Administration is not the end of the world

[Yorkshire Blue]

Administration isn't the worst case scenario. In fact administration, although unpleasant could even be a positive if we can restructure and pay off our debts.

I'd take the 10 point deduction IF it meant getting our finances in order. I'd rather be relegated this year (not a certainty, even if we do lose 10 points and not a certainty to be avoided, even if we don't lose 10 points) and be in a good financial position for the next decade and beyond rather than postponing the inevitable.

We shouldn't be seeking to avoid administration at any cost. It may turn out that Ron can confound expectations and cobble together a last minute deal to stave it off. But that isn't necessarily what will be in the best interest of the club. If he gets such a deal, we need to know at what cost: mortgaging what is left of our club's future may be too much of a price to pay.

There is more to the club's future than surviving this particular threat. If Sainsburys stump up the money early, but at a deep discount we may not have the money to pay the next tax bill and we may have played our ace too soon.

There is a lot more to Wednesday than avoiding administration.

 

[Shrimper93]

As crazy as this sounds and contraversal to some, maybe this is a viable option for us in RM's view just look how the other clubs have faired in admin

 

[Beefy]

Does anyone know why we didn't go into Administration a decade ago when Ron bought the Club? That would have seemed the logical time to do it. Plenty of businesses survive this, and certainly plenty of Football Clubs. If it happens it'll feel like the worst kick in the balls ever but maybe it's what we need.

 

[sosman]

Agreed, Yorkshire.

Which is why Scally makes the comment (not the first person to do so) that a 10-point deduction is not nearly enough; the penalty should be much more severe as it can still be a profitable way forward.

Are we having this conversation because that's what everyone thinks is going to happen today?

It will be a severe embarrasment for RM if we do go to admin, seeing as his fairly recent statements that the debts "will" be paid off will be shown to have been hollow. Not sure if he will be able to stay on after being shown up like that.

 

[The Flying Scotsman]

Does anyone know why we didn't go into Administration a decade ago when Ron bought the Club? That would have seemed the logical time to do it. Plenty of businesses survive this, and certainly plenty of Football Clubs. If it happens it'll feel like the worst kick in the balls ever but maybe it's what we need.

Losing 10 points 10 years ago would have put us in the conference!

 

[Beefy]

There was no ten point penalty ten years ago though. That got brought in much later simply because so many clubs were choosing to go into Admin because it's a pretty good deal - you spend money on transfers and wages that you haven't got, go into Administration, see your debts drop my 90% and start again. Plenty of much bigger clubs have done it. Personally, I think the punishment should be automatic relegation. Then maybe football clubs will keep their houses in order. At the moment there's very little incentive to pay tax bills as getting better players will gain you more than ten points anyway.

 

[Sussex Shrimper]

Couldn't agree more with the OP.

First things first, I want Southend United to continue to exist, and having learned of the consortium waiting in the wings the prospect of Southend United going into liquidation is probably further away than it has been in a decade or more.

Administration would (will?) force us to confront long running problems that have caused the club to **** money year on year for longer than I care to recall. As disgraceful a piece of legislation as it is that allows a business to enter administration, divest itself of its debts at a knock down price and carry on with a fresh balance sheet, I hate the game rather than the player. Being cynical, 10 points could prove an outrageously cheap price to pay.

The biggest potential problem I see, way over and above any short term difficulties that arise as a result, is how any potential departure of Ron from the club would affect our relationship with SEL when it comes to using the new stadium. For that reason I'd encourage people to think carefully before burning any exquisitely coiffured effigies tomorrow night. However we might feel right now about Ron Martin's stewardship we may very well still find ourselves needing to have a cordial business relationship with the man in the future.

 

[canveyshrimper]

Losing 10 points 10 years ago would have put us in the conference!

To be pedantic it wouldn't, as the points deduction penalty is only something that has been introduced within the past 4/5 years, and mainly in the wake of Leicester going into admin owing 40+million IIRC.

 

[palexander]

Totally agree too - admin is not the end of the world - and if anything, will hopefully galvanise everyone for a relegation battle, which perversely, is quite exciting!

On the other hand, admin MUST mean we sort ourselves out long term. Whether that is the removal of Ron Martin, or a new team of investors.

I think we all know that we cannot survive as we are currently and at the end of the day, that IS Ron Martin's fault - so either he sorts himself out, or he looks to sell up and gets out of town IMO.

 

[The Flying Scotsman]

Too many pedantic people out there. Me bad!

 

[TITSUP]

Whatever happens today, Southend United Football Club Ltd must be kept afloat!

 

[palexander]

Too many pedantic people out there. Me bad!

Love this - its like a crossword anagram!

