administration would yield a further penalty and with it the likelihood of dropping another rung down the English soccer’s standings. Three points is equal to one win. Pompey, which is 16th in the 24-team Championship division, plays archrival and league leader Southampton in two days.
In Portsmouth, a blue-collar city where about one in 10 people works at a naval dockyard on England’s south coast, the fall from grace has hurt.
“The club is a very, very important part of the city,” said Malley, who’s watched games at Fratton Park for 57 of his 67 years. “Football is one of the main things here.”
Chainrai agreed to CSI’s request to defer the payment for the club for two years and imposed an interest rate of about 8 percent on the new owners, said Andronikou. The sale was completed after Chainrai received a bank guarantee from Bankas Snoras AB, Antonov’s collapsed Lithuanian bank.
Winning Approval
Fans like Malley are upset that Antonov was able to pass the Football League’s so-called Owners and Directors test, a requirement for all prospective buyers of clubs.
The U.K.’s Financial Services Authority in 2008 rejected an attempt by Snoras to open up in Britain, saying it wouldn’t deal with the regulator in an “open and co-operative way.”
“The League will now continue discussions with the club regarding the administration of its parent company and update the board at its next meeting,” the Football League said after a Dec. 8 meeting. Roman Dubov, a director of CSI, said the Football League spent “at least one to two months” to check Antonov’s credentials and found nothing wrong.
Chris Akers, a Portsmouth director who joined CSI on Sept. 14, said the group had bought as many as 10 companies, including one which owns the broadcast rights to the World Rally Championship for about 30 million pounds.
All the purchases were funded by Antonov, who is now CSI’s major creditor, according to Andronikou. Portsmouth’s debts were more than 100 million pounds and the team needed to enter into a deal with creditors to prevent it from going out of business. Andronikou said total debts, including those to past creditors, total about 25 million pounds.
Antonov “was never passionate about football,” Akers said in an interview. “I know of the pre-season and the current season games, I think he’s been to two.”
--Editors: Rodney Jefferson, Hellmuth Tromm
To contact the reporter on this story: Tariq Panja at tpanja@bloomberg.net
To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net
