Coventry City edge closer and closer to the abyss

by Tom Furnival-Adams

Coventry City is not simply experiencing a financial catastrophe right now; it faces a crisis of identity, with far-reaching implications for football supporters across the country.

The Ricoh Arena dispute has spun out of control over the past 12 months, to such an extent that it is virtually impossible for Coventry supporters to comprehend, let alone confront what is happening to their club.

At face value, the idea that Coventry’s owners, Sisu, were able to place part of the club into administration themselves, before appointing the administrator and buying the same subsidiary back as their administrator’s preferred bidder is absurd. This is only the tip of the iceberg.

Imagine, then, the difficulty of explaining to those with only a passing interest why this is such a significant, disturbing case.

A typical conversation with the uninitiated goes as follows:

“So I hear Coventry are in administration then?”

Me: “Er…not exactly. Half of the club is in administration”.

“Ok. But new owners will sort everything out, right?”

Me: “No. The new owners are the old owners”.

“Right. But you’ll at least be able to afford to pay the rent on the stadium now?”

Me: “The owners could afford to pay the rent before, they just chose not to. We might be ground-sharing with Walsall next season”

“I don’t get it. Surely the FA don’t let that sort of thing happen? Anyway, how do you think Mourinho will get on at Chelsea next year?”

And this is one of countless frustrating facets of Coventry’s situation: it is virtually impossible to outline without sitting someone down and giving them a half-an-hour lecture on the complicated recent history of the club and its owners.

It may be a significant case study, but it’s a complex and boring one. People don’t follow football because they’re interested in the convoluted business practice of anonymous hedge funds.

It was the romance of England’s Euro ’96 campaign that truly hooked me in the first place, not the intricacies of the catering deals struck for that tournament and how they impacted on overheads for men in suits. If I supported anyone but Coventry, I probably wouldn’t take much more than a passing interest either.

Not another Porstmouth

One of the greatest misconceptions is that Coventry are another Portsmouth or Leeds, having spent beyond their means in order to achieve undeserved success. This is a popular perception because it is simple and easy to understand. We live in a post-2008 financial crisis world; we can all relate to that narrative arc, and according to some, Coventry fans should stop whining and deal with the consequences.

To reduce the Coventry situation to this, though, is like comparing Hamlet to The Snowman on the basis that they both conclude with the death of their protagonists. For a start, where was Coventry’s post-relegation overspending? And where was the success?

According to reports, Coventry are now around £70m in debt. Sisu claimed upon purchasing the club that they had rendered it debt-free. In recent years the net transfer spend has been negative. Sisu even used the Ricoh Arena for almost zero outlay last year.

So where on earth have these colossal debts come from? Why is there so little transparency? Unsurprisingly for an ownership who have failed to file their accounts on time for three years in a row, the breakdown of these debts remains for their eyes only.

See also: Barnet drop out of the Football League and into the unknown

Fans are running out of patience because their club is being taken away from them needlessly. It is not being downsized and dismantled because there isn’t an appetite from supporters, but because of a series of terrible business decisions made by individuals who have no affiliation with Coventry, and who appear to be unashamedly acting solely with self gain as their motive. There is a reason that all football fans should sit up and take note: this could happen to any club in the country.

Coventry City has averaged an attendance of approximately 18,000 throughout its history. This is a club who were deemed to require a 45,000-seater stadium only fifteen years ago, who represent a city of nearly 320,000 people. 

The FA and the Football League have been very quiet when it comes to recent events at Coventry

As recently as February of this year, 32,000 fans filled the Ricoh for a Johnstone’s Paint Trophy game against Crewe. And yet here we are, hypothesizing over the number of fans who might follow Coventry if they spend the next three years sharing with Northampton or Nuneaton while a new stadium is built (Sisu anticipate 3,000; a more realistic figure is 1,000 or less).

In other words, in such a deregulated system, no club is ‘too big’ to be immune from similar abuse.

It is this lack of accountability that Coventry’s plight serves to highlight. A governing structure that allows an anonymous hedge fund specialising in extracting profit from corporate insolvency cases to purchase a football club, drive it to administration and then buy it back to continue the exercise is one that requires some serious scrutiny.

The FA and the Football League have been very quiet when it comes to recent events at Coventry. Presumably they hope to distance themselves from the negative PR that inevitably follows Sisu’s circus, but they have a duty of care to the club’s long-suffering supporters.

