portsmouth news

Portsmouth hope for £60m loan amid cash crisis

December 9, 2009
By Harry Harris, Football Correspondent

Portsmouth and other Premier League clubs are securitising their TV revenues for years into the future to help alleviate debt, ease cash flow, buy players and, in some cases, simply to survive and ward off administration.

Avram Grant
GettyImagesAvram Grant is Portsmouth manager

Portsmouth, who have failed to pay their players twice during two takeovers already this season, are searching for a major loan secured against the next two years of their TV revenues, which are paid via the Premier League.

If new manager Avram Grant can keep the club away from relegation, the loans against TV revenues for the next two years could reach £60 million, but relegation would halve the amount Portsmouth could borrow against their TV revenues.

Ten years ago, clubs like Newcastle and Leeds United led the way in securitising their guaranteed season ticket sales to buy players, ease debt and build new stands. Some clubs followed suit and so, having tied up season ticket sales for years to come, the clubs are now seeking to sell advanced TV revenues, knowing that a new three-year cycle of Premier League rights both domestically and overseas, amounting to £3 billion collectively, is guaranteed.

A Fratton Park source told ESPN Soccernet: "The club are talking to banks and organisations from Hong Kong to Australia about securitising TV revenues for the next two years. You would be surprised at the number of clubs that have either already done this or are doing it now, even some of the big ones.

"Portsmouth are in urgent need of refinancing as everyone knows but there is no chance the clearing banks in the UK would lend this amount of money, so the club are looking around the world right now.

"If the club were to stay in the Premier League then the TV revenues would be worth between £50 million and £60 million but, even if we go down, the next two years would be worth £25 million to £30 million."

Pompey are due £7 million in January from the Premier League as their next instalment of the TV revenue, but the club might have no choice but to allow that money to be diverted directly to two clubs owed outstanding payments on player transfers. That would enable the Premier League to lift the transfer embargo and permit Grant to invest in new players - providing the club can pull off the refinancing package.

Debts of £8 million are still due to Chelsea and French club Rennes as Pompey have fallen behind in payments on the transfers of Glen Johnson and John Utaka. The club are also due to pay Devondale Investments, a family trust linked to former owner Sacha Gaydamak, £8 million by the end of January. The club owe £33 million to Gaydamak, with the balance of £25 million payable in 2012.

However, the insider dismissed a number of rumours concerning the club's debts: "The new owners have put in £18 million already, but there was £30 million of debt and that had to be totally repaid.

"It is true that we still owe a few agents large amounts of money but they have been renegotiated and spread out over a period of time. As for the rumour that we are behind with payments to the police for match-day policing, I have no idea where that one has come from - we pay them on a match-to-match basis.

"Rumours persist about the [Inland] Revenue, and we are behind for October and November payments, but we are probably as up-to-date with the Revenue as most clubs in the Premier League." The club owe a PAYE bill of £1.5 million due from the November payroll.

The source added: "We are, though, still to pay £7 million of transfer debts, and that is why we are still under the league's transfer embargo, but I would say that £7 million still to pay on transfers is about the lowest in the Premier League.

"We are in the process of refinancing, trying to find the loans offset against TV revenues, and with something like £16 million to £18 million put in already by the new owners, we should be in a very strong position come next summer."

The FA and Premier League might want to know more details should there be any third-party loans in case they contravene strict new regulations brought in after Carlos Tevez and Javier Mascherano's third-party ownership controversy.

In addition, speculation continues about the future of Portsmouth's long-suffering chief executive Peter Storrie.

Ali al-Faraj became the new owner of Portsmouth in October and immediately appointed his lawyer, Mark Jacob, as executive director of the club. Jacob's representation of the 40-year-old Saudi businessman has, to some degree, crossed over into Storrie's role within the club's administration. Jacob has assumed overall charge of the day-to-day running of the club - again, something that was once Storrie's domain.

Storrie, though, has not been totally marginalised. Although he was officially on leave to take a holiday in Australia, ESPN Soccernet tracked Storrie down to Hong Kong, where he was conducting business meetings en route to Australia, with more meetings planned in Australia to double up with his holiday. Storrie, though, declined to make any comment.

Faraj failed to pay the players 75% of their wages for November, although it understood that the remainder has been paid or is in the process of being paid. However, it has been suggested that it required another loan of £1.5 million from Balram Chainrai to meet the remainder of the players' salaries. Chainrai, a Hong Kong-based businessman, had previously loaned the club £17 million, a short-term loan to meet £10 million in unpaid tax and the players' wages in September and October.

This third-party loan is another issue the Premier League is sure to want clarification about.

The finances put in place following the takeover by Ali al-Faraj are sufficient only to keep the club operating on a day-to-day basis, but the club have reached the maximum of their overdraft facility, hence the urgency to secure outside funding securitised against future TV revenues.