There are many claims made that are said to be the truth of CCFC’s situation in this mess. Such claims often lead to confusion and division. Below are some of the facts. The hope is that a clear statement of provable facts will help get everyone on the same page and we can face the problems that confront our Club in a unified manner.
None of what follows is opinion – just factual. As far as has been possible all entries are capable of independent third party verification and the sources of that verification can be disclosed. Please contact the Sky Blue Trust with details of any errors or amendments. The Sky Blue Trust will not be held liable for any action by a user of this information.
OEG/CCFC – Otium Entertainment Group Ltd trading as “Coventry City Football Club”
SISU – SISU Capital Limited
ARVO – ARVO Master Fund
SBS&L – Sky Blue Sports & Leisure
CCC – Coventry City Council
AEHC – Alan Edward Higgs Charity
Wasps – Wasps Holdings Limited
Structure & Ownership….
“CCFC is the same as or is SISU” – INCORRECT
- OEG was formed & registered in April 2011. It purchased the assets of “CCFC” and became OEG/CCFC in June 2013
- Legally OEG/CCFC is a separate legal entity from ARVO, SBS&L or SISU.That is very important to understand because it protects SISU from OEG/CCFC creditors or actions taken against OEG/CCFC. It is why it has been so very difficult for anyone to take direct action against SISU.
- SISU is declared at Companies House as a relevant legal entity that has the right to exercise significant influence or control over OEG. SISU is not declared as the owner of OEG/CCFC or being the same entity. SISU controls OEG/CCFC
- The legal separation allows SISU to take actions concerning OEG/CCFC without it affecting the rest of the SISU business or funds. It allowed the creative & legal accumulation of losses. That is important to understand.
- OEG is owned by ARVO and SBS&L. Both are controlled by other SISU entities and ultimately by Joy Seppala & Dermot Coleman (the shareholders/Directors of SISU Capital Limited)
- SISU were appointed to manage the investments by their clients, for which they receive payment from the investment funds. The investment in OEG/CCFC is part of those funds
- Tim Fisher is the only director of OEG/CCFC and joint director of SBS&L along with a SISU employee Laura Deering
- OEG/CCFC is the only football trading entity in the group set up. SBS&L has no income
“CCFC is separate from OEG Ltd” – INCORRECT
- OEG owns and uses the trading name of Coventry City Football Club
- CCFC’s legal entity for all actions and transactions is OEG.
- OEG owns all assets(the right to golden share, trademark, Ryton, players contracts etc) and is liable for all creditors(Loans, VAT, trade creditors, wages, PAYE etc)
- OEG employs all players, managers & staff and operates all functions of CCFC.
- All turnover, income, player sales etc belong to OEG. All expenses & overheads paid by OEG
- The EFL membership or “Golden share” is disclosed at Companies House in the name of OEG
- CCFC cannot sign contracts, agreements or legal actions, only the directors of OEG can
- It is the directors of OEG that have authority or power to make decisions, there are no directors of an entity called CCFC registered
- All employees are not involved in all decisions, that does not mean CCFC is not fully involved in all decisions taken by OEG or decisions taken on behalf of OEG.
- CCFC and OEG are one and the same
“CCFC is not involved in the court action” – INCORRECT
- The parties involved in the current Judicial Review are named on the court papers as ARVO SBS&L and OEG who are bringing action against Coventry City Council, with Wasps Holdings Ltd and Alan Edward Higgs Charity as interested parties.
- OEG is the legal entity of CCFC – the club is involved and named in making a legal challenge whether it does any work on the case or not.
- Not all employees of a business are part of or influence all decisions or even need to be. Employees or officers of OEG/CCFC do not need to attend court or be active in the case for the action to proceed and for OEG/CCFC to be involved
- The action is instigated at the instruction of SISU that doesn’t alter the parties named on the court papers. It is OEG that is recognised by the Court. SISU are not named in bringing the action.
- Directors are usually required to sign documents on behalf of a limited company. OEG has one director
“the only income CCFC receives is match day income” - INCORRECT
- The 2017 group accounts show match receipts as £2.46m and commercial activity £3.67m plus the profit on player trading. Such analysis is available each year in the filed financial statements and is provided by the company and its director(s)
- Commercial income is described by the directors as TV, Sponsorship, advertising, Club lottery, Shop and other promotion activities.
- OEG/CCFC has received, prize money and various annual distributions from FA & EFL that will be included in the income figures
- OEG/CCFC now stages fan’s events at the stadium
- OEG/CCFC used to receive a share of food & beverage income on match days at the stadium, unknown if it still does. This amounted to 50:50 split of the net profit on such sales (or 15% of such turnover)
- OEG/CCFC receives income from the club shop and online sales
- OEG/CCFC receives the income from player trading and receives the Academy grants
- OEG/CCFC does not receive any stadium sponsorship income but it does receive pitch side advertising and other sponsorship income
- OEG/CCFC does not receive any income from other events at the stadium but nor does it pay any of those associated costs or take any of the financial risk.
“SISU have invested £70m even £100m since they have been here” – INCORRECT
- An analysis of the statutory accounts cash flow statements discloses the amounts of loans physically received from SISU entities since 2008. It totals £33.15m up until 31 May 2017. (last published accounts).
- However, the amount that is outstanding by the current club (ie OEG/CCFC) is £14.57m as at 31/05/2017 including interest accrued £5.63m. That sum is owed to ARVO & SISU Master Fund. The balance of the real debt £24.21m excluding interest relates to SBS&L pre-administration, is unsecured and is not a liability of OEG/CCFC.
- Many of the losses have been retained from previous ownerships or created by clever accounting between group companies. All perfectly legal. But it is not hard cash spent.
SISU take the player sales income” – INCORRECT
- No evidence to support this claim. The player sales are detailed in the accounts of OEG/CCFC. The group cash flow statements for SBS&L show that the money is accounted for in OEG and applied to the running costs of OEG/CCFC.
- The only entity that can trade in players under EFL/FA rules is OEG, and the figures must be shown in the OEG audited financial statements
- The financial statements reveal that costs before interest regularly exceed income and the player sales bridge that gap. There is no spare money
“SISU have never taken any money out of CCFC” – INCORRECT
- Since 2008 the accounts of the football club (pre and post the administration) show a number of occasions where the loans have decreased in value. This does not mean that SISU Capital Limited has taken funds directly from the CCFC companies but the investors (the original funds, ARVO & SISU Master Fund) must have.
- In 2011/12 the loans were repaid by 1.125m (pre administration)
- 2013/14 & 2014/15 ARVO converted some its loan to preference shares. After the administration the owners transferred the old losses of the previous CCFC companies to OEG before converting them to preference shares totalling £60.9m. This was not new money.
- 2016/17 part of the loans from SISU Master Fund (£1.03m) received 2016 and 2017were repaid by £112k
“SISU do not put any money in to the club” – INCORRECT
- It is not true to say SISU have not put any money in recently. In 2015/16 SISU Master Fund made a loan of £530K and in 2016/17 £500k (part repaid in same year). In those two years the club only balanced the cashflow because of those loans (ie what was spent was balanced by what was received including the loans)
- Had SISU not put those sums into the club then Otium/CCFC would not have been able to pay its bills and could have become insolvent
- Up until 31/05/2017 ARVO had put £8.65m funds into OEG/CCFC. Of that £2m was prior to OEG becoming OEG/CCFC and £1.5m funded the purchase of the CCFC assets from the administrator.
“SISU are paid large amounts of interest on the loans” – INCORRECT
- There are loan agreements with ARVO and SISU Master fund that mean Otium/CCFC is charged interest on the sums outstanding
- Over 98% of the interest on loans provided by shareholders or SISU has never been paid out.
- The interest charge is legally due but Otium/CCFC has no way of paying those sums, it simply hasn’t had money in the bank to pay it.
- The loan interest is not paid or written off but added to the total debt each year
- There were relatively small amounts of interest paid over, in 2017 £39k 2016 £25k
- Otium/CCFC owed a total of £5.63m interest outstanding as at 31/05/2017
- The interest charge cannot be ignored when calculating the OEG/CCFC profit in any year of financial statements “because they are due to the owner”. The loans & interest are fundamental to the ability of the company to keep going and are legally payable
“SISU are paid the administrative expenses shown in the accounts” – INCORRECT
- Administrative expenses are a category of expenses and costs that is required by the Companies Act 2006 to be disclosed. It includes depreciation, audit fees, rental costs of land or equipment but it also includes costs like rates, insurance, light & heat, Repairs, registrations, certain wages, director’s remuneration etc. No different to most companies
- In 2017 the total of administrative expenses was £1.57m. Of which Depreciation was £140k Audit £27k Rent or lease costs £656k, Directors remuneration £176k. Leaving £570k spent on the other overheads
- The administrative expenses are broadly similar to other clubs of similar size that publish a breakdown
“Tim Fisher is not paid by CCFC” – UNKNOWN
- There is director’s remuneration disclosed in the 2016 & 2017 financial statements. But no disclosure as to who
- During 2016 & 2017 Marc Venus was a director of Otium/CCFC so any remuneration could only relate to him.