 

[Richard_Cadette]

I guess your opening gambit depends entirely on context - in comparison to a humanitarian crisis, or a natural disaster causing huge loss of life, then no, of course it's not the end of the world. In terms of where we have been over the last few season, the bright future we were all promised, and the fantastic position the club found itself in, by design or otherwise, then yes, it's very, very bad.

There is no way we should be in this position, as I have said on numerous occasions, and while it is all very well saying it could be a positive thing if we can restructure the club - what if we can't? A 10 point deduction, and the whirlwind that the administrators will cause ripping the club to pieces could almost certainly result in us dropping out of this division. Then we have the question of ownership - who will own the club going forward? The current regime should not be involved in the club at all IMO as they have proved that they are not capable of running what on paper seems a very viable club.

Then it is down to what kind of owner picks us up - With planning permission granted, and the club no doubt being available on the cheap, then we will attract a lot of interest - but will it be from the right kind of people?

Of course, it is possible that we could end up with a Knight in Shining Armour and we can move forward with all the original plans, but there is no guarantee, and the cuncertainty is extremely worrying.

 

[Firestorm]

I am beginning to think that Administration could be the start of things again, rather than the end. Investors would not want to put meaningful sums of money into an outfit with 7M debts, however get them down to 2-2.5 M and we may well be talking.
I would not be surprised if there is already a buyout package lined up , paying 30-40% and the club then moves forward from a clean slate (assuming RM can get the CVA right)
I am concerned about the ethics of this and it may also be the case which changes the FLs stance on the administration penalty as it strikes me that this may a deliberate plan to wipe out our debt (True it will cost Mezcal / SEL a couple of Million, but that was apparently going to be written off when the profit from the FF / RH development came through anyway)

 

[Xàbia Shrimper]

Does anyone know why we didn't go into Administration a decade ago when Ron bought the Club?

Apart from the fact that Delancey put together a rescue package worth 1.5m just before the hearing?

 

[Matt the Shrimp]

Does anyone know why we didn't go into Administration a decade ago when Ron bought the Club?

Because there was no need. The last time HMRC presented a winding-up petition in 2000, it was for c. £450K. Delancey wanted to use it as a ruse for ousting John Main; Paul Fitz and I convinced Colin Wagman (then deputy chairman of Delancey) that that would be a bad idea, and they'd be better off settling the debt with HMRC, calling an EGM and ousting Main in that way. In that economic market, raising £450K was not difficult for a company as large as Delancey.

Matt

 

[Wickford Blue]

If we go into admin though isn't it the responsibility of the Administrator to liquidate asstes and pay off debt? If this is the case would this not result in a fire sale of our assets which are the players, therefore we would potentially lose most of the first team squad and have to complete the season with the youths and players we cannot get rid of. Didn't this happen at Hornchurch??

 

[Yorkshire Blue]

Agreed, Yorkshire.

Which is why Scally makes the comment (not the first person to do so) that a 10-point deduction is not nearly enough; the penalty should be much more severe as it can still be a profitable way forward.

Are we having this conversation because that's what everyone thinks is going to happen today?

It will be a severe embarrasment for RM if we do go to admin, seeing as his fairly recent statements that the debts "will" be paid off will be shown to have been hollow. Not sure if he will be able to stay on after being shown up like that.

I'm starting this conversation as much if we avoid administration today.

Administration is bad, it is likely to result in a number of unpleasant things besides the 10 points - the splitting up of the Tilson and Brush team for example - but my point was that it may still be a better alternative to whatever rescue plan RM comes up with, if the terms of that plan are too unfavourable. Avoiding administration might not necessarily be the victory people think it is.

When it comes to raising the money RM is in an incredibly weak bargaining position and whoever lends him the money, will be more than aware of this. There is more to today than avoiding administration is good and going into administration is bad.

 

[C'mon you Shrimpers]

the downside is the 10 points (Tilly and Brush's biggest challenge since keeping us out of the conference) and the fact that small creditors often suffer most when companies go in to administration. Now as the consortium have agreed to pay all debts this should not happen (hopefully if they are men of their word - their first test). Ron's other companies remain intact if I understand it and he can still aim to get finance to finance the FF development which as we know is more than a stadium. Administration in these circumstances may seem not so bad as at first sight. Business men (and that includes the SUFC board as well as the consortium) are not like football fans. They see things less emotionally.
Chin up, worse things happen at sea.

 

[C'mon you Shrimpers]

If we go into admin though isn't it the responsibility of the Administrator to liquidate asstes and pay off debt? If this is the case would this not result in a fire sale of our assets which are the players, therefore we would potentially lose most of the first team squad and have to complete the season with the youths and players we cannot get rid of. Didn't this happen at Hornchurch??

I am a layman here so forgive me if I'm talking crap. If someone wants to buy the club and pay the debt then all the above is unnecessary. The administrators job will be to see if it's viable.