FL to hold emergency meeting

[Burger]

Maybe they've given us the same three options:

 

1. Cease to be members (i.e. withdraw from the League).

 

2. Start in Div 4 (as per Rule 11)

 

3. Stay in Div 3, but accept the points deduction

 

and we've not agreed to any and so they are going back to agree on next step.

 

I personally think there's a game of brinkmanship going on (and I can't blame Pinnacle for trying it on), it's just that I very much doubt the League will concede on this issue.

 

They hold all the aces (i.e. we have to make them let us into their game), there are a number of recent precedents (all the rulings from the Leeds case make this clear, including the support of an Independent Arbitration Panel) and as the voting showed with the Leeds case, they probably have the support of the majority of their member.

 

IMHO they won't be backing down.

 

if so then the next question is do Pinnacle (mystery backer) want to continue with "buy-out" if we start on minus 25 or lower league?

[InvictaSaint]

Maybe they've given us the same three options:

 

1. Cease to be members (i.e. withdraw from the League).

 

2. Start in Div 4 (as per Rule 11)

 

3. Stay in Div 3, but accept the points deduction

 

and we've not agreed to any and so they are going back to agree on next step.

 

I personally think there's a game of brinkmanship going on (and I can't blame Pinnacle for trying it on), it's just that I very much doubt the League will concede on this issue.

 

They hold all the aces (i.e. we have to make them let us into their game), there are a number of recent precedents (all the rulings from the Leeds case make this clear, including the support of an Independent Arbitration Panel) and as the voting showed with the Leeds case, they probably have the support of the majority of their member.

 

IMHO they won't be backing down.

 

All of which begs the question Steve of why - with complete respect to you and your research - the highly expensive legal minds working with Pinnacle have not considered everything you raise (it is their job after all) and come to the same conclusion. If this is how things stand, and how things, based on precedents, are likely to pan out, why in the name of all things holy did they proceed on the assumption that this game of brinkmanship would work??

 

I cannot for a minute believe that they could have entered into this period of exclusivity in such a naive fashion, with so many lawyers advising them, to risk losing half a million pounds for nothing. It just doesn't add up does it?

 

By all means let's see them push the boundaries a little and see what happens, but for the love of God, if it's a case of seeing £500K disappear down the swanny and losing the club, or starting with your option 3 (start in DIv 3 [League 1] on -10), then the latter MUST prevail.

 

If it is anything more insidious than this - i.e. differentiating between SLH and the new SFC Ltd - then surely it would be an insurmountable obstacle to ANY bidder as Fry has already stated explicitly (Echo quotation yesterday).

 

All of which, ironically, should put Pinnacle in a position of strength not weakness; they have just got to learn when to stop pushing and start signing - and quickly!

[um pahars]

All of which begs the question Steve of why - with complete respect to you and your research - the highly expensive legal minds working with Pinnacle have not considered everything you raise (it is their job after all) and come to the same conclusion. If this is how things stand, and how things, based on precedents, are likely to pan out, why in the name of all things holy did they proceed on the assumption that this game of brinkmanship would work??

 

I cannot for a minute believe that they could have entered into this period of exclusivity in such a naive fashion, with so many lawyers advising them, to risk losing half a million pounds for nothing. It just doesn't add up does it?

 

I think a number of reasons (and I'm sure there are more than i can think of):

 

1. Maybe Pinnacle probably think it's worth a punt in giving the League a scare, even if it doesn't come off. A fair strategy as long as too much time and resources isn't wasted. Puff your chest out, try and front up the League and give it a go.

 

Nothing ventured, nothing gained.

 

2. Maybe the League haven't made their position clear, i.e. is it (a) -10 in Div 3, (b) -25 in Div 3, © -10 in Div 4, (d) -25 in Div 4 etc etc etc and so the wranglings from that side have only just been started to be played out.

 

I would certainly want the League to be explicit about what the starting point will be before I signed the cheque.

 

3. You could go to 10 different lawyers and get ten different interpretations and summations. It's also in a lawyers interest to suggest giving legal action a go.

 

 

I certainly don't think Pinnacle are naive, and scenarios 1. and 2. wouldn't suggest that at all.

Edited 20 June, 2009 by um pahars
got me numbers wrong

[Whitey Grandad]

Simple - repayment of the principal. When you renegotiate your 150k mortgage at 8% you don't expect to turn it into a 70k mortgage at the same time? You expect to remortage to 150k at 4%.

 

We are asking the creditors to wipe out a substantial portion of their loans to us, not simply asking to pay less interest.

 

In time, the net effect is the same.

 

This comes down to the essence of the arrangements between the corporate bodies. SFC does not own the stadium and never has, presumably paying a charge for its use. The stadium is owned by a separate company, itself owned by SLH. From what I have read, the stadium company is viable and profitable in its own right. The debts and liabilities of the stadium comany are not related so SFC who could choose to play in any approved stadium, as has happened with many other clubs. It is therefore a matter of the other creditors and the money owed to them. If SFC has always paid the commercial rate for services provided by SLH companies and others then there has been no cross-subsidy and SFC has the option to obtain those services from alternative sources. SFC is short of liquidity but is not in administration and could raise cash from sales of season tickets, or from a financial backer.

[um pahars]

In time, the net effect is the same.