- Remuneration of £175K it is stated was paid to third parties on behalf of the Directors
“CCFC is self sufficient”- INCORRECT
- As shown previously this is not the case because in 2016 and 2017 financial statements a SISU controlled entity has had to put just over £1m in to OEG/CCFC. If it were self sufficient there have been no requirement to do so
- OEG/CCFC does rely on the match day, commercial and player sale incomes to operate and survive. However the financial statements to 31/05/2017 disclose this was not enough and loans were required from the owners.
“the auditors sign the accounts off” – CORRECT BUT
- The auditors sign off their opinion of the financial statements.
- The director signs off the accounts before the auditors can sign
- The directors must be satisfied that for a period of at least 12 months from the date of signature that the company is a going concern. That means the company has the ability to trade as a football club (eg a home ground) and can fund it so it can meet its debts as they fall due.
- The auditors examine the accounts and make their own independent assessment whether they show true & fair view and a company that is a going concern as described by the director for the 12 months from date of signature. If they do not agree they are required to publish an adverse audit report and to state why.
- A written assurance from the owners that they intend to continue to fund or source funds is not a guarantee to do so and is not legally binding
- Financial statements are filed with Companies House and the EFL by 28th February each year
“SISU will put us in to administration again” - UNKNOWN
- It is only one of several possibilities available. What happens will depend on what suits SISU and its investors best. It is far from a certainty.SISU have a duty to act in the best interests of their investors first and foremost.
- The directors must act in the best interest of OEG. But also have a duty to consider the interests of the shareholders
- As the part owners and by far the biggest creditor ARVO control would control any insolvency. ARVO is controlled by SISU
- You do not need to go in to administration to dissolve or liquidate a company
- Administration costs are high and such an action would weaken the control SISU have.
- Assets of a distressed company are often sold at under true value
- If Wasps became an unpaid creditor of OEG they could petition the courts for administration, but control of the process would be taken over by SISU
- There is no evidence that OEG/CCFC are not paying their liabilities as they fall due
- There is no evidence that the owners will not continue to support OEG
- There is no evidence that OEG is insolvent.
SKY BLUE TRUST
“the Sky Blue Trust want to force the club to go into administration so they can take over” – INCORRECT
- There is simply no legal mechanism by which the Trust can do this. It is impossible.
- OEG/CCFC going in to administration does not even guarantee that the Trust could be involved in the club going forward or the rescue package.
- Insolvency is one of the scenarios that the Trust has made contingency plans for so that they can react promptly to it, as it has for no ownership change, new owners, fans ownership or the worst outcome of no club at all.
- The phoenix club scenario is the very last resort to keep a team at all in Coventry and only after all other options have been exhausted and failed.
- The first target is a successful CCFC in Coventry
“The Trust just want a seat on the board as an ego trip”
- The Trust objectives are set out in their constitution, Details can be found here
- The EFL & FA are promoting the better representation of fans
- The Trust website publishes details of their ideas for fans involvement. Details can be found here https://www.skybluetrust.co.uk/index.php/fan-ownership/551-fan-ownership-q-a
- Even with 100% ownership it would not mean that the Trust would be running the club on a day to day basis.
- The Trust has taken suitable professional advice and appointed advisors where appropriate in making the plans for the various scenarios that could be possible
- Trust board members are unpaid elected volunteers who bare their own expenses
The Sky Blue Trust recently hosted a meeting, to which both key players in the current stadium crisis and concerned Coventry City supporters, were invited.
The aim of the meeting was to explore different ideas that might assist in bringing an end to the current impasse that threatens the future of the Sky Blues if not resolved.
At this well attended meeting there was an overwhelming feeling that we, as supporters, had to do what we could to save our club, exploring all possible avenues.
There were a number of interesting and innovative suggestions made, all of which were noted and discussed further at a further meeting last week where members from the Sky Blue Trust board and other groups met to put in place proposed actions.
These actions largely fall into three categories;
- Engagement with Key Stakeholders.
- Establishing and communicating the real facts.
- Raising profile of our clubs situation.
The following list is not exhaustive. We will add to it and adjust according to circumstances. However it does contain some of our initial agreed plans.
Engagement with Key Stakeholders
- Members from Sky Blue Trust board to meet with officials from Coventry City Council. ( An initial meeting was held on February 5th with further meetings planned.)
- Members from Sky Blue Trust board to seek meeting with officials from Wasps. We are making regular and strenuous endeavours in regard to a dialogue.
- Members from Sky Blue Trust board to seek meeting with EFL Chief Executive Shaun Harvey and other senior officials of EFL. We hope that a meeting can take place in the near future.
- Members from Sky Blue Trust board to seek further meetings with other relevant parties and agencies.
Please note that any of these meetings must take place on the basis of “confidence and trust”. Therefore, we will be limited as to how much we can say publicly. If a viable and satisfactory solution is to be developed, this will only be achieved by all parties respecting appropriate discretion, possibly with formal Non-Disclosure Agreements in place.
Establishing & Communicating the real facts.
- Jimmy Hill Way spokesperson David Johnson has written a 12000 word article detailing the " story so far" in the words of the key stakeholders in this saga. This has been made available on the Sky Blue Trust website and through social media outlets.
- The Sky Blue Trust has commissioned a detailed, researched account of the key facts which has been compiled by a well respected Chartered Accountant and aims to provide a clear statement of provable facts and dispel some myths. This will be published shortly.
- Coventry City FC Chairman Tim Fisher to be invited to Open Meeting at the earliest opportunity to explain the real CCFC position.
- Sky Blue Trust board to commission further research into background of SISU shareholders.
Raising profile of our clubs situation
- Sky Blue Trust members and other Sky Blues supporters to be given access to a template to send to their local MP or councillor adding their own personal story as to what this current impasse means to them, and asking for their support.
- Sky Blue Trust media team to raise profile Nationally, seeking support of respected journalists and broadcasters including Jim White, David Conn, Danny Taylor and Henry Winter.
- Sky Blue Trust board to research possibility of ACV (Asset of Community Value) at Ryton training ground.
- A visual demonstration “6 and Out “ to be organised at the forthcoming televised match at Luton Town FC on February 24th.
- A coach to be organised to travel to London to lobby key organisations including a visit to SISU HQ.
- A delivery of correspondence/letters from Sky Blues fans detailing what Coventry City FC means to them. These letters to be sent to both Joy Seppala and the Football Club.
- Other lawful protests/demonstrations arranged by other supporter groups with the intention of raising profile of clubs impending homelessness to be supported where possible.
- Further matchday demonstrations towards end of season to be arranged depending on progress with solution.
We encourage all Sky Blue Trust members and other Coventry City supporters to get behind these proposals to help try and ensure a future for our football club.
Any additional suggestions remain very welcome as is any help you can offer.
How Sisu Have Made the Sky Blues Homeless (Probably): Joy, Tim and Friends – Condemned By Their Own Words
THE JIMMY HILL WAY CAMPAIGN
How Sisu Have Made the Sky Blues Homeless (Probably):
Joy, Tim and Friends – Condemned By Their Own Words
We would not usually publish such a lengthy article (12,000 + words) in one go. However, friends and colleagues have pointed out that the opportunity to bring together so many issues in a single document is well worthwhile.
Anyway, the article is broken into convenient sections, so you don't have to read it all in one go!
Deflecting the Blame
Coventry City Football Club is less than 3 months away from playing what could be its last ever game at the Ricoh Arena on 28th April 2019. Legal action that endangers the business of the landlords, Wasps Rugby Club, is preventing negotiations from taking place for the Sky Blues to play at the Ricoh in 2019/20 and beyond. Without a home ground and with no apparent alternative, Coventry City may soon cease to exist.
In recent weeks, there have been attempts by Coventry City management to turn the focus of Supporters’ complaints away from owners Sisu and onto the parties that Sisu are pursuing within their legal action, Wasps and Coventry City Council.
The arguments from CCFC Chief Executive, Dave Boddy are that:
- Sisu won’t stop their relentless litigation over the sale of shares to Wasps in Arena Coventry Limited (“ACL”), which is the leaseholder for the Ricoh Arena, so fans need to turn their attention onto Wasps.