Sisu’s actions are morally reprehensible, but they have not yet apparently broken any rules. Much like corporate tax evaders, one has to examine the system that allows them to get away with it just as much as the offenders themselves.

The tribal nature of football fans is partly what makes them such ripe targets for the antics of the likes of Sisu. Capitalism is driven by consumer choice and the collective influence of a customer base which has a shared goal of attaining the best quality product for as little cost as possible.

Consumer choice does not traditionally exist in football because a club is bestowed upon you from a young age, as a consequence of your family’s allegiance or a link to the place where you grew up. If a supermarket treated its customers with the same contempt that Sisu has treated fans of Coventry, they would all have taken their money elsewhere a long time ago.

But football fans are stuck with their club, and investors in modern football know this. They can afford to exploit their customers, safe in the knowledge that they will stay loyal to the brand – and I think the gradual re-defining of football clubs and supporters as ‘brands’ and ‘customers’ is partly what lies at the heart of Coventry’s mess.

If those responsible for regulating “investors” were not so reliant on them for revenue, they might be able to carry out their responsibility to protect historic community institutions such as Barry Town and Wimbledon FC.

Only by discarding petty club rivalries and combining their collective spending power will football supporters have any success in fighting back against the likes of Venky’s and Sisu.

Tom Furnival-Adams is a contributor to Just Football and long-suffering Coventry City fan who has also written for When Saturday Comes and The Two Unfortunates. Follow him on Twitter @Tom_FA

(photo credit: Southampton Atlantean via Flickr)

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15 Responses to “Coventry City edge closer and closer to the abyss”

  1. PorkyCovvy
    July 2, 2013 at 12:44 pm #

    This article seems very heavily biased towards Coventry City’s owners SISU and does not provide the context which has led us to this situation.

    SISU have subjected its asset, Coventry City, to a financial management structure which is nothing short of negligence, this cannot be denied by anyone. However, SISU saved the club from liquidation with their purchase. The debt which was owned to external parties was taken in-house which effectively left us debt free. This is still the case to an extent if you discard the Ricoh Arena arrears.

    This debt structure rightfully allows SISU to place its own company into administration as they are the majority creditor as the outstanding rent only represents a small portion of the sums. It is the role of the administrator to re-coup as much finance for the creditors as possible and it is not their role to place the football club into new ownership; especially when the potential suitors have done nothing to suggest they are more capable of running Coventry City in a successful or sustainable manner.

    If you are to cite the ethical practice of the ownership then the balanced argument would also highlight the public purse strings of Coventry City Council bailing out ACL, the holding company of the Ricoh Arena. This is a financial management structure which isn’t too dissimilar (but nonetheless far less complex) to the one used by SISU to run Coventry City Football

    Whilst referencing the earlier statement of negligence, it could be argued SISU’s refusal to pay the rent for the Ricoh Arena was in the best interests of the football club. The rent was extortionate and failed to provide the football club with any access to match day revenues (excluding ticket sales). With Financial Fair Play coming into force the club are restricted to spend a percentage of their revenue on playing staff. If the club have no match day revenues then attempting to finance a promotion winning team based on dwindling season ticket sales and replica football shirts is impossible.

    This is the reason Coventry City could afford to pay the rent but chose not to; because without access to revenue from our “home” the club will fail to survive no matter who owns it.

    To place a fundamental share of the blame on SISU without acknowledging the detrimental influence of ACL in this dispute is unfair. Coventry City fans are also to blame as they have deserted the club and left match day attendances at a frightfully low level, especially when compared to the required footfall former Coventry City Chairman Ray Ranson claimed the club needed in order to be sustainable. Whilst fans of Coventry City can certainly not be coined as “glory supporters” they equally have not remained with the club when the standard of football reduced.

    They key to ending this situation is to get SISU and ACL to the negotiating table in order to keep Coventry City at the Ricoh Arena. Any deal must have the long-term option for the club to own the asset. Had the Sky Blue Trust not marginalised themselves by aligning themselves against SISU they could moderate such talks and with no public offer or interjection from the Football League this issue could continue beyond the pre-season.

    • johnkelly
      July 2, 2013 at 3:38 pm #

      A football club needs to resonates with the supporters.We supporters are a fickle bunch.Over the history of CCFC we have had more bad times than good times.Therefore we are very suspious of interlopers,Throughout our history how many charatons have controlled the club? Even MNUFC would not put up with so much libation.You cannot blame the supporters for the failure of the owners.A blind man could see that Ranson was just a tool of the wake up to reality.We are on the path to destruction with the continued ownership.The data does not lie!!