 

Wiping millions off of your debt and renegotiating the rate on the other debt will not have the same net effect, even over time.

 

Wiping the millions off will be much more beneficial in the short and long term.

 

This comes down to the essence of the arrangements between the corporate bodies. SFC does not own the stadium and never has, presumably paying a charge for its use. The stadium is owned by a separate company, itself owned by SLH. From what I have read, the stadium company is viable and profitable in its own right. The debts and liabilities of the stadium comany are not related so SFC who could choose to play in any approved stadium, as has happened with many other clubs. It is therefore a matter of the other creditors and the money owed to them. If SFC has always paid the commercial rate for services provided by SLH companies and others then there has been no cross-subsidy and SFC has the option to obtain those services from alternative sources. SFC is short of liquidity but is not in administration and could raise cash from sales of season tickets, or from a financial backer.

 

I'm sorry but your analysis of how SFC PLC and SFC Ltd trade is just way off the mark. The wholly owned companies under the umbrella of the PLC do not rade at arms length as you suggest.

[Whitey Grandad]

Wiping millions off of your debt and renegotiating the rate on the other debt will not have the same net effect, even over time.

 

Wiping the millions off will be much more beneficial in the short and long term.

 

 

 

I'm sorry but your analysis of how SFC PLC and SFC Ltd trade is just way off the mark. The wholly owned companies under the umbrella of the PLC do not rade at arms length as you suggest.

The time to full repayment of the mortgage can be the same with different capital debts and repayment terms, it's all a question of how the agreement is structured. If one of my customers comes to me and says 'I've got a bit of a problem at the moment, can I pay you half of what I owe you but I'll make it up sometime in the future' then I have to give it careful consideration. Regarding the interactions between the separate companies, I bow to your superior knowledge. Clearly this cannot be self-evident or there would not be all this legal discusion and the FL board would not have needed to call in auditors?

[um pahars]

The time to full repayment of the mortgage can be the same with different capital debts and repayment terms, it's all a question of how the agreement is structured. If one of my customers comes to me and says 'I've got a bit of a problem at the moment, can I pay you half of what I owe you but I'll make it up sometime in the future' then I have to give it careful consideration.

 

And maybe you would, but I doubt your reply would also include,"and by the way rather than the full £240,000 you owe me, let's just call the debt £80,000 and you only have to pay that back".

 

There is a massive difference between renegotiting payment terms and amounts and wiping 2/3rds of the debt off.

 

Regarding the interactions between the separate companies, I bow to your superior knowledge. Clearly this cannot be self-evident or there would not be all this legal discusion and the FL board would not have needed to call in auditors?

 

The Club does not trade in the manner you are suggesting, i.e. at arms length witht the stadium being it's own insular company.

 

The FL called in the forensic accountants to ascertain the financial inter dependibility of the SFC Ltd and SFC PLC (not the manner in which they traded with each other), something that soon became obvious.

[Whitey Grandad]

And maybe you would, but I doubt your reply would also include,"and by the way rather than the full £240,000 you owe me, let's just call the debt £80,000 and you only have to pay that back".

 

There is a massive difference between renegotiting payment terms and amounts and wiping 2/3rds of the debt off.

 

Or 'let's call it £80,000 but you have to pay it back at a higher rate of interest and there are punitive early-repayment conditions'. Debts are restructured all the time, revalued, swapped for equity, sold off to collection agencies at vastly reduced levels, anything to get at least something back rather than nothing.

[um pahars]

Or 'let's call it £80,000 but you have to pay it back at a higher rate of interest and there are punitive early-repayment conditions'. Debts are restructured all the time, revalued, swapped for equity, sold off to collection agencies at vastly reduced levels, anything to get at least something back rather than nothing.

 

Indeed they are, but when you get to a case of administration, then the p's in the £'s are much smaller.

 

I'm sorry but suggesting there is no material difference to the creditors between going in & coming out of administration and a renegotiated position on debt is somewhat stretching things.

 

To get the vast majority of your debt wiped off will normally only occur in drastic circumstances.

[saints triumph]

Southampton relegated by insolvency ruling

By Soccernet staff

 

April 23, 2009

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Southampton were effectively relegated from the Championship on Thursday when the Football League docked the club 10 points for breaking their insolvency rules.

 

 

DanielHambury/Empics

 

Southampton's fate has now been sealed

 

Should Saints finish outside the bottom three they will have the points deducted this season, which will place them back inside the relegation zone and thus consign them to League One next season.

 

However, if they are relegated conventionally at the end of the season the 10 points will be taken off at the start of next season with the former Premier League outfit in the third tier of English football for the first time in 50 years.

 

They are currently four points adrift of safety with a poor goal difference and just two games left, meaning it is most likely they will begin 2009-10 on minus 10.

 

The club's parent company, Southampton Leisure Holdings plc, went into administration a few weeks ago but it was felt a penalty could be avoided as Football League rules apply to clubs rather than their associated companies.

 

However, the Football League were concerned at the link between Southampton Leisure Holdings and Southampton Football club and ordered a financial review before deciding whether to impose a 10-point penalty.

 

The review concluded that the entirety of the income streams for the holding company came directly from the Football Club, and as such there could be no doubt that the two are "inextricably linked as one economic entity'', and that the 10-point deduction should be applied.