- Coventry City Council gave a cast-iron assurance that the Football Club wouldn’t be adversely affected by Wasps’ acquisition.
These claims are not supported by the facts. The first is a false premise, because Sisu could and should cease action which has failed at all points to date. The second is an exaggerated interpretation of comments made in the context of Council debate and public relations.
The fundamental reasons that Wasps now occupy the stadium built for our football club which faces a homeless future, if not extinction, are:
- The failed strategy of Joy Seppala and Tim Fisher to get the Ricoh on the cheap, thereby leaving the way open for Wasps to make a purchase at value acceptable to the shareholders in ACL;
- The insistence on legal action, taken partly in the name of Otium Entertainment which trades as Coventry City FC, which poses a direct threat to Wasps’ survival, yet has little apparent chance of success.
Throughout this article, I will evidence the failings of Sisu and its associates with quotations from the leading protagonists.
When Sisu took over Coventry City in 2007 there was an option in place to re-acquire the 50% shareholding that had been sold by former directors to the Alan Edward Higgs Charity (“AEHC”) for £6.5 million. This option included a formula to determine the price at which these shares could be purchased. Buying back the shares would also have given the football club access to revenue streams from food & beverages, car parking etc., income which has been the subject of much controversy in later years.
There was a period of almost 7 years between Sisu buying the football club and Wasps taking control of the Ricoh. For most of this time Sisu made little effort to secure the position of the football club at the stadium, which it could have done by exercising the share option.
Finally, in June 2012 Sisu agreed terms with AEHC but the deal was never concluded, not least because Sisu drastically changed their mind about the financial value of those shares following due diligence. It emerged during one of the many court hearings that Joy Seppala considered the shares to be worthless but had still been prepared to pay £2 million of the originally agreed £5.5 million. Ms Seppala’s personal assistant, Laura Deering (who is now one of two directors of Sky Blue Sports & Leisure, parent company of Otium, along with Tim Fisher) explained why Sisu had been willing to pay £2 million above their estimate of real value:
“She [Joy Seppala] recognised that the Company [ACL] was worth nothing” but “She recognised they were a Charity” and “She recognised the value of what the Charity had given”. Laura Deering, April 2014
By this time, Coventry City’s tenure at the Ricoh was already on a precarious path. Under direction from Tim Fisher, Chief Executive at that time, the club began to withhold rent in March 2012. This action, later described by a High Court Judge as a “Rent Strike”, eventually led to the Sky Blues’ departure from the Ricoh in 2013. Legal enforcement processes taken by ACL would have led to the Administration of CCFC but Sisu pre-empted that by appointing their own Administrator on 21st March 2013 and club staff departed from the Ricoh the following day.
From that day forward, Coventry City’s occupancy at the Ricoh has been severely diminished, even non-existent in the dark days at Northampton and has never had any sense of permanence.
Until relatively recently, the noises emanating from Sisu and the Football Club have been consistent in one respect: there has been no intention for the Sky Blues to play at the Ricoh, except on a temporary basis.
Highfield Road II
Even before the departure from the Ricoh, Tim Fisher was espousing the new strategy for the Sky Blues’ future home.
CCFC has “no option but to build a new venue” Tim Fisher, February 2013.
“We have started the process of procuring land so that we can shift the new stadium build forward at a pace. The stadium will be in the Coventry area in accordance with Football League rules.
“We have left the Ricoh Arena. We were told categorically by ACL and by the council [that] there is no commercial deal to be done and, in actual fact, they would only ever work with the Administrator.
“We were very, very clear in our minds as to exactly what was intended. Given the position, we have had to make contingency plans to fulfil our fixtures on an interim basis while we deliver the long-term vision.
“That long term vision has us playing in the Coventry area in a new stadium that will be designed and delivered in 3 years.” Tim Fisher, May 2013.
“If we say we’re going to build a stadium then we will. We have provided clear evidence to the League on our ability to deliver on those plans. It's not, and never will be, our intention to mislead, filibuster or posture.” Tim Fisher, August 2013
I would contend that, for the most part, all Tim has ever done at Coventry City is to “mislead, filibuster or posture”.
Then in September, Joy Seppala gave a rare interview to the Coventry Telegraph in which she was adamant about her plans. Here are the most relevant excerpts:
“Plan A is building a new stadium. There is something very exciting about building something that is a new beginning. It feels like the club is at a new beginning.”
“The new stadium will be close to Coventry but not in the jurisdiction of Coventry City Council. We met the Football League in January and discussed where it should be and what it should be.
“Instinctively it would not cross my mind to have it within Coventry City Council’s boundary given the history, histrionics and the issue of freehold ownership.”
“The club needs 100% ownership of the freehold of the Ricoh. If you look back at the history of the club, you can see why this is important.
“I don't posture. I always tell people what it is I need. I don't go for wasting time in negotiations.
“There is no way we will go back to [a] rental deal. As I said to the Football League when they asked recently if we would do a temporary arrangement, it would be irrational to return on an interim basis where I have any exposure to Coventry City Council whatsoever.”
“The long-term viability of the club depends on us doing this [building the new stadium]. If the status quo continued [playing at the Ricoh], Coventry City would not be here in a year or two.”
Joy Seppala, September 2013
In December 2013 we were treated to a utopian vision of that new stadium, with impressive designs unveiled by architects appointed by CCFC. Also, the Stadium Forum was launched, with a local lawyer, Sandra Garlick, leading a group of supporters in making recommendations about the detailed specifications.
“Having met with members of the Coventry City Football Club board and the owner, I have seen both their enthusiasm and determination to create a new stadium that brings a range of commercial benefits to the club.” Sandra Garlick, December 2013
I have little doubt that Ms Garlick genuinely believed what she had been told, but she placed the Stadium Forum in abeyance in 2015 in apparent disillusionment and it has never been reconvened.
Either side of the turn of year from 2013 into 2014, one of the more comedic characters to occupy the Sky Blues’ Board Room made his contribution to the propaganda.
“In the absence of a clear commitment [by Coventry City Council] to discuss ownership [of the Ricoh] we are pressing ahead with our plans for a new stadium on the outskirts of Coventry.” Mark Labovitch, December 2013
And then this classic, a few weeks later:
“We are about 3 weeks away from being able to name the final site.” Mark Labovitch, January 2014
But of course, 3 weeks turned into 5 years and not one crumb of soil, never mind the 60 acres of land required for “Highfield Road II” has ever been named, let alone purchased.
The cycle of spin slowed down after that embarrassing moment, though every so often, the mirage of a new stadium appeared on the horizon, even after City had returned to the Ricoh in September 2014.
The recently promoted Chairman of CCFC explained a “propco / opco” arrangement whereby CCFC would not own the new stadium but would have to pay rent at the new ground to another Sisu Company.
“The Capital cost [of the new stadium] would be met by a separate company, a property company. That's the norm throughout football whenever projects like this are undertaken.” Tim Fisher, March 2015
11 months later, Joy Seppala made one of her rare appearances outside of a court room when she visited the Supporters Consultative Group.
“A new stadium is essential for the viability of the club in the long run. We do not want to be in League One and if we were promoted and were smart about what we did, we could be competitive in the Championship. It is working well on the playing side currently and we could be successful in the short-term without our own ground. However a stadium is critical – it de-risk’s the economics of the club. Also it is the club’s and supporters’ home.
“The intention is to drive a new stadium forward as it de-risks our profile – but currently we are unable to give details or timescales. There were talks on a piece of land for a long time but nothing came of this, which was frustrating. Things will hopefully crystallise in the near term.”Joy Seppala, February 2016
From that point, the trajectory of dialogue began to change …. but still not in the direction of a long-term deal at the Ricoh. The first hint of a new “Plan A” came from the recently appointed, but soon to be departed, Managing Director of CCFC.
“I think there can be a solution that doesn't involve us owning the stadium.” Chris Anderson, March 2016
Very soon, the conversation entered a whole new ball park.
A Kick In The Butts
“Coventry City FC can confirm that long dated talks have been held with the Butts Park Arena [“BPA”] and Coventry Rugby Club on a future ground share deal.
“Whilst the club still has two years left on the current deal with the Ricoh Arena, it is important that the club continues to work towards securing its long-term future.” Coventry City FC, May 2016
It is fair to say that initially there was some cautious enthusiasm from Coventry Rugby Club towards the potential for a ground share. It didn’t last and has long-since been ruled out by their Chairman, recognising that Sisu are not people with whom he and his club would wish to do business.
