Page last updated at 15:14 GMT, Friday, 26 February 2010

When football club administration kicks off

By Gerald Krasner
Partner at insolvency practitioners Begbies Traynor

Gerald Krasner
Players contracts are a key issue, says Gerald Krasner

When a football club administration kicks off things get incredibly hectic, and fast.

To start with, you need to insert a team of people to sort out the financials, appoint legal advisers and a valuer to start the process of identifying potential buyers.

You need to speak with the media so that you can explain to the fans what an administration actually is and what it means for them.

In addition the media is a useful tool to help identify potential buyers.

You need to open lines of communication with both the PFA and FA, and consider whether you need to try and strike a deal with the PFA to get them to contribute to players wages.

Contracts

You need to start getting your head around the player contracts - how long is each player under contract, what bonuses are they entitled to at this point in time and what might they be contractually entitled to in the future.

Though Portsmouth is the first Premier League club to go into administration, the fundamentals remain the same regardless of the division in which the club plays

You also need to look at players that have already been sold - were there sell-on clauses giving rise to claims?

You need to appoint an agent who can advise on each player - what interest is there from other clubs and what are they worth?

If the ground is not owned, you have to get in touch with the landlord to let them know where they stand.

You also need to have a meeting with background staff to address their concerns and let them know what is expected of them in the weeks ahead.

And that is all just in the first hour!

Rescue plan

Coming to terms with all of this information quickly is essential, so that it can be ascertained how a rescue plan or restructuring can be put together. However, this depends ultimately on buyers coming forward.

Red card
Some football clubs are facing problems off the pitch

The appointment of an administrator provides an eight-week lifeline to put together proposals to allow the club the chance to be reborn.

In those eight weeks the administrator will be working 18-hour days so it is not for the faint hearted.

There are inevitably moments when the outcome lies in the balance.

When I was appointed the administrator of AFC Bournemouth in February 2008 I committed to a monthly midday press conference to provide an update on the proceedings.

I recall two occasions when we were five minutes away from the start of those press conferences and when we did not actually have cleared funds in the bank to allow us to continue. Liquidation was literally that close.

Though Portsmouth is the first Premier League club to go into administration, the fundamentals remain the same regardless of the division in which the club plays.

The immediate challenge at Portsmouth will be to ensure the club has sufficient cash flow to enable it to continue to operate in the short term.

At the initial press conference the administrator would not give too much detail. He will still be getting his head around all the facts, and will want to keep all options close to his chest.

Though a points penalty has already happened, the administrator will want to ensure a Company Voluntary Arrangement will be approved by the creditors, thus ensuring further points penalties are not incurred next season.



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