 

The 1976 FA Cup winners dropped out of the Premier League in 2005 after a 27-year stay in the top flight.

 

The Football League said on it's website: "The report, by Grant Thornton, set out in detail the various inter-relationships between the four different group companies at Southampton Leisure Holdings Plc (the Holding Company).

 

"The conclusions were based both on the content of the annual accounts published by the Holding Company, which include the Club, and other information made available to Grant Thornton as part of their enquiries. The Board noted that Grant Thornton reported that toward the end of their enquiries co-operation with them was withdrawn.

 

"The report concluded, among other things, that: 1.The Holding Company has no income of its own; all revenue and expenditure is derived from the operation of Southampton Football Club Limited (SFC) and the associated stadium company.

 

"2.The Holding company is solvent in its own right. It only becomes insolvent when account is taken of the position of SFC and the other group companies.

 

"3.The three entities (the Holding Company, SFC and the stadium company) comprise the football club and they are inextricably linked as one economic entity.

 

"In light of all this advice, the Board concluded that an administrator had been appointed in respect of the Club or part of its undertaking or assets. Accordingly, it was left with no alternative other than to invoke its 'Sporting Sanctions' regulations and apply a 10 point penalty to the Club. The other provisions of The League's insolvency policy also become effective.

 

"As the insolvency event occurred after The Football League's deadline of the fourth Thursday in March, the points deduction will take effect either: 1.In the current season, if Southampton avoid relegation to League 1; 2.next season, if the club does not avoid relegation."

 

Southampton are likely to appeal against the decision, meaning further uncertainty towards the end of a turbulent season for the club both on and off the field.

 

A statement from the club read: ''The administrators and the club were informed of the League's intention to issue a release on the findings of the independent forensic report five minutes before its publication, leaving no time for consultation and to inform fans, players and staff.

 

''We are of the opinion that an incorrect conclusion has been reached. The football regulations do not apply to the circumstances surrounding Southampton Football Club.''

 

Saints also refuted the Football League's claim they withdrew their co-operation towards the investigation.

 

The statement concluded: ''Both the club and the administrators are now considering their positions and expect to launch an appeal.''

 

Football League chairman Lord Mawhinney acknowledged the club do have the right to appeal.

 

Speaking on Sky Sports News, he said: ''There is an appeal mechanism and it's up to Southampton to decide whether they want to appeal and on what basis.''

 

He added: ''(The decision) wasn't inevitable, we commissioned forensic accountants to look at the situation. They gave us their report, they drew our attention to the holding company's annual report and we got external legal advice.

 

''The weight of all three of those made it clear that the club's affairs were inextricably linked to the holding company and, as a consequence, we took the view that an administrator had been appointed relating to the club and therefore we had no choice under our regulations but to apply the sporting sanctions.

 

''I have sympathy for the fans but the fans know as well as the rest of us that this has not been a shining example of football management. We have had changes and tension at board level and so the fans have had a difficult time.

 

''I can't imagine there is a Southampton fan in the world who welcomes this decision but the job of the Football League Board is to protect the integrity of the competition and that is what we have done.''

 

This bit is interesting

 

Football League chairman Lord Mawhinney acknowledged the club do have the right to appeal.

 

Speaking on Sky Sports News, he said: ''There is an appeal mechanism and it's up to Southampton to decide whether they want to appeal and on what basis.''

[CanadaSaint]

The FL called in the forensic accountants to ascertain the financial inter dependibility of the SFC Ltd and SFC PLC (not the manner in which they traded with each other), something that soon became obvious.

 

And the rationale behind this structure (to protect against administration) was made very clear with Leon Crouch's shockingly unwise admission some time back. Pinnacle can't even distance themselves from that because Crouch appears to be part of their team.

 

Without Leon on the inside of the bid I think we'd have a chance. We didn't conduct ourselves anything like Leeds, and appeals are supposed to address differences like that.

 

With Leon inside the Pinnacle group I think we should just swear, spit, punch the wall, call the FL bastards - and then take the ten-point hit.

[Burger]

And the rationale behind this structure (to protect against administration) was made very clear with Leon Crouch's shockingly unwise admission some time back. Pinnacle can't even distance themselves from that because Crouch appears to be part of their team.

 

Without Leon on the inside of the bid I think we'd have a chance. We didn't conduct ourselves anything like Leeds, and appeals are supposed to address differences like that.

 

With Leon inside the Pinnacle group I think we should just swear, spit, punch the wall, call the FL bastards - and then take the ten-point hit.

 

Do you think we should swear, spit, etc and then take the 25 point hit?

[um pahars]

And the rationale behind this structure (to protect against administration)

 

The rationale behind this structure (put in place in 1996 and way before the League's Insolvency Procedure was even dreamt of) was to circumvent the FA's Rule 34 (regarding financially exploiting football clubs).

[CanadaSaint]

Do you think we should swear, spit, etc and then take the 25 point hit?

 

On what basis would the additional 15 points be assessed?

 

We have made orderly progress through administration (although it hasn't always felt like it to us ) and we have - as far as I know - met all football-related obligations.

 

Damn right I'd appeal any additional hit because, in my understanding of the rules, there's no basis for it.

 

The goal of the point-deduction process is not to destroy long-established clubs.