“I have certainly firmly ruled out any involvement with Sisu.”Jon Sharp, January 2017
In the meantime, the Coventry City FC Chairman, in line with his habit of over-promising and under-delivering, was keen to build up hopes. At the same time, he was never one to miss an opportunity to deflect blame onto the Council or others. As in this fine example, when speaking to the Supporters Consultative Group:
“So, Butts park, where are we? We’ve previously developed a scheme which comprises a stadium, residential, a hotel, student housing and retail. The massing exercises and financial modelling shows it works and we have two potential institutional investors interested in the development. This scheme would be good for Coventry City as a club, Coventry as a City and the community - providing inward investment.
“However, at this time the development scheme will not move forward. There is a political embargo. The club cannot move forward on the site. The council want the owners of the club to stop legal proceedings. I cannot influence this situation at all. I can only focus on the things I can influence and that I can change.
“However, if at some moment in the future – scintilla temporis - the political embargo is set aside or falls away then we would have an opportunity to potentially build-out Butts Park.” Tim Fisher, October 2016
It is entirely possible that Coventry City Council had considered running interference at the early stages of this discussion, by inserting a clause into the ground lease to prevent professional football from being played at Butts Park. In reality, CCC had no serious power to stop a development. Further, the Leader of the Council had previously confirmed their position:
“I want to clear up any confusion about the proposal to develop a joint stadium for rugby and football. I want to be really clear that the council will not put any obstacles in the way of this happening.
“Anything that requires our involvement including variations to the leases will be considered in the usual way - openly and transparently by members.” George Duggins, May 2016
So talk of a “political embargo” was apparently just Fisher-speak. As for the use of the term ‘scintilla temporis’ … a Latin law term for a legal fiction of an interval of time separating two events that can't practically be separated but the order of which affects a legal issue … your guess is as good as mine!
In a fractious meeting with members of the Sky Blue Trust, the Chairman continued to peddle the BPA as a realistic future for Coventry City.
“The Butts Park Arena is on in terms of the football club. We are working with the Football League and Coventry Rugby Club.
“Jon Sharp has made a statement over the last day or so which shows his commitment, as long as we have some form of mediation, because Jon believes it is right and appropriate because peace and reconciliation in this city.
“If he can accommodate the football club, and all the infrastructure challenges, then that’s what they will do.”
He added: “As long as there is a breakout of peace, I do believe the Butts Park Arena is an option for a Coventry Rugby Club and Coventry City Football Club ground share.” Tim Fisher, March 2017
Which conveniently ignored a key passage in what his opposite number at Coventry Rugby Club had said:
“Also, as I have already stated elsewhere, we will not deal with SISU.” Jon Sharp March 2017
At that same Trust Meeting, the myth of a new stadium was finally put to bed:
“We weren’t able to close a land deal on our own stadium - full stop.
“But we spent a lot of time working with Coventry Rugby Club to develop a stadium which would be more than ample in terms of capacity.
“It’s the preferred option because it keeps us in the city. We are committed to staying in Coventry.” Tim Fisher, March 2017
So there we have it: Plan A is dead, long live Plan A! Except that the new Plan A wasn’t long-lived at all.
“There has been no movement. The position of Coventry Rugby regarding the football club has not changed.
“They are a sister club bearing the city’s name with a proud old history just like us, have fallen from grace just like us. We are marching back up and I sincerely hope that they do and we will offer what support we can to get there.
“One thing we can’t do is to have any formal arrangement with them, any groundshare while they are owned by their current owners.
“And the reason for that is quite simple - the current owners are in the first place, whether correctly or not, vilified within the city and we have spent many years re-establishing our relationship and our standing in the city, and I’m not prepared to risk that by associating with City’s owners.” Jon Sharp November 2017
As we now know, even if Sisu themselves had not been an insurmountable obstacle, the surrounding infrastructure costs associated with building a stadium of sufficient capacity for Coventry City’s stated needs were the final nail in the coffin.
“….. there was once upon a time the idea the Sky Blues may move, but they wanted a 25,000-seater stadium and I was informed by a council official that, if that was to be the case, the roadworks alone, which would be for our tab, would be £26million.
"So that didn't happen in a hurry." Jon Sharp May 2018
Countdown to Homelessness Part 1
While the plans for BPA progressed less far even than those for Highfield Road II, the concern in late 2017 turned to the time expiring on the current deal to play at the Ricoh.
When former CCFC Director, Steve Waggott, negotiated the return to the Ricoh in September 2014, it was on the basis of 2 years’ initial period and a further 2 years’ option that could be exercised at the will of the football club. This was all the football club required because, as demonstrated earlier, Seppala and Fisher were still insisting that the future lay in a new stadium.
Already half way through the option period, there seemed to be a problem looming. Wasps had been in control of the Ricoh since shortly after the Sky Blues return to the Arena and were the potential victim of the legal action being pursued by Sisu, using the Football Club as a vehicle, against Coventry City Council.
Talks about a future relationship for Coventry City at the stadium had been broken off previously by a former Wasps’ CEO. Referring to the legal action as a “distraction”, he said:
“We decided that we wouldn’t conclude the conversation at that point in time. This was during the time when various appeals were going on at the Court of Appeal.
“I’m not a lawyer but you can’t ignore the volume of comment about it. We felt it was difficult to conclude on a long-term arrangement while all that was still going on.” David Armstrong, June 2016
With Mr Armstrong due to step down from the role in summer 2017, there was a more co-operative stance from his successor-in-waiting.
“We haven’t heard anything from the football club.
“Obviously I’ve read about the bids going in [a reference to approaches from the Gary Hoffman consortium to buy CCFC], and I imagine that’s what’s taking the football club’s time.
“If and when they wish to talk to us, of course we are always willing to talk and listen.
“They are here for another season, and we’ve always made it very clear we want them to be here for the longer term.
“Clearly they are pursuing a number of long-term plans, which they are entirely within their right to do.” Nick Eastwood, May 2017
Yet fans endured an anxious wait through the Autumn and Winter of 2017/18. The new Chief Executive, Dave Boddy, gave assurances in December that a new deal was “imminent” but it was several weeks into the New Year before a firm announcement was made.
“We’re very pleased to announce this agreement, which is a deal for the club to continue playing at the Ricoh Arena until at least 2019.” Dave Boddy, February 2018
His Wasps’ counterpart showed that there was an iron fist in the velvet glove:
“The agreement which was put in place to allow the football club to return to the city is in its last season.
"We fully appreciate the importance to Sky Blues supporters of their club playing in their home city, so we have agreed to a one-year extension with the football club.
“CCFC have on numerous occasions expressed their wish to move to a stadium they own, but with those plans not yet realised this agreement will give the Sky Blues an extra year to secure a new home.
“This is certainly not a commercially-driven decision, and there are plenty of financial and other arguments for us not continuing with any agreement, but we do not wish to see the football club disadvantaged.
“We understand the importance to supporters and the city itself of having Coventry City playing in Coventry. That has been at the forefront of our thinking, despite the significant distraction of the current legal proceedings.
“It is widely known that there are obstacles – in the form of the current legal proceedings – which stand in the way of a longer-term agreement.
“We believe it is important for all parties concerned that we clarify at this stage that, unless those obstacles have been overcome by the time those discussions for the 2019/20 season would normally commence, then, regrettably, we will not be in a position to enter such discussions.” Nick Eastwood, February 2018
The sense of relief that City were safe at the Ricoh for one more season was tempered by the short-term nature of the deal. There were two strong messages from Mr Eastwood which bear emphasising:
- CCFC had been granted an extra year to secure a new home after having expressed their wish to move to a stadium they own, on numerous occasions.
- There would be no discussions for the 2019/20 season while legal action continued.
Those signals have not been heeded by Sisu and CCFC, with potentially disastrous consequences.
But hey, we were shortly to embark on the best end of season party for over 50 years, culminating in that glorious League One Play Off Victory at Wembley. For a short while, we could enjoy football success and push the off-field problems to the back of our minds.
Not For the First Time
Those warnings from Nick Eastwood were not the first to be ignored by Sisu and the club, with the dire consequence that placed us where we are today.
Back to the dark days of Northampton and all the empty grandstanding by Seppala, Fisher and Labovitch. The revenues of ACL had been suffering since the Rent Strike began some 18 months before and the absence of the football club from the City was hurting other businesses. Never mind the hurt that most Sky Blues Supporters were feeling with our club in self-imposed exile.
The then Leader of Coventry City Council laid down a clear marker for Joy Seppala:
“If Joy Seppala is serious about wanting to discuss a possible deal, then we need to talk soon.
