The Highs and Lows of Coventry City Football Club
As a licensed insolvency practitioner based in the Coventry area I have always kept a keen eye on the highs and lows of the roller coaster that is Coventry City Football Club. Forever hoping that the succession of debt problems and landlord issues that the sports business has faced can be resolved so that they can get back to where they belong, being in Coventry and in the top tier of English football as opposed to a time share at Northampton’s Sixfields Stadium sitting precariously in League 2.
The news surfacing in the last few days is that the club’s new owners/new operating Company, SISU, have now made payment of approximately £470,000 to ACL (the owners of the Ricoh Arena) via the Football League. This follows the Football League’s recent ruling that the club should repay the unpaid rents of £600,000 less the costs of the Administration (which ACL were deemed to be responsible for given that the Administration was as a result of them rejecting a Company Voluntary Arrangement proposal by the club that would have seen them repaid over a number of years).
The news of this payment having successfully been made not only keeps the dream alive for most supporters of a return to the Ricoh arena but also goes some way to demonstrate that the new operating business is capable of paying its debts as and when the fall due.
So what happens to the creditors of the old operating company – Coventry City Football Club Limited?
Whilst none of the £470,000 is due to them, the football creditors rule imposed by the football authorities, allows for a share of the clubs revenues from media rights and sponsorships to be diverted to “football creditors” therefore it is believed that as CCFC Limited has now gone into Liquidation, some of these funds and the balance of funds from the sale of the business and assets (after costs) can now be used to distribute to these creditors on a pence in the pound basis.
What would have happened if the payment had not been made?
For those of you that are not up to speed with all things Coventry City FC, you should know that had this payment not have been made, then the club would almost be certain to never return to the Ricoh arena and may have been unable to complete their fixtures within the football league, so this news would certainly leave supporters breathing a sigh of relief.
Now the ruling of the football league to allow the Administration costs to be discounted from the rent sums due, may still be challenged by ACL, as they have been given a deadline to appeal by, however an appeal is likely to demonstrate that ACL are only concerned with recouping unpaid rent money and not demonstrate a willingness to start negotiations on a new lease for the club so my feeling is that an appeal would be unlikely. However, lease negotiations when a landlord has been stung in the past, tend to be somewhat difficult to achieve a quick agreement on and therefore I suspect that this ruling and subsequent payment has come too soon to ensure that the club could play their football matches in Coventry this season however I understand that if an agreement can be reached with ACL then the move away from the Sixfields Stadium in Northampton could happen quickly.
Coventry City FC has certainly seen its fair share of lows given the points deductions imposed not only when they entered Administration but once again when they moved to Liquidation therefore the football league’s ruling, whilst it is a lot to have to pay, can be considered a high.
What’s next for Coventry City FC?
The success of the club going forward is not solely determined on whether they can return to Coventry, this has been proven by MK Dons who moved from Wimbledon to Milton Keynes. However every Coventry supporter I speak to almost always has a second team which they support as the lows of the club in recent times make it extremely difficult for them to support them alone. Therefore a return to the stadium would seem the quickest route to success as attendances would rise, revenues would increase leaving more funds available to recruit better players. However, if a new lease was agreed would the attendances reach anywhere near the 23,000 fans that saw them thrash QPR 3-0 in their first match at the stadium some nine years ago? Only time will tell…
For an article covering the general landlord and tenant issues in Liquidation see HERE.