[CanadaSaint]

The rationale behind this structure (put in place in 1996 and way before the League's Insolvency Procedure was even dreamt of) was to circumvent the FA's Rule 34 (regarding financially exploiting football clubs).

 

Um, do you remember exactly what Leon said about this?

[Beer Engine]

The root of the FL's difficulties is simply this:-

 

FL Regulations were drafted on the incorrect assumptions that (a) a football club and the entity that owns it (ie a limited company) are one and the same thing; and (b) the assets and business that comprises a football club will all be owned by a single company.

 

Saints transgressed the substantive rule that requires that a 10 point deduction is applied to any club going into administration - with the added penalty that the deduction will apply in the following season if the club goes into administration after the cut-off date AND if the club would have been relegated at the end of the season even without the application of the points deduction.

 

We have tried to dodge the FL rules on a technicality - specifically on the basis that the football club was in fact SFC Limited (not in administration) rather than SLH plc.

 

There is no merit in our claim - even the OS used to have an investors page (hastily removed after we went into administration) stating that SLH plc's primary business was running Southampton Football Club. The fact that SLH plc chose to hive out assets and liabilities to SFC Limited and the companies that apparently own the stadium and training ground etc. makes no substantial difference to the situation.

 

In those circumstances, the FL's argument is that Southampton Football Club is a basket of assets and liabilities held by a group of companies which are united by the shareholdings of the parent company SLH plc - a company which crucially has no other significant business interests.

 

In short - the FL's argument is that the whole holding comany scenario is a deliberate sham set up to thwart the proper application of the FL Rules.

 

We have no chance of succeeding in overturning the 10 points deduction on appeal - regardless of where that appeal or review is heard.

 

The worst that will happen is that the judge/adjudicator will reccomend that the FL Regulations are clarified to explicitly cover the holding company scenario.

 

I find it very hard to believe that the delay is due solely to Pinnacle having to sign away a right of appeal which is worthless anyway.

[so22saint]

The root of the FL's difficulties is simply this:-

 

FL Regulations were drafted on the incorrect assumptions that (a) a football club and the entity that owns it (ie a limited company) are one and the same thing; and (b) the assets and business that comprises a football club will all be owned by a single company.

 

Saints transgressed the substantive rule that requires that 10 point deduction is applied to any club going into administration - with the added penalty that the deduction will apply in the following season if the club goes into administration after the cut-off date AND would have been relegated at the end of the season even without the application of the points deduction.

 

We have tried to dodge the FL rules on a technicality - specifically on the basis that the football club was in fact SFC Limited (not in administration) rather than SLH plc.

 

There is no merit in our claim - even the OS used to have an investors page (hastily removed after we went into administration) stating that SLH plc's primary business was running Southampton Football Club. The fact that SLH plc chose to hive out assets and liabilities to SFC Limited and the companies that apparently own the stadium and training ground etc. makes no substantial difference to the situation.

 

In those circumstances, the FL's argument is that Southampton Football Club is a basket of assets and liabilities held by a group of companies which are united by the shareholdings of the parent company SLH plc - a company which crucuially has no other significant business interests.

 

In short - the whole holding comany scenario is a deliberate sham set up to thwart the proper application of the FL Rules.

 

We have no chance of succeeding in overturning the 10 points deduction on appeal - regardless of where that appeal or review is heard.

 

The worst that will happen is that the judge/adjudicator will reccomend that the FL Regulations are clarified to explicitly cover the holding company scenario.

 

I find it very hard to believe that the delay is due solely to Pinnacle having to sign away a right of appeal which is worthless anyway.

 

More worrying then is that the parent company has been dissolved so if you follow that logic, they may well not be awarding a golden share, as the company that owned it (according to them) has gone - it's the same argument as the CVA stuff as SLH isn't getting one - it's gone!

 

It's all ******** though - the FL can let in anybody they like really, at any point so there's nothing stopping them letting us enter on -10 pts other than a worry about setting a precedent, which frankly is rubbish as they seem to take everything on a combination of who is the "biggest" and who has the most influence at the lodge.

[obelisk]

The FL certainly don't come across as what I would consider to be gentlemen in these negotiations. When one thinks of the chairman's history in politics that doesn't really surprise me.

 

I shall try to put the matter to the back of my mind and start with the F5 routine on Monday. Thanks for the update btw.

[gordonToo]

The root of the FL's difficulties is simply this:-

 

FL Regulations were drafted on the incorrect assumptions that (a) a football club and the entity that owns it (ie a limited company) are one and the same thing; and (b) the assets and business that comprises a football club will all be owned by a single company.

 

 

The fact remains that on a strict interpretation of the FL rules, SFC have not been placed in administration and therefore the 10 point penalty cannot apply.

 

If however the FL are legally entitled to change the wording of their own rules and apply them retrospectively to SFC then we cannot win. Otherwise we would seem to have an excellent case.

[CanadaSaint]

It's very tempting to see Mawhinney as the FL and make this whole thing personal.

 

Regardless of our feelings about Mawhinney, the FL's rules and the supposed loopholes in those rules, the FL is effectively our fellow clubs until we get back to the Prem.

 

The more we b*tch and complain and appeal, the more we are likely to p*ss off clubs whose support we may well need down the road.

 

There's a price attached to that, and I'm not sure it's worth paying in order to take on what seems to be a "no-win proposition".