“There will be a point, in the very near future, where we will be overtaken by events, not least the outcome of Sisu’s renewed Application to the High Court for Judicial Review which is listed for November 28.
“My statement to full council on Tuesday October 22 confirms that all options are available for discussion.
“I am prepared to discuss, subject to contract, and without prejudice to the on-going court case, the issue of stadium ownership with Joy Seppala just as I have been prepared to discuss stadium ownership with other interested third parties in the past.
“If this matter cannot be resolved by the turn of the year, then I and all of my colleagues on the Labour group on Coventry City Council will look to put in place a process which ensures the best possible deal for the people of Coventry in relation to the Ricoh Arena.
‘‘So for one last time, I say, quite clearly, that I am prepared to meet with Joy Seppala and to have a discussion with her without prejudice and subject to contract in relation to all and any issues in relation to the Ricoh Arena, the land around it, and Coventry City Football Club.” Ann Lucas, October 2013
“We need to talk soon.”
“ …. I have been prepared to discuss stadium ownership with other interested third parties in the past.”
“If this matter cannot be resolved by the turn of the year, I and all of my colleagues on the Labour group on Coventry City Council will look to put in place a process which ensures the best possible deal for the people of Coventry in relation to the Ricoh Arena.”
Those warnings could not have been clearer … other than perhaps saying: “by the way, Wasps are buzzing around the Ricoh, so get a shift on if you don’t want to miss out.”
This was the response from the Coventry City Board:
“Joy’s door is open to Ann for further discussions. But we would have to be clear this time that it would be a discussion about stadium ownership.
“In the absence of a clear commitment to discuss ownership we are pressing ahead with the plans for a new stadium on the outskirts of Coventry.” Mark Labovitch, December 2013
A strange response, given that Ms Lucas had plainly issued an invitation to discuss stadium ownership …. but Mr Labovitch was a strange man!
So instead of entering negotiations as proposed by the Council Leader, Sisu ploughed on with the first application for Judicial Review in which they would get soundly beaten in 2014.
Ann Lucas repeated her messages in the New Year in a statement to full Council:
“…. I am no longer prepared for us to be distracted unnecessarily on this issue - as important as it will remain.
“We will prepare rigorously to defend our position against the owners of Coventry City Football Club in the ongoing Judicial Review proceedings.
“We will provide support to ACL as it gears up to deliver its business plan over the next year and beyond. “We will leave the door ajar to the owners of the football club and, indeed, any other interested parties who want to discuss sensibly the future development of the Ricoh Arena.
“But as I made clear before Christmas - we will now move on.”
She concluded her speech by saying:
“The position of Ms Seppala on behalf of the Club that they will only come back to the Ricoh Arena as complete and unfettered owners and in the meantime they will accelerate plans to build a new home outside Coventry - is equally clear. Repeating these respective positions does not strengthen the case, nor does it provide a solution.
“Now this Council must and will move on. We do not have time to waste and must not have unnecessary distractions from the priorities ahead of us all.
“I will continue to hope for a solution to this sorry saga - but I will not allow it to dominate and distract any longer.
“Enough is enough - we move on and lead our city to a strong, prosperous future - preferably with the Sky Blues at the Ricoh Arena playing an integral part in our success - but if necessary without them.”
Whether the owner and directors didn’t comprehend the warnings, thought that Ms Lucas was bluffing or believed that their court room strategy would give them the desired result so they could ignore the messages, it’s impossible to know. But they underestimated their opponent in just about every respect and that was a mistake of catastrophic proportions for Coventry City FC, as it left the path clear for Wasps to take the Ricoh from under Sisu’s noses.
It’s interesting to compare the two leading ladies in this saga. The Sisu Boss made great play of her resolute approach during her Coventry Telegraph interview. It proved to be hollow bluster:
“If anyone doubts a stadium will be built, they haven't had engagements with me over the course of the last two years.” Joy Seppala, September 2013
Ann Lucas, on the other hand, said what she’d do and did what she said. However distasteful the outcome, in my opinion that is an admirable quality. Supporters were naturally dismayed at Wasps’ takeover of the Ricoh …. I’m not happy that it ended any hope our Football Club had to own the Stadium … but I find it difficult to find significant fault with Coventry City Council when Sisu had more than enough chances to secure a deal and plenty of warning of the consequences if they didn’t.
And there was still one more chance to come.
Cause of Action
Which is where we get to the crux of the current problem.
It’s September 2014 and Coventry City have just returned to The Ricoh Arena after that most shameful period of absence in Northampton. The mood amongst Coventry City supporters, indeed in the whole City of Coventry, was one of euphoria that the football club had been re-united with the stadium which was built for the Sky Blues. Therefore, the shock that was to come was only intensified, since it was in such stark contrast with the feel-good factor that we had just enjoyed.
On 18th September, less than 2 weeks after the first game of the new Ricoh era, the news broke via the Coventry Telegraph that Coventry City Council were in advanced discussions to sell its shares in ACL to a London rugby club, Wasps. In addition, it transpired later that the lease on the stadium, held by ACL, had been extended to 250 years. The deal was finally concluded early in October.
There were many misgivings about this turn of events:
- The deal had been done in secrecy which seemed inappropriate for a public body.
- Coventry City had agreed to return to the Ricoh without being in possession of the knowledge that ownership was about to change.
- Because the new owners were another sports club, the Sky Blues could lose priority of stadium use.
- The length of the lease meant the deal was tantamount to a sale of the freehold.
- Wasps’ presence in the City was perceived as a potential threat to Coventry Rugby Club.
- By selling to a club from out of the area, Coventry Council were enabling Wasps to do exactly what Sky Blues supporters had protested so vehemently against when our club was removed to Northampton, arguably on a worse level because of the greater distance and permanency of the relocation.
These misgivings were not without foundation to a greater or lesser extent. It is not my purpose to defend the actions of Coventry City Council or their decisions. Throughout the whole Ricoh Arena saga there have been a number of actions taken by the Council that may have been unhelpful, some would even say harmful to CCFC. Equally, many actions have been extremely beneficial, to the point of actually saving the club. Without the intervention of the Council in the previous decade, I think that it is doubtful that there would be a Coventry City FC today.
But for good or bad, the fact is that Coventry City Council are not accountable to the football club or its supporters. They are required to act in the best interests of the Council Tax Payers and residents generally and Councillors are accountable at the ballot box for their actions. As the leader stated:
“We are charged with representing you and I’m sorry that each and every decision we make can’t have a referendum, but that’s what democracy is about.
“You elect us and then decide whether or not we have made those decisions in your interests. We don’t take our responsibilities lightly, in a decision like this we serve the interests of the people of Coventry.” Ann Lucas, October 2014
On a political level, there was unanimity across both political parties and all Councillors. And the number of people who are both Coventry City Fans and resident in the City probably only represents around 10% of the total population of Coventry. While some of that 10% can be a noisy minority, they are still a marginal faction. The other 90% and some of the 10% have greater concerns, including not wishing the entanglement of the Council with CCFC and Sisu in respect of the Ricoh, or the Ricoh and ACL, to be a drain on a hard-pressed public purse.
The deal with Wasps not only put money back into that purse but it de-risked the Council’s exposure to the Ricoh situation, as the arrangement also paid off the loan that the Council had made to ACL, which was the subject of the first Judicial Review.
For ACL, which had undoubtedly been suffering financially since the Rent Strike begun in 2012 and then from the lack of an anchor tenant when CCFC upped and left in 2013, Wasps’ takeover meant there was a strong chance of the business being re-invigorated. As one of Ms Lucas’s Conservative colleagues pointed out:
“We have to do what is right, which may not always be what is popular.
“It must be made absolutely clear the position of ACL is uncertain after the club made it clear they were returning on a temporary basis, but that creates a lot of uncertainty to the future. This is the best way of protecting ACL’s financial interests.” Councillor Tim Sawdon, October 2014
Sisu’s reaction to this development was to launch a second Judicial Review, two days before Wasps played their first game at the Ricoh in the week before Christmas:
“Today, our lawyers have filed papers relating to the on-going legal action with Coventry City Council.
“This step has been taken as a precautionary measure to safeguard Coventry City FC’s position in relation to the outstanding legal appeal [in JR1].
“We believe that some of the decisions the council has made were not taken in the best interests of Coventry taxpayers and had a seriously damaging effect on the club.
“Commercially, it is the right thing to do and is necessary to protect the club’s position as a tenant in Coventry.
