Portsmouth football club enter administration
LONDON: Portsmouth were condemned to relegation Friday after becoming the first Premier League team to enter administration in a move designed to avoid the 112-year-old club going out of business altogether.
The move means Portsmouth will automatically be docked nine points, a penalty which virtually guarantees the top flight's bottom club will drop to the second-tier Championship at the end of the season.
The entry into administration was confirmed at London's High Court following the failure of attempts by Portsmouth's Hong Kong-based owner Balram Chainrai to find a buyer willing to bail out a business with debts in excess of 60 million pounds (90 million dollars).
A fire-sale of the club's best players, who include England goalkeeper David James, is now inevitable as administrator Andrew Andronikou attempts to return the business, labelled "dysfunctional" by one insolvency expert, to a viable state.
Significant redundancies are expected at a club which employs 600 people and the players and coaching staff will be asked to accept wage cuts in an attempt to make Portsmouth more attractive for potential buyers.
Had Portsmouth not gone into administration, the club would almost certainly have been liquidated on Monday when a High Court judge was due to rule on a winding-up petition brought by the British tax authorities over an unpaid Value Added Tax (VAT) bill of 7.5 million pounds.
At a preliminary hearing on February 10, the judge said she feared Portsmouth were operating while insolvent but agreed a temporary stay of execution after being convinced there was a realistic chance of a buyer coming forward.
The nine-point penalty will leave Portsmouth, who have won only four of their 26 matches this season, with seven points, 17 adrift of Hull, the club currently occupying the last survival spot, with only 12 matches left to play.
Portsmouth's financial difficulties have been underlined by the club's failure to pay staff and players on time on four occasions since August and by the boardroom turmoil which has meant the club has had four owners this season.
Chainrai took control at the start of this month in an attempt to recover some part of a 17-million-pound loan his company made to the former owner, Ali Al Faraj, a Saudi Arabian national based in the British Virgin Islands.
Chainrai's loan had been secured against the 90 percent stake that Al-Faraj acquired in October from previous owner Sulaiman al-Fahim, who had himself only been the owner for two months. Al-Fahim took over in August from Alexandre Gaydamak, who claims he is still owed 28 million pounds.
The cast of characters seen in the Pompey boardroom this season has also included Israeli lawyer Daniel Azougy, a convicted fraudster and an adviser to Al-Faraj.
Portsmouth's financial woes are the result of the medium-sized south coast club spending beyond its means on the acquisition of players and their salaries.
The approach arguably paid off when Portsmouth lifted the FA Cup in 2008 -- the club's first significant silverware in 58 years.
But the success proved unsustainable and the Cup-winning squad assembled by then-manager Harry Redknapp has since been dismantled.
Star striker Jermain Defoe and midfielder Lasanna Diarra were sold in January 2009 and Defoe's England team-mates Peter Crouch and Glen Johnson followed at the end of last season.
Bosnia goalkeeper Asmir Begovic and key defender Younes Kaboul were offloaded last month and only a Premier League ruling that the club could not sell players outside the transfer window prevented further sales this month.