[Whitey Grandad]

In short - the FL's argument is that the whole holding comany scenario is a deliberate sham set up to thwart the proper application of the FL Rules.

 

The PLC setup predates the rules by a considerable period.

[bridge too far]

 

Originally Posted by Beer Engine

In short - the FL's argument is that the whole holding comany scenario is a deliberate sham set up to thwart the proper application of the FL Rules.

The PLC setup predates the rules by a considerable period. quote]

 

I think that's an important point and it undermines the FL's argument.

 

It's like punishing me for smoking in a pub 10 years ago, before the smoking ban came into force!

[CanadaSaint]

The PLC setup predates the rules by a considerable period.

 

That may be so but the following - see http://news.bbc.co.uk/sport2/hi/football/teams/s/southampton/8014811.stm - effectively destroys any case we have IMO:

 

Crouch: "Southampton Football Club was set up so that if this ever happened, we would not have these points deducted - it's the way they have interpreted the rules."

 

Mawhinney: "What he said that was of particular interest of me was when he said this structure was set up to avoid the football club having a penalty if it got into financial trouble."

 

The FL interprets its rules as it sees fit - regardless of how "fair" its interpretation may seem to be in the eyes of fans with a huge emotional attachment to their clubs.

 

I think we're best to try to stay on the high ground here - take our medicine and put people in place who can make sure that the points deduction didn't really matter anyway.

 

I'd bet Pinnacle blinks before the FL does. They've invested too much (time and money) to quit now.

[Mole]

It's very tempting to see Mawhinney as the FL and make this whole thing personal.

 

Regardless of our feelings about Mawhinney, the FL's rules and the supposed loopholes in those rules, the FL is effectively our fellow clubs until we get back to the Prem.

 

The more we b*tch and complain and appeal, the more we are likely to p*ss off clubs whose support we may well need down the road.

 

There's a price attached to that, and I'm not sure it's worth paying in order to take on what seems to be a "no-win proposition".

 

No one likes us we don't care is the line used by Millwall fans. If other clubs want to hate us then bring it on.

[Whitey Grandad]

That may be so but the following - see http://news.bbc.co.uk/sport2/hi/football/teams/s/southampton/8014811.stm - effectively destroys any case we have IMO:

 

Crouch: "Southampton Football Club was set up so that if this ever happened, we would not have these points deducted - it's the way they have interpreted the rules."

 

Mawhinney: "What he said that was of particular interest of me was when he said this structure was set up to avoid the football club having a penalty if it got into financial trouble."

 

The FL interprets its rules as it sees fit - regardless of how "fair" its interpretation may seem to be in the eyes of fans with a huge emotional attachment to their clubs.

 

I think we're best to try to stay on the high ground here - take our medicine and put people in place who can make sure that the points deduction didn't really matter anyway.

 

I'd bet Pinnacle blinks before the FL does. They've invested too much (time and money) to quit now.

I think that most people would settle for -10 points but it's the threat of further deductions that gives us all the willies. Clearly the decision must be partly political because asking prospective new owners to sign a waiver is not written anywhere in the League rules and must be a discretionary move on the part of the board or its chairman.

[gordonToo]

That may be so but the following - see http://news.bbc.co.uk/sport2/hi/football/teams/s/southampton/8014811.stm - effectively destroys any case we have IMO:

 

Crouch: "Southampton Football Club was set up so that if this ever happened, we would not have these points deducted - it's the way they have interpreted the rules."

 

Mawhinney: "What he said that was of particular interest of me was when he said this s."

 

The FL interprets its rules as it sees fit - regardless of how "fair" its interpretation may seem to be in the eyes of fans with a huge emotional attachment to their clubs.

 

I think we're best to try to stay on the high ground here - take our medicine and put people in place who can make sure that the points deduction didn't really matter anyway.

 

I'd bet Pinnacle blinks before the FL does. They've invested too much (time and money) to quit now.

 

Not necessarily. What Crouch meant to say was that the structure was set up to avoid the football club having a penalty if SLH got into financial trouble. This seems to be a perfectly reasonable and (so far) successful arrangement and Mahwhinney is at best straw clutching.

[SB]

Whats the talk of further points deduction, ?

[Whitey Grandad]

Whats the talk of further points deduction, ?

The 10 points are for starters. More follow after depending on how the club exits administration - see Luton & Bournemouth for examples.

[CanadaSaint]

I think that most people would settle for -10 points but it's the threat of further deductions that gives us all the willies. Clearly the decision must be partly political because asking prospective new owners to sign a waiver is not written anywhere in the League rules and must be a discretionary move on the part of the board or its chairman.

 

I hear you, but I hadn't heard anything about further deductions until today and I'm wondering where it came from.

 

Perhaps all this results from a dark threat from the Dark Lord - "Take the 10 points or it'll be much worse".

 

That would be true to form.

[jam]

That may be so but the following - see http://news.bbc.co.uk/sport2/hi/football/teams/s/southampton/8014811.stm - effectively destroys any case we have IMO:

 

Crouch: "Southampton Football Club was set up so that if this ever happened, we would not have these points deducted - it's the way they have interpreted the rules."

 

Mawhinney: "What he said that was of particular interest of me was when he said this structure was set up to avoid the football club having a penalty if it got into financial trouble."

