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Page last updated at 11:57 GMT, Tuesday, 16 November 2010

Mandaric out of running to buy Sheffield Wednesday

By Matt Slater and Dan Roan

Milan Mandaric
Mandaric ruled himself out of a return to Portsmouth last month

Crisis-hit Sheffield Wednesday have suffered another blow after Leicester chairman Milan Mandaric ended his interest in buying the League One side.

He opened discussions with the Owls last week but pulled out on Tuesday after failing to agree terms with a major shareholder.

The club must find £600,000 by Wednesday to pay off the taxman or face the possibility of administration.

Talks on the club's future are continuing with other parties.

Deputy prime minister Nick Clegg, a Sheffield MP, has also offered his help to keep the club afloat.

Earlier in the week, former Sheffield Wednesday player and manager Chris Turner, who is now fronting one of the groups interested in buying the club, said the situation was "critical" for the Owls.

With a third winding-up petition in five months looming, the heavily indebted League One side have 24 hours to find a buyer or face administration.

"There's a number of consortia still in there, including the one I brought together, but the time for rumours has stopped," said Turner.

"It's time for action and I've said that to the group I brought to the club. I've said 'stop talking, put your money on the table and get this deal done'.

"I've done as much as I can. They now need to come forward and save the club."

Turner's group, however, are considered to be outsiders for the South Yorkshire giants, who now owe a total of £27m.

The Middle East-based oil consortium lost momentum when lead investor Kevin Mundie pulled out of the deal, citing family reasons.

Former Portsmouth and Leicester owner Mandaric had long been rumoured to be interested in buying in at Hillsborough after recently banking a reported £40m from the sale of Leicester City to a Thai group.

On Monday, former Owls chairman Dave Allen confirmed Mandaric's interest, just days after the Serbian-born businessman had issued a statement to distance himself from a bid for the club.

Allen, who is now the majority shareholder at League Two side Chesterfield, is owed £2.4m in loans dating from his controversial stint at Hillsborough.

The casinos and greyhound track owner told BBC Sheffield he is willing to write off the interest-element of that sum - £900,000 - and accept three payments of £500,000.

If there was an outstanding offer on the table we wouldn't be in this position now

Kris Wigfield, "Wednesday 'til I die"

The first of those would be upfront, with the rest coming over two years. If this is agreed to, he would throw in his shares in Wednesday, worth another £500,000.

"I'm quite prepared to ease the burden a bit," Allen said. "But a representative from Mandaric made me such a derisory offer I wasn't prepared to talk to him any longer."

The BBC understands Mandaric's offer was a one-off £300,000, a sum consistent with the amounts he has offered the five other directors and former directors also owed money.

Those five - Keith Addey, Ken Cooke, Bob Greison, Geoff Hulley and Mick Wright - are believed to have accepted "nominal amounts" of the figures they are owed, although that might change if Allen is given a better deal.

But all these sums are relatively small compared to the amount owed to Wednesday's main creditor, the Co-operative Bank.

The Manchester-based institution is owed £23m but is so desperate to retreat from its ill-fated foray into football, without taking the public-relations hit of bringing a famous club down, it is willing to walk away with just £7m.

Sheffield Wednesday
Wednesday's Hillsborough home is one of football's most famous venues

This is despite securing that debt against Hillsborough - part of England's bid for the 2018 World Cup - and the club's training ground.

If a deal cannot be done before Wednesday's High Court date, it is possible the Co-op will opt to place the club in administration to avoid liquidation.

But that is an option of last resort, with administration triggering an automatic 10-point penalty for the Owls, providing no guarantee of returning any more money to the bank and ending the club's continuous 143-year history.

There are two other potential buyers believed to be in the mix.

Wednesday Forward, a group fronted by Rotherham businessman Spencer Fearn and Sheffield accountant John Roddison, has said it is willing to inject £5m in order to keep the club afloat for the rest of the season.

Any repayment of the debt, however, would have to wait until Wednesday started to climb the league ladder again: a risky option that fails to give the Co-op the exit it desires.

The remaining bid is understood to be from an unknown "sugar daddy", although his plan is believed to be a similar gamble on a return to the Premier League and therefore unlikely to gain the bank's support.

All this uncertainty is a depressing state of affairs for a club that spent most of the 1980s and 1990s as one of England's top clubs.

Kris Wigfield, an insolvency expert and founder member of fans' group "Wednesday 'til I Die", believes the future of the club "now hangs in the balance".

"If there was an outstanding offer on the table we wouldn't be in this position now," said Wigfield. "The various parties are playing cloak and dagger tactics.

"It's very worrying and it's now 50-50 as to whether we go into administration."

On the face of it, Wednesday's fate appears dire. They only avoided administration in September because the Co-op agreed to settle a £1.1m income tax bill owed to HM Revenue and Customs (HMRC) but that was it as far as the bank is concerned.

With another £600,000 owed to HMRC (with £300,000 in VAT arrears due in December), the stakes could not be higher, particularly as the taxman would block football's preferred route out of administration, the Company Voluntary Arrangement, triggering a further points penalty.

"That would be devastating for everybody" said Turner, who had two stints as Wednesday's goalkeeper before managing the club between 2002 and 2004.

"It's not just about a points deduction. It's the bigger picture. Local businesses would lose out and there'd be a massive knock-on effect."

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see also
Owls on verge of administration
14 Nov 10 |  Sheff Wed
Mandaric considers Owls takeover
12 Nov 10 |  Leicester
Owls face second winding-up order
09 Nov 10 |  Sheff Wed
Owls investor pulls out of deal
03 Nov 10 |  Sheff Wed
Owls takeover very close - Turner
15 Oct 10 |  Sheff Wed
Wednesday given time to pay debts
11 Aug 10 |  Sheff Wed
Wednesday handed winding up order
23 Jul 10 |  Sheff Wed
Strafford resigns as Owls chief
17 May 10 |  Sheff Wed

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