“It also ensures that all the outstanding legal action reaches its natural conclusion.” Sisu Capital, December 2014
After all those statements from the owner and directors of Coventry City FC that the future lay in a new stadium beyond the jurisdiction of Coventry City Council, owned by the club so that 100% of revenues could be accessed, here was Sisu lashing out because they had lost out on a deal to obtain a share of ACL and the control of the Ricoh.
Of course, the objective of all this legal action and other tactics, such as the Rent Strike, appears to have been to get the Ricoh Arena, which was funded by local, national and EU taxpayers, on the cheap. Not only has that strategy failed dismally thus far, it left the way clear for Wasps to move in.
If only Sisu had applied themselves to the situation in the same way that Wasps had done, in a professional business-like manner, it is highly probable that Coventry City would have been permanently coupled with the Ricoh Arena and Wasps would have had to build a nest elsewhere.
Two key points that we were to discover down the line:
- The action was being brought in the names of Otium Entertainment Limited, ie Coventry City FC, Sky Blues Sports & Leisure (“SBS&L”), the parent company, and Arvo Master Fund which holds the debenture over all the football clubs’ assets.
- Although the action is about Coventry City Council’s behaviour, the purpose of the case appears to be to put Wasps out of business. The Applicants claim that the Rugby Club underpaid for ACL, with the enhanced lease, by £28 million, an amount which they will try to force Wasps to pay to the Council.
Therefore, Judicial Review 2 pitted the Football Club against the Rugby Club; Tenants against Landlords. That was never going to make for a happy relationship.
And it is precisely why we are now in this crisis, with probably just 7 home games left at the Ricoh.
One Last Chance
But before that next round of legal shenanigans kicked off, there was one final opportunity for Sisu to repurchase that 50% shareholding in ACL and thereby secure Coventry City’s future at the Ricoh.
Wasps had already completed the purchase of the Council’s half-shareholding in the Ricoh for £2.77m and made an equivalent offer to the Higgs Charity for the remaining shares.
However, under the agreement by which the Charity had bought the shares from the football club in 2003, Coventry City Football Club Limited had a right of first refusal to buy them back. The Higgs’ Trustees therefore invited a bid from the liquidator of CCFC Limited.
“The Trustees are honouring the existing commitment to the football club through the terms of the Option Agreement made in 2003 with CCFC Ltd (now in liquidation).
“We have contacted the liquidators to provide them with an opportunity to make an offer to purchase our shares. This matter is now with the joint liquidator of CCFC Ltd in liquidation, Mr Appleton.” AEHC, October 2014
The football club initially claimed that they were not provided with sufficient detail to evaluate an offer:
“We’ve yet to receive the necessary information to enable us to even begin to decide whether we’re able to purchase the Higgs’ shares in ACL, but fans will be the first to know if the position changes.” Tim Fisher, October 2014
However, a bid was submitted shortly before a 30 day deadline expired:
“We have made a conditional offer – we are still awaiting vital information.
“Through the liquidator the club has been given an opportunity to purchase the Higgs’ shares in ACL and we have made a very generous offer.
“This might be a unique opportunity and we owe it to the fans to try to purchase a stake in the Ricoh Arena thereby securing our short-term future, and to bolster revenues in regards to financial fairplay and improve the product on the pitch, which will be the first time since we left Highfield Road.
“This does not detract from us building our own stadium; it is important we keep a focus in that because we need access to 100 per cent of stadium revenues.
“The offer is not just a financial offer, we have also proposed a far-reaching partnership with the charity to use the power of football to create a community programme.
“It’s about using football for community cohesion and the ultimate betterment of the whole Coventry community.
“This is a very serious offer. We have to look beyond any past issues with the relationship between the charity and football club. The club comes first.” Tim Fisher, November 2014
This statement appears contradictory. On the one hand, Tim claimed that vital information was still required, therefore the offer was conditional. On the other hand, he stated that it was “a very generous offer” which implies that they had enough information to make that appraisal.
That second phrase has particular significance, as I will explain later.
It also emerged that Wasps, now the owner of 50% of ACL, would have a right of veto on any sale of the Higgs’ shares. The Rugby Club had previously submitted their offer to the Charity but whether they would exercise the veto or not, we shall never know and it never became necessary as the offer from the club was declined anyway.
“The Trustees having considered the conditional offer from the Joint Liquidators of CCFC Ltd have decided to reject that offer.” AEHC, November 2014
At which point, the path was clear for Wasps to complete the outright acquisition of ACL and secure control of the Ricoh for the next 250 years.
The response from Coventry City was illuminating and repeated the claim by Tim Fisher that the offer was generous, also revealing the headline price which just topped the Wasps’ monetary value:
“This morning the liquidator’s offer for a stake in the Ricoh Arena company, was turned down by the Alan Edward Higgs Charity.
“Naturally, the club are extremely disappointed. Our proposal was for a far-reaching partnership with the Higgs Charity to work together on community projects.
“Our offer was a unique opportunity to meet the twin objectives of the Club and the charity, using the power of football and sport in creating community cohesion and for the benefit of the whole Coventry community.
“Despite the fact that access to critical documentation was denied, the liquidator’s offer for the charity’s 50 per cent stake in the Ricoh Arena was generous – around £2.8 million – and guaranteed above market value price.
“Alongside the proposed CCFC-Higgs Charity partnership, we felt this was the right deal for everyone concerned that demonstrated our ambition for the future of the club in the city. We have pursued every possible avenue.
“Our deal at the Ricoh with Wasps remains in place. We will be playing our home matches there for the next four seasons and look forward to working with Wasps to ensure our mutual success on and off the field.
“Our ultimate goal is to return CCFC to the Premier League but we can only do this if we own our own stadium, allowing us to access 100 per cent of our revenues. In the near future, we will be able to give our fans more details of our plans and tell you where the new stadium will be.
“The liquidator has declined our request, in the interests of transparency, to publish the full details of the offer. We have released in full the detail of our proposed community partnership with the Higgs Charity. We have continually stated since our return to the city, that community will be at the heart of our development and that still remains very much the case.” CCFC, November 2014
Once again, the same old story about the new stadium is also regurgitated, as it was by the Chairman in his previous comment.
The club placed great store in the Community aspects of their offer, what they called “Seven Pillars of Partnership”, all very worthy aspirations including a “Communiversity”. Wasps had also built community development into their offer to the Charity, including re-naming the North Stand as the “Higgs Stand” and donating 50p per ticket to the Charity.
The reasons for the choice of Wasps over CCFC were revealed in this statement from the Trustees:
“The Trustees of the Higgs Charity had clear objectives when in 2003 they bought Football Investors Ltd which owned 50% of Arena Coventry Ltd.
“Primarily they sought to ensure that the planned development of the Ricoh Arena would go ahead. In partnership with the City Council the development would act as a major stimulus to the regeneration of north east Coventry. This has been achieved.
“They also hoped to protect their investment. In this they have not succeeded. This loss of value is reflected in the offers received by the Trustees for their shares. ACL, following a period of restructuring both of its debt and its business, is now fully profitable but at the point where new investment is required to finance the next expansion onto Car Park C and on the adjacent leisure land.
“The sale of their shares by the Trustees will enable this continuation of the regeneration of north east Coventry.
“In rejecting the offer from Otium, the Sisu company which owns the Coventry City Football Club name and the licence to play in the Football League, the Trustees are fully aware of the possibility that they may be subjected to criticism, as they were by Sisu Capital Limited in the court proceedings between the Charity and Sisu Capital Limited earlier this year.
“Notwithstanding the history of Sisu’s behaviour, the Trustees considered carefully the offer to purchase made by Otium through the Joint Liquidators of CCFC Ltd. In addition to the financial aspects of the offers, the Trustees considered all other factors.
“Amongst other factors considered, the Wasps offer was unconditional; the Otium offer was conditional. The Wasps offer requires in effect nothing of the Trustees other than the transfer of the shares.
“The offer from Otium through the Joint Liquidators is expressly stated to be non-binding and subject to a number of conditions. It contains conditions, none of which can be fulfilled wholly by the Trustees owing to duties of confidentiality to third parties.
“Further the question of ownership of the Option agreement has been made ambiguous by the Joint Liquidators.
"They claim both that it is the right of the liquidators of CCFC Ltd exclusively to exercise their option to buy and also that the Option was sold to Otium in 2013 out of the Administration of CCFC Ltd.
"Further, the Option has been reported in the annual accounts of the Sisu company that owns Otium, Sky Blue Sports and Leisure, in 2008, 2009 and 2010 as an asset (valued at £1m).
"To be absolutely clear the Option was expressly stated to be non-assignable without the express consent of the Trustees, which consent has not been asked for or given. The Trustees were reluctant to enter this morass of conflicting spurious claims.