 

The FL interprets its rules as it sees fit - regardless of how "fair" its interpretation may seem to be in the eyes of fans with a huge emotional attachment to their clubs.

 

I think we're best to try to stay on the high ground here - take our medicine and put people in place who can make sure that the points deduction didn't really matter anyway.

 

I'd bet Pinnacle blinks before the FL does. They've invested too much (time and money) to quit now.

 

I don't think Crouch's comments destroy our case, although they certainly don't help and gave Mawhinney a moral case why they should apply the penalty.

 

If it went to court or arbitration or whatever then I think the following:

- Crouch wasn't involved when the reverse takeover, SFC / SLH thing happened so he isn't qualified to judge the motives behind the action

- The club and holding company setup predates the penalty rules by some years so it cant be argued that [we] were trying to evade the rules by setting up the club in this way.

- (As far as I am aware) Crouch wasn't involved in the decision to put SLH into administration so his comments cant be taken as indicative of the then board's motivation.

 

Incidently I don't believe that Crouch was trying to say that the REASON for the PLC setup was to evade the rules but rather that as a RESULT of the PLC setup the rules don't apply.

[Beer Engine]

The fact remains that on a strict interpretation of the FL rules, SFC have not been placed in administration and therefore the 10 point penalty cannot apply.

 

If however the FL are legally entitled to change the wording of their own rules and apply them retrospectively to SFC then we cannot win. Otherwise we would seem to have an excellent case.

 

 

Don't get me wrong - the FL Rules have been drafted very badly and a narrow, technical interpretation of those rules might, in theory, have let us off the hook.

 

Having said that, whilst it is true that SFC Limited is not in administration, it is also true that Southampton Football Club and SFC Limited are not one and the same thing. Apparently a number of the assets and liabilities that comprise Southampton Football Club, like the stadium, training ground, mortgages and bank loans are attached to other companies within the SLH plc group.

 

So, if the business of SLH plc and its subsidiaries is primarily the running of Southampton Football Club (which by its own admission on the OS it was), then the FL have a good case when they say that the points deduction should apply even if it is only the holding company that is insolvent. Or as the FL put, the activities of all the SLH plc group companies are inextricably interlinked.

 

There are technical flaws with the FL's broad brush approach - but their verdict is fair in the context of the purpose of the FL Insolvency policy.

 

It is obvious that if all the assets and liabilities of Southampton Football Club had been vested solely in SFC Limited then SFC Limited would have gone into administration. The splitting up of the club into various companies does not alter the fact that, taken as whole, the football club's business was insolvent.

 

We're very unlikely to get anywhere with an appeal based on a narrow, technical application of the FL's (admittedly) woefully drafted rules because the substantive merits of the case are with the FL who, after all said and done, are merely attempting to stop football clubs from living beyond their means and using the administration procedure/corporate restructuring to avoid the consequences of their overspending. If the FL didn't do this then irresponsible, overspending clubs like Southampton would be able to gain an unfair competetive advantage over other FL members who have lived within their means.

 

The supreme irony is that we broke the bank to buy a bunch of useless players who gave us a competetive disadvantage!

 

Pinnacle's lawyers must have advised them to accept that the 10 point deduction will stand - so what does it matter if you sign away a right to appeal? My concern, therefore, is that the apparent absence of a CVA for the liabilities of SLH plc Group and its potential descent into liquidation may propmt the FL to impose an even heavier points penalty on Southampton Football Club regardless of new ownership and a newly created corporate structure. This, in turn, might have a significant detrimental effect on the valuation of Southampton Football Club and the price that Pinnacle is prepared to pay to own it - if anything.

Edited 20 June, 2009 by Beer Engine

[um pahars]

Pinnacle's lawyers must have advised them to accept that the 10 point deduction will stand - so what does it matter if you sign away a right to appeal? My concern, therefore, is that the apparent absence of a CVA for the liabilities of SLH plc Group and its potential descent into liquidation may propmt the FL to impose an even heavier points penalty on Southampton Football Club regardless of new ownership and a newly created corporate structure. This, in turn, might have a significant detrimental effect on the valuation of Southampton Football Club and the price that Pinnacle is prepared to pay to own it - if anything.

 

I would probably agree and IMHO I think the sticking point is that the League have not made it clear what the final outcome will be. As I said elsewhere I think Pinnacle would want to know exactly where the Club will be starting next season before they hand over the cash i.e. what division and with what points deduction.

[Whitey Grandad]

I would probably agree and IMHO I think the sticking point is that the League have not made it clear what the final outcome will be. As I said elsewhere I think Pinnacle would want to know exactly where the Club will be starting next season before they hand over the cash i.e. what division and with what points deduction.

Precisely. What other reason could there be for an 'emergency' meeting?

[Faz]

Precisely. What other reason could there be for an 'emergency' meeting?

 

Consider this from the Luton Town case:

 

"We will continue to that responsibility very seriously."

 

A Football League statement said: "Luton Town were unable to agree a CVA with their creditors and as a consequence are unable to satisfy the normal conditions of the League's insolvency policy for exiting administration.

 

"The board decided, however, that they were prepared to exercise their absolute discretion under their 'exceptional circumstances' provisions in order to accommodate the new entity"

 

This is my take on it:

 

* The FL invoked the Insolvency Policy, deeming that SLH and SFC were in effect the same entiity. The FL gave notice to revoke SFC's licence to participate.

