Portsmouth suffer Premier League parachute payment blow
Portsmouth will not benefit directly from Premier League parachute payments until 2012 at the earliest because the money will be paid directly to the club’s football creditors.
Under the terms of a new settlement expected to be agreed with the Football League this summer, relegated clubs will be due £16m in each of the next two seasons and £8m in each of the following two. Such is the scale of Portsmouth’s debt however that almost half will pass directly to the players and clubs owed money.
Earlier this season the Premier League diverted Portsmouth’s scheduled broadcast revenue payments directly to clubs owed outstanding transfer fees, and they will do so again to clear the huge debts.
The arrangement is a further blow to the club’s prospects of finding a new owner, as the parachute payments are the one strand of guaranteed income.
It emerged as the Premier League and the Football Association announced that Portsmouth would not be permitted to take their place in the Europa League next season, earned courtesy of their presence in the FA Cup final, because they do not meet Uefa’s financial criteria. Their place will now go to the seventh-placed finishers in the Premier League.
Administrator Andrew Andronikou claimed on Thursday that the ruling was unfair on the club’s fans, but it is understood that his firm was informed of the likely ruling last week and that at no stage has the club even applied for a Uefa licence.
Given the scale of their debts it is also highly unlikely that Portsmouth would meet the criteria, and sources said any expectation Uefa would waive the rules is misplaced..
Meanwhile the club’s supporters, including action group SOS Pompey, have launched a campaign calling on Andronikou to deny the club’s former owners tickets to the FA Cup final and give them instead to the small creditors such as St John Ambulance who will lose money as a result of the club’s collapse.
This week Andronikou revealed that Portsmouth’s debts totalled £108.6m, with a further £14m owed to finance companies by other clubs on their behalf.
Of the total, £22.2m is owed to clubs and players whose debts are secured under the terms of the football creditors rule. This ensures that if a club goes into administration, players and clubs receive priority over other creditors including the taxman. Portsmouth owe £17.3m in outstanding transfer fees, and current and former players are owed £4.9mn in wages, bonuses and image rights.
The football debts mean that all of the first year’s parachute payment and a third of the second-season money will go directly to these creditors, meaning it will be 2012 before the club receive any cash benefit.
They may have to wait even longer however, as owner Balram Chainrai, who also claims to be a secured creditor, is owed £14.2m. If he were to call in that debt it could be 2013 before the club receive any surplus.
Portsmouth’s unsecured creditors are owed £92.3m but will have to settle for a fraction of that if the club are to exit administration.
In a further development Tottenham confirmed that they would seek £1m compensation from Portsmouth after the transfer of Asmir Begovic collapsed in January.
“Our intention had been to assist a fellow club in financial difficulties whilst at the same time protecting our commercial position,” Tottenham said in a statement.