"Alongside the offer through the Joint Liquidators is an offer from Otium to allow the Charity to join it in an extensive football club based community programme. The proposal does not fit the Trustees’ plans for their future activities and commitments already made.
"The Trustees hope that Otium will now engage with the community as they suggested in 2012 and now again in this recent letter from Mr Fisher. It is not for a charity to support the activities of a commercial enterprise; however it is socially responsible for commercial enterprises to support the local community.
"The Ricoh Arena is a major asset to the City and continues to be the home of ‘Coventry City Football Club’. Responsibility for the future of both the football club and Wasps lies with their owners." AEHC, November 2014
There are several points to take out of this statement:
- The offers received from both Wasps and Otium were at a considerable discount to the £6.5 million paid by the Trustees in 2003. The Buy-Back Option granted to CCFC had been linked to a formula and this comment suggests that the Otium offer did not get over that hurdle.
- The Otium offer contained conditions and was non-binding, the Wasps offer was unconditional. The attachment of conditions will generally have the effect of depreciating any financial value, so in the mind of the Trustees the Otium bid had a lower benefit in real terms than Wasps’ offer.
- There was an inference that the Liquidator and/or Otium and/or SBS&L were in breach of the terms of the Option, by assigning the rights granted to CCFC Limited without consent of the Trustees. In such circumstances, the Trustees may have been entitled to consider the Option to be impaired or void.
- The Community aspects of Otium’s offer were dismissed although Higgs called upon Otium to fulfill earlier proposals made in 2012 with regard to Community engagement. Perhaps they were suggesting that the “Seven Pillars of Partnership” were unlikely to be delivered, given Tim Fisher’s track record on accomplishing his commitments at CCFC?
Further clarity was given by the Clerk to The AEHC Trustees in an interview with Trish Adudu on BBC Coventry & Warwickshire recently, making it clear that the Otium offer was of considerably less benefit when all factors were considered:
“The trustees were given a very simple choice. On the one hand was a cash offer for real money and on the other hand there was an offer from Otium, well through the Liquidators, for some money not necessarily all the money, and only subject to all sorts of conditions.
“So it was ‘what if’ money and real money. And so I'm afraid there was no choice for the Trustees.” Peter Knatchbull-Hugessen, November 2018
To Guarantee or Not to Guarantee?
“The Ricoh is a much-loved community asset that every one of us is proud of.
“No one here has ever been prepared to sell the Ricoh Arena or the leasehold unless we can be completely satisfied our original aims can be met and include a home for the football club.
“We have always had the interests of the people of Coventry, taxpayers and local residents at the heart of any decision about future ownership of the stadium or ACL.
“Let me be clear, any deal around the future of the Ricoh Arena must not happen if it threatens the future of the Sky Blues or Coventry Rugby Club.
“We have been working with Wasps to make sure their aspirations for the club, the Ricoh and the community are right for Coventry.” Ann Lucas, October 2014
That statement by the Council Leader, on the day that the deal with Wasps was completed, has been grasped recently by CCFC Management as a drowning man grasps at straws.
It is backed up by Council Minutes of 7th October which state:
“The commitment that any deal relating to the Ricoh Arena would not be approved unless the following three tests were satisfied:
A good deal for the City
The security and future of Coventry City Football Club
The security and future of Coventry Rugby Club” Coventry City Council, October 2014
In an Open Letter to Fans published on the CCFC website, the Sky Blues Chief Executive wrote:
“It was appropriate and correct for the leader of Coventry City Council to put forward these requirements at the time of selling the Ricoh Arena to Wasps. The Council’s covenant of commitment to Coventry City Football Club was designed to reassure fans.” Dave Boddy, December 2018
He goes onto add:
“However, the future of Coventry City Football Club is now under threat.
“At the time of announcing the deal with Wasps, the Council failed to minute or present to Coventry City fans, Coventrians and the media that the Council’s covenant to secure the future of the City’s then 131 year old football club would have an expiry date and time limit of just four years…
“The council point to a ‘No deal’ outcome being a “direct consequence” of legal action by the football club owners.” Dave Boddy, December 2018
Dave makes a fair point in quoting the assurances given by the Council at the time the deal was signed off. Unfortunately, he then completely overplays his hand by references to a ‘covenant’ which Collins English Dictionary defines as: “A formal written agreement between two or more people or groups of people which is recognised in law.” According to the Legal Dictionary it is usually: “An agreement, contract, or written promise between two individuals that frequently constitutes a pledge to do or refrain from doing something.”
To the best of my knowledge, a Covenant, in that sense of a legally binding guarantee, was not created by the Council in 2014. What was stated were considerations made by the Councillors when approving the deal, intended to give comfort to fans of Coventry City and Coventry Rugby Club.
Even if such a formal arrangement had been constructed, it would not grant freedom and indemnity to a poorly behaved tenant for its own reckless actions or protection from the consequences of those actions. In this instance, it is the behavior of owners and directors of the tenant that have put a continued tenancy at risk, by:
- Attempting to distress the Landlords business to extinction through legal action;
- Repeatedly stating, over many years, that alternative solutions for a home ground are the preferred choice for the Tenant;
- Only entering into a deal at the Ricoh in 2014, immediately prior to the Wasps takeover, that was 2 years firm and 2 years optional, because the Football Club would not be staying for the long-term.
It is this third point that explains why the ‘Council’s covenant’ had ‘an expiry date and time limit of just four years’. Because that was all the time that the Sky Blues’ owner and directors had deemed necessary.
The Open Letter continues:
“What is being painted is a false choice – it does not have to be a case of the Owners dropping the legal action or there is no deal, and it is not a case of “cannot enter discussions”.
“In previous years a deal has been achieved by the football club whilst the Owners pursued legal action and that CAN be the case again.
“Regardless of the current situation between football club owners, stadium landlord and council, the Club would like to extend an offer to meet with the landlord and the Council with the intention to resolve the issue of the football club having nowhere to fulfil its fixtures from the beginning of next season.
“The Club will engage in a constructive and positive manner – with the single aim of saving our football club. The Club entirely agrees with our landlord Wasps wanting to move the situation forward for the good of Coventry City, its supporters, the Ricoh Arena and the City as a whole. The club looks forward to continuing to work together, based on the excellent day-to-day operational relationship we already enjoy.
“Equally, we extend an invitation to Coventry City Council to sit and hold constructive discussions to understand how the Council might help resolve the situation for the good of everyone involved. It would be an unmitigated disaster if the club was to fold and disappear in the very year that Coventry holds the title of being the City of Sport. We will work together with the Council to ensure that this does not happen.
“The Club is ready to sit at the negotiating table – we want to do a deal. A deal that preserves the football club. It is now time for all parties to work together for the good of Coventry City Football Club, its supporters and our community.” Dave Boddy, December 2018
There is much that I can agree with in terms of sentiment. The problems arise at a practical level:
- While it may be the owners driving the legal action, it is taken partly in the name of the club’s legal entity, Otium whose sole Director is the Club Chairman, Tim Fisher. He is also one of only two directors of another applicant, SBS&L.
- It is naive to expect Wasps to negotiate another deal when it was a condition attaching to the existing deal that court action would have to be stopped for further discussions to commence. Just because Joy Seppala and Tim Fisher have rarely lived up to their public statements, it would be foolish to expect others to be similarly spineless.
- The Council no longer has “a dog in this fight”. Any actual power to influence decisions ceased with the sale to Wasps in 2014. It would be embarrassing for the City to lose its major football club while Coventry is European City of Sport but events are beyond control of the politicians. The best that supporters could hope for is that Councillors may try to influence Wasps to a conciliatory position. However, that is a process that MPs and Government Ministers have already taken on board in respect of all relevant agencies in this dispute.
- Mr Boddy’s letter appealed for leeway from other parties yet fails to ask anything from the party with most responsibility for the impasse, Sisu Capital. The simple solution would be to desist from litigation which so far has benefited no one other than the legal profession and is seemingly hopeless, based on the available evidence.
In a subsequent Match Day Programme referring to his Open Letter, the CEO stated that:
"There was some criticism that the letter did not point to the actions of the Owners that have contributed to this impasse. The Football Club has regular communication with the Owners and we make strong representations on the current situation to them. Everyone is aware of the consequences of a no deal scenario.” Dave Boddy, December 2018
At the time of writing, it is unclear what the ‘strong representations’ consist of or whether any response has been received from Ms Seppala.