 

* Under normal circumstances the club in administration exits via a CVA. Luton didn't. They formed a new company and applied to join the league in place of the old. The FL excercised their discretion and allowed this, but with an additional 20 point penalty.

 

* Pinnacle are buying SFC, which is not in administration, and so cannot exit via a CVA. SLH, which is in administration and does not hold the licence, is being liquidated.

 

* The FL have to find a way of getting themselves out of the mess they've created by deeming SLH and SFC were effectively the same - clearly they're not, as SFC continues and SLH does not. If they accept the two entities are not "intrinsically linked", they have to withdraw the penalty.

 

* Pinnacle won't complete without knowing they have the licence issue sorted, as otherwise they own a stadium and a football club but have no league in which to play football.

 

I don't think this is about the 10 point penalty per se, but more about the FL realising at the last minute that by withdrawing the notice of revokation, they effectively lose the appeal Fry has already lodged, but which has not yet been heard.

 

Probably b*****ks, but it makes sense to me.

Edited 20 June, 2009 by Faz

[up and away]

Originally Posted by CanadaSaint

That may be so but the following - see http://news.bbc.co.uk/sport2/hi/foot...on/8014811.stm - effectively destroys any case we have IMO:

 

Crouch: "Southampton Football Club was set up so that if this ever happened, we would not have these points deducted - it's the way they have interpreted the rules."

 

Mawhinney: "What he said that was of particular interest of me was when he said this s."

 

The FL interprets its rules as it sees fit - regardless of how "fair" its interpretation may seem to be in the eyes of fans with a huge emotional attachment to their clubs.

 

I think we're best to try to stay on the high ground here - take our medicine and put people in place who can make sure that the points deduction didn't really matter anyway.

 

I'd bet Pinnacle blinks before the FL does. They've invested too much (time and money) to quit now.

Not necessarily. What Crouch meant to say was that the structure was set up to avoid the football club having a penalty if SLH got into financial trouble. This seems to be a perfectly reasonable and (so far) successful arrangement and Mahwhinney is at best straw clutching.

 

No one can interpret what Crouch meant to say, not even the idiot himself. Seeing as everything was set up at Saints years prior to these regulations even being touted, Lowe must of had crystal balls that Buster Gonads would have cast envious glances at.

 

Where does anyone get the idea that the FL have done anything illegal or against their own rules? Everything they have done so far is perfectly acceptable within their structure and the only peron in the league that would argue with that is Saints?

[docker-p]

Where does anyone get the idea that the FL have done anything illegal or against their own rules? Everything they have done so far is perfectly acceptable within their structure and the only peron in the league that would argue with that is Saints?

If their case is so water tight as you suggest, why are they (FL) so bothered about Pinnacle agreeing not to appeal?

Why not let Pinnacle (or by then SFC) have their day in court, win the case and have their costs met?

[Wopper]

No one can interpret what Crouch meant to say, not even the idiot himself. Seeing as everything was set up at Saints years prior to these regulations even being touted, Lowe must of had crystal balls that Buster Gonads would have cast envious glances at.

 

Where does anyone get the idea that the FL have done anything illegal or against their own rules? Everything they have done so far is perfectly acceptable within their structure and the only peron in the league that would argue with that is Saints?

 

Do you mean the idiot thats put his money into the club and kept it solvent.

[Thedelldays]

If their case is so water tight as you suggest, why are they (FL) so bothered about Pinnacle agreeing not to appeal?

Why not let Pinnacle (or by then SFC) have their day in court, win the case and have their costs met?

maybe they will...we have no idea of the finer details do we..

[gordonToo]

The FL have to find a way of getting themselves out of the mess they've created by deeming SLH and SFC were effectively the same - clearly they're not, as SFC continues and SLH does not. If they accept the two entities are not "intrinsically linked", they have to withdraw the penalty.

 

We know that's all nonsense but it's a technically sound argument and would explain why the FL is demanding the waiver as their position is far from watertight.

[gordonToo]

No one can interpret what Crouch meant to say, not even the idiot himself. Seeing as everything was set up at Saints years prior to these regulations even being touted, Lowe must of had crystal balls that Buster Gonads would have cast envious glances at.

 

LOL!

 

Where does anyone get the idea that the FL have done anything illegal or against their own rules? Everything they have done so far is perfectly acceptable within their structure and the only peron in the league that would argue with that is Saints?

 

As Faz has suggested the key to this may be the FL having to explain how SFC can continue and SLH not if the two are "inextricably" linked. Hence the need for Pinnacle to sign the waiver accepting the -10 points.

[Faz]

LOL!

 

 

 

As Faz has suggested the key to this may be the FL having to explain how SFC can continue and SLH not if the two are "inextricably" linked. Hence the need for Pinnacle to sign the waiver accepting the -10 points.

 

I'm not sure it's even about the 10 points. More that the FL do not have a mechanism for dealing with our rather unique position. They had expected Pinnacle to buy SLH and come out via a CVA. Pinnacle haven't done that, and the rule book (which didn't cover the 10 point deduction in any case) doesn't cover the position where SFC - which is not in administration - says withdraw the revokation notice. Hence the need for an emergency meeting to once again re-invent the rule book on the hoof (always a dangerous thing).