  2. James
    July 2, 2013 at 1:06 pm #

    As a lifelong Coventry supporter, all I can say is that what is happening to Coventry City is an absolute disgrace. Or at least I think it is. The problem we are in is so convoluted, so messy, and so hidden that even by keeping abreast of all the goings on regarding the club, I still don’t have a clear view as to what is happening.

    All I do know, is that our club is being dragged through the dirt and run into the ground. CCFC is being killed and the football authorities seem to care not a bit.

  3. Fat Dave
    July 2, 2013 at 1:25 pm #

    Oh dear. Not bad but not good enough.

    Why should the owners (any owner) pay the rent out of their own pocket(s)? The football club should be paying the rent.

    The debt is to the owners, so not a problem for as long as the owners are content to carry that debt (but not increase the debt by paying more rent)

    The simple truth is that Coventry fans should be putting pressure on ACL to allow Coventry to play at the Arena at an affordable rent AND forcing them to negotiate partial ownership of the stadium with SISU.

    Another simple truth is that SISU have done very little wrong, other than trying to make the club sustainable.

    The analogy is that your parents are about to be thrown out of their home because they cant afford the rent. But you decide to side with the landlord.

    The fans are helping drive the football club out of Coventry the City and out of business

    • graham williams
      July 2, 2013 at 3:52 pm #

      sorry dave but get it right ..ITS SISU/OPIUM who are driving the football team out the city,,,have you /sisu/opium not seen the petition figures about SAVE OUR CLUB etc ….fans have stated that it will hurt but they WILL NOT go outside the city to watch HOME games ….so its not them that’s driving the club out …GO TO all football unite to keep Coventry city in Coventry…this is a new set up site which was set up by a WOLVES FAN who wants UNITY in football clubs,,,,sadly Coventry city are small fry as proved when west ham had government help for there move to Olympic stadium….hugh Robertson sports &media minister helped out….when asked last week by local COVENTRY mp he stated its a problem between the football league and the club…..GOVERNMENT cannot get involved typical double standards

    • steve
      July 2, 2013 at 5:38 pm #

      you should learn the facts before making a ridiculous comment

    • B. Nice
      July 2, 2013 at 6:04 pm #

      Careful now! You know dealing in facts isn’t allowed by many a Coventry City supporter! ACL’s constant over-charging, to the tune of between £5 and £7 million if average figures throughout the divisions we’ve been in are to be believed, are a massive reason the club is in the brown stuff, with the club having been forced to sell the paddle because of it. SISU are no angels, but they have never been on a level playing field as far as raising revenues is concerned. Depending on which figure was true for the debt when SISU took over, and now, the debt is seemingly the same, which means they have steadied an almost sunken ship – despite falling crowds, and reduced income due to relegation (Yes, they probably should have invested more in the playing side, but without the guarantee that supporters would come back, this would only have added to an un-manageable debt).

    • Micky
      July 2, 2013 at 8:02 pm #

      I think you need to look at this more finely. They were offered a reduction with access to match day costs, they refused. Sch at the time they new of financial difficulty with ACL, withholding the rent was a ploy to further this and to try and gain ownership or part ownership of the Ricoh at a discounted price. why should they lay claim to a tax payer funded asset? The council want the Ricoh to be sold, to correct people who will use the freehold of the surrounding land to rejuvenate the area of the city creating jobs in the process. Not some leaching faceless company with misinformed promises, no transparency or no empathy for suffering fans and city residents alike. I personally hope they aren’t allowed back at the Ricoh and are bullied out of the city.. Read up on past SISU practises, they seem to have history on this, shame if they was on the receiving end.

  4. Simon
    July 2, 2013 at 1:49 pm #

    Excellent blog on CCFC – thank you. Spot on about non-Cov people’s reactions – not a care! Same for national media too. Few seconds of coverage, maybe regarding a Trust protest or action, but that’s it. SISU aren’t going anywhere until they cripple ACL into oblivion and buy The Ricoh on the cheap. Then who knows what they’ll do with it. As long as us fans are safe in the knowledge that no one, on either side of the battle, gives a crap about them, then that’s ok, right?!

