It is reported that the administrators PKF have stated that the outstanding debt at Portsmouth FC is around £58m. On closer inspection it can be seen that all but about £10m of this seems to be owed to the owner or the previous owner. The scale of these debts could be fatal. Portsmouth do not have a great team and they are in desperate need of a new stadium. Relegation is a near certainty and therefore who is going to pay large amounts of money for a League 1 club which is needing major investment?
The major obstacle to the survival of the club appears to be the money owed to the previous owners, but should this be allowed?
The Football Authorities have been very keen to introduce what they call "Financial Fair Play". This is being done for laudable reasons however this will not safeguard clubs like Portsmouth where the cost (or part of the cost) of acquisition becomes an outstanding debt to the owner.
In addition to Financial Fair Paly rules, shouldn't the Football Authorities bring in a rule which says that if an owner buys a club or injects capital that money is to be Equity i.e. owner's risk capital which will lost if the investment is not successful.
What power does the administrator have to tell the owners that they have lost their money? What right does a previous owner have to insist on getting his money back to the point where the only alternative is to close the Club? I am sure that a well supported Club such as Portsmouth would be attractive to potential investors if the price was c£10m i.e. the non-owner debt and therefore it is easy to see the effect that the recent owners are having on the very existence of the Club.
How come owners are allowed to adopt a position where they can invest in a Club but insist on getting their money back if the investment turns bad?