 

If the FL insist on the 10 points, the members are effectively saying they can have their licence revoked at any time, at the whim of the management committee.

 

The FL should just accept their rules were badly drawn, leave us alone, and change them to reflect properly the intention.

 

All IMO.

[CanadaSaint]

The FL should just accept their rules were badly drawn, leave us alone, and change them to reflect properly the intention.

 

The fundamental flaw in this concept, Faz, is that it is simple common sense.

 

And we've all had plenty of opportunity over recent years to realize that arrogance and common sense are rarely found in the same sentence.

[Faz]

The fundamental flaw in this concept, Faz, is that it is simple common sense.

 

And we've all had plenty of opportunity over recent years to realize that arrogance and common sense are rarely found in the same sentence.

 

True. Don't suppose there's any chance of getitng hold of Hawhinneys expenses?

[aintforever]

The football League are behaving like a bunch of amateurs, they originally said we had the right of appeal, now they are saying we have to waive that right to join the league - you cannot blame Pinnacle for trying to contest that.

 

It's blatant blackmail and so obviously wrong, whatever anyone's opinion of the -10 point penalty.

 

I would guess that it's important for Pinnacle because if we get the -10 we are pretty much guaranteed two seasons in League 1. You would pay less for a club in that situation than one that stood a realistic chance of going straight back up.

[sidthesquid]

The 10 points are for starters. More follow after depending on how the club exits administration - see Luton & Bournemouth for examples.

 

I still have nasty feeling this is what the arguments are about - it's not the minus 10, it's the prospect of minus 25 because of the complications of not being able to complete a CVA.

A CVA is a legal contract, and it is quite possible that the lawyers will say that in the real world it is impossible to conclude one because in strict legal terms SLH is being liquidated and SFC never was insolvent in the first place. At the same time the FL is saying no CVA and you take -25. Which means either the FL back down completely and accept that SFC never was in administration, or by their own rules have no choice but to impose -25. And maybe that is why the no appeal clause is the stumbler and why Pinnacle is choking on its coffee at the prospect.

[sidthesquid]

Do you mean the idiot thats put his money into the club and kept it solvent.

 

That's the one. It was an idiotic statement I'm afraid, regardless of how much money he's put in

[um pahars]

More that the FL do not have a mechanism for dealing with our rather unique position. They had expected Pinnacle to buy SLH and come out via a CVA. Pinnacle haven't done that, and the rule book (which didn't cover the 10 point deduction in any case) doesn't cover the position where SFC - which is not in administration - says withdraw the revokation notice. Hence the need for an emergency meeting to once again re-invent the rule book on the hoof (always a dangerous thing).

 

The League have a huge amount of leeway and discretion on all matters pertaining to their own League.

 

The Arbitration Panel in the Leeds case backed this up and one snippet gives an indication that the League has every right to use its discretion:

 

64. Given the absolute discretion afforded to the Board in this respect by the Memorandum, Articles of Association and the Insolvency Policy and having regard to the margin of appreciation afforded to a sport’s governing body, the Claimant would have failed to establish that the Board’s decision (or the League’s) to include the points Condition was a decision that no rational decision maker in their position could make.

 

 

[Whitey Grandad]

The League have a huge amount of leeway and discretion on all matters pertaining to their own League.

 

The Arbitration Panel in the Leeds case backed this up and one snippet gives an indication that the League has every right to use its discretion:

 

 

64. Given the absolute discretion afforded to the Board in this respect by the Memorandum, Articles of Association and the Insolvency Policy and having regard to the margin of appreciation afforded to a sport’s governing body, the Claimant would have failed to establish that the Board’s decision (or the League’s) to include the points Condition was a decision that no rational decision maker in their position could make.

 

 

Absolutely. The board can and will do as it sees fit. Things have obviously reached a stage where they cannot proceed without clarification or ratification from the League and hence the emergency meeting. Nothing much can happen until they have met and decided.

[up and away]

Originally Posted by up and away

Where does anyone get the idea that the FL have done anything illegal or against their own rules? Everything they have done so far is perfectly acceptable within their structure and the only person in the league that would argue with that is Saints?

If their case is so water tight as you suggest, why are they (FL) so bothered about Pinnacle agreeing not to appeal?

Why not let Pinnacle (or by then SFC) have their day in court, win the case and have their costs met?

 

It is just the way the FL works as has been explained in the posts above. There will be no court, it will be the FL appeal process or nothing. I could see one of the creditors taking the FL to court if SLH had not fulfilled their CVA and the club was allowed to escape this. This could be as minor a matter as Saints having the right of appeal to the FL, time will tell. The problem arises because we have to effectively rejoin the FL and in doing so sign up to all their regulations from this point in time. It is obviously something out of the norm or the FL would not have rushed through an emergency meeting for Monday.

 

What concerns me is some statements from outside of Pinnacle stating lawyers opinions that we have a cast iron case. With the case of sporting bodies or probate, I would not believe a word from them unless they were prepared to proceed on a no win, no fee basis.

 

Even if we were to sign away our rights of appeal in any court, I doubt that would stand up to scrutiny when the agreement would have been made under duress.

[eelpie]

Even if we were to sign away our rights of appeal in any court, I doubt that would stand up to scrutiny when the agreement would have been made under duress.

 

That was Leeds claim when they went to Arbitration - and they lost.