  5. markyboy
    July 2, 2013 at 2:30 pm #

    This downward plunge has been happening since we fell from the wealthy pastures of the premier league.

    Yes we had debts, all or most football clubs carry debt! But poor management and business decisions have all but finished CCFC off as a sporting contender.

    SISU the current owner in it’s many guises, have made many of those poor decisions. Their biggest one was to buy the ailing football club in the first place.
    They took on a debt ridden club and its crazy rent agreement with ACL, they should have know what they were buying into!

    The Ricoh arena was a major factor in SISU wanting to save Coventry City from extinction in the first place, in my opinion. But somewhere along the line that original plan of a buy out seems to have been lost.

    SISU seem to have forgotten or were unaware that to run a successful football club requires good sound management and expertise. Even more importantly a reasonable amount of investment in players and staff over a prolonged period. To build on good foundations.

    When they took the reigns of the club, some of these things happened. A few decent players have been and gone during their reign. Some are about to start the new season with their now premier league clubs. Many Managers with great track records of past promotions have also graced the dugout of the Ricoh arena only to fall well short.

    The biggest factor in all this is a lack of investment in the most important thing of all. The playing squad.
    Contracts have often aloud to run down to nothing. Allowing great potential players to leave the club at critical points in its rebuilding, as the owners have often showed lack of ambition to build a quality squad.
    Whenever the club has been close to grasping the next upward rung of the ladder, it seems the owner has not had the conviction to help it grab for it.

    Eventually this formula brings nothing but failure as Coventry City Football Clubs current position shows us.

    So again i ask the question, what does a Hedge Fund like SISU want with a debt ridden Football Club in the third division of English football?
    They have no assets other than its players, no ground and a support that has little or no belief in their ability to take them back to the “BIG TIME”.

  6. graham williams
    July 2, 2013 at 3:42 pm #

    from a fan of nearly 50 years the present situation could well put COVENTRY CITY FOOBALL CLUB off the footballing league map,,,,,some can say it was only sisus intervention that may have stopped them going out of business,but since then there involvement has been a disaster…the communications were none,stil is ..when questionare asked the answer is lies after lies and the main man at the forfront TIMMIE FISHER has a nose bigger then pinnochio as all he spits out is lie after lie after lie…The main lady our JOY may be a private lady but does she realise the hurt generations are feeling with her companies decisions…What business sense is there to move a club to groundshare for 3 years,lose 75 per cent of home support or more and then budget for a stadium in the Coventry area…PLEASE WHO EVER CAN SAVE OUR CITY .

  7. graham williams
    July 2, 2013 at 3:45 pm #

    in reference to the statement about media coverage even GLASTONBURY 2013 showed a SISU OUT flag .good on the bearer

  8. Dave Mander
    July 2, 2013 at 10:31 pm #

    Fat dave
    Are you a Leicester city fan or Tim Fisher in disguise, your comments are way off the mark and should be removed from this site as you talk a load of rubbish.
    Just football is all Sky Blues fans want, have you ever been to a match ?
    Do you know what passion is, to follow your club, to support no matter what, SISU have done little wrong? Come back to planet Earth my friend and if you have all night I could put you right on a few things. 32 k for a Johnstones paint match last season us fans know how to drive the club out of the city don’t we.

    Keep your comments in the best place, to yourself or perhaps when you learn the facts you can be in a position to have your say.

  9. Fat Dave
    July 3, 2013 at 10:33 am #

    Absolute nonsense – I knew the “you must be Leicester” or “you must be SISU” argument would arrive – so tiresomely predictable and ignorant.

    Fans want Coventry to remain within the City so either the club pays rent with money it doesnt have or the rent is lowered. But ACL won’t deal with SISU, so the fans should be demanding that ACL back down.

    Dave Mander – you clearly don’t understand the issues and are blinded by anti-SISU rage. Time to calm down and face reality.

    Coventry fans continue to undermine the very future of the club. The protests should be directed at the Council and ACL.

    The first poster, Porky Covvy is right.

    Laughable – all you fans want is “investment” but why should anyone continue to pour money into a loss-making club? Why dont you all invest, instead of sniping from the sidelines.

  10. Tom
    July 16, 2013 at 5:21 pm #

    Shame about Coventry, I love the headline above that says “not another Portsmouth”, I think those guys have been made insolvent at least twice.
    I was also gutted when Leeds United went into administration, I thought they had a great team when Viduka, Hart and Eirik Bakke was playing for them