To be fair to Dave, his latest Programme notes do recognise that the owners as well as landlords have the destiny of CCFC in their hands:
“I know fans and the wider community are growing weary of the continued disputes around the club, and the jeopardy that the club finds itself in. That has been a regular state, and is even more urgent than ever this year.
“While those who made decisions through this period, even back to 1997 when plans were first presented for ‘Arena 2000’, will have made the decisions based on their best judgement of the best interests of the Club at the time, the Club is consequently now in a position where it is reliant on others – be it decisions of owners or landlords - for its future and its very survival.
“A long-term solution to provide stability to the Club and to its fans and the community needs to the aim for everyone involved, so that this same issue does not rear its head every year and the Football Club can move forward with long-term stability.” Dave Boddy, February 2018
Plan A Version III
Just a reminder of two earlier quotations which I underlined:
“Plan A is building a new stadium.” Joy Seppala, September 2013
Then in reference to the development of a stadium at Butts Park with Coventry Rugby Club:
“It’s the preferred option because it keeps us in the city.” Tim Fisher, March 2017
Plan A Version III was revealed in an interview on Sky Sports earlier this season:
“Plan A has been and remains staying at the Ricoh Arena.” Tim Fisher, September 2018
To which he added at the end of the interview:
“That is Plan A. There has never been anything other than Plan A so we are just hoping to do a deal with the landlords.”
Which is strange, because earlier in the interview he also said there was an unspecified Plan B and a Plan C! Honestly, I didn’t know whether to laugh or cry.
But there we are. Plan A is now staying at the Ricoh Arena. This despite all the efforts down the years to persuade otherwise and actions which impair Coventry City’s chances of remaining, all hopes of a Sky Blue future lie at the Stadium which was built for our club.
The Chief Executive wrote in his programme notes about 8 weeks later:
“Coventry City Football Club comes first above everything else, I’m sure you will agree. It is imperative that a deal is agreed and that we stay at the Ricoh Arena. The EFL have made very clear in writing to us that a groundshare outside of Coventry is not and will not be an option – even if it was, it is not an option we are interested in. We want to stay at the Ricoh Arena.
“For the avoidance of doubt to everyone in Coventry and Warwickshire who cares about the Football Club, failure to reach agreement to play at the Ricoh next season will mean that the Club’s place in the English Football League is severely at risk.” Dave Boddy, November 2018
The Open Letter which followed and subsequent statements from both Fisher and Boddy just re-iterate, with an increasing sense of urgency verging on panic, that there is no alternative to the latest Plan A.
After all these years of posturing about a new ground or a Butts Park Ground Share, only when Seppala and Fisher have failed to deliver on any of the commitments they’ve made, finally comes the admission that Plan A can only be to play at the Ricoh.
But whose fault will it be if that Plan A Version III is not realised? Well according to the Sky Blues Chairman and Chief Executive, it will be the responsibility of Wasps and Coventry City Council.
Sorry Gentlemen, but I beg to differ.
Apples and Pears
Presently, we await the decision of the Supreme Court on whether to hear the application from Otium, SBS&L and Arvo to hold a Judicial Review into the circumstances of the ACL share sale.
As with the first Judicial Review, the applicants lost heavily in both the High Court and the Appeal Court. That is not to say they won’t be permitted a further hearing, which would certainly prolong the agony for all concerned, not least supporters of CCFC with the club’s future teetering on a precipice.
The 23-page judgement from the Court of Appeal deals with a complex case and the law relating to those circumstances. However, some key passages sum up the decision.
“For the reasons given in this judgement I now hand down the appeal in this case is dismissed and the order of Mr Justice Singh [High Court Judge] of the 20th of July 2017 is upheld.”
“I would dismiss this appeal and would uphold the order made by the judge, refusing permission to apply for judicial review.
“As I have said above, I consider that the judge was correct to refuse permission to apply for judicial review, on the basis that Sky Blue’s [the Applicant’s] case was based essentially on a comparison between “apples and pears”. Lord Justice McCoombe, October 2018
The “apples and pears” reference concerns two differing valuations, which when compared show a distinct difference between the value of the ACL shares under different circumstances. The first valuation by KPMG, one of the world’s foremost firms of financial advisors, was commissioned by Coventry City Council to assess the price at which it should sell its shares to Wasps. The second by leading property consultants, Strutt & Parker, was obtained by Wasps in support of a bond issue to raise the finance for the acquisition.
It was the difference in these valuations which gave rise to the argument by the Applicants that Wasps underpaid for the shares by approximately £28 million. In dismissing that comparison as invalid, Lord Justice McCoombe clearly disagreed. His decision was supported by two other very senior judges, Sir Brian Leveson and Lord Justice Irwin.
Just to clarify, the judgement did not express any opinion as to whether the valuations were correct, only that the conditions and assumptions attaching were very different, so comparison between the two was not meaningful.
There is an alternative way of reaching the same conclusion about the price paid by Wasps, one based on the actual events described in this history as opposed to theoretical values arrived at in the KPMG and Strutt & Parker valuations.
There are many different approaches to valuing businesses and shares. There is actually only one real way of determining value, which only occurs when a sale and purchase is completed.
Experts in the field of Corporate Finance will generally agree that the true value of a business (or in the case of ACL, 50% of the business) determined in the context of other terms, conditions and structures agreed, is the price which a willing buyer offers and a willing seller accepts.
In the instance of the sale of Coventry City Council’s shareholding, the price agreed with Wasps was in isolation. However, the Higgs’ shares were subject to two bids: one from Wasps and the other from Otium via the Liquidator of CCFC Limited.
With a single bidder for shares, in a non-competitive market, the value agreed is less certain. When there are multiple bidders and multiple sellers in respect of identical parcels of shares, the value achieved becomes far more definitive.
The Wasps offer to Higgs was exactly the same as that agreed with the Council for equivalent shareholdings. As described earlier, the Otium offer had a greater headline price but the “apples and pears” factor of conditional versus unconditional bids meant the Wasps offer was more attractive to the Higgs’ Trustees.
Therefore, two willing sellers agreed the exact same price with one willing buyer. Furthermore, let’s remember two quotes from the failed bidder in this auction:
“…. we have made a very generous offer”;
“…. the liquidator’s offer for the charity’s 50 per cent stake in the Ricoh Arena was generous – around £2.8 million – and guaranteed above market value price”;
statements made by Tim Fisher - Chairman of Coventry City FC, the sole Director of Otium, co-director of SBS&L - or with his implied consent, which completely undermine the case which Otium, SBS&L and Arvo continue to pursue against the Council which implicates Wasps.
Of course, I am not a Supreme Court Judge and those most senior Justices may take a different view. But I do have extensive experience of business acquisitions and disposals and in my opinion, the differential valuations are largely irrelevant to this matter.
The value of the shareholdings in ACL was determined by this quasi-auction in Autumn 2014. Therefore, the core of the case advanced by the Applicants, controlled by Sisu, appears to have no merit.
The existence of the KPMG valuation is however important in one other respect, as it shows the Council following good practice in checking that the price offered was reasonable.
I have concentrated on the matters relative to impending homelessness of the Sky Blues. On and off the field the Sisu era has been a largely unhappy time in many other respects. Despite the glorious end to last season, Coventry City is still only a shadow of the former Premier League club it was until May 2001.
As others will be quick to point out, there are people and organisations other than Sisu and associates who have contributed to the current crisis. Coventry City Council, Wasps, the Higgs Charity, the EFL and particularly some directors from the pre-Sisu days, have all taken some actions or decisions that turned out not to be in the best interests of Coventry City FC, even though many of those were taken with good intentions.
But Sisu have been in control of our football club for 11 years. Tim Fisher was appointed in 2011 and Joy Seppala has had a ‘hands on’ involvement since that time, after realising that her former colleagues such as Onye Igwe had made a complete hash of things. And there is only so long that those in charge can go on blaming others for a problematic situation, particularly when the list of failings of the owner and directors of the business is so extensive.
As I have outlined in preceding sections:
1. Sisu had almost 7 years to buy the 50% shareholding in ACL from Higgs yet failed to take the opportunity, with disastrous consequences for CCFC. The Club lost out, partly because Sisu were not willing to pay the value that the Trustees and then Wasps could see in that investment.
2. From 2013 onwards, Joy and Tim made it clear that they did not want the Sky Blues to play at the Ricoh. Plan A was a new stadium, they wouldn't consider being within City Council jurisdiction, or would only consider buying the Ricoh on a Freehold deal. Every statement made clear that a tenancy arrangement at the Ricoh was not an option for the Football Club. It was a series of statements in which Sisu would “mislead, filibuster or posture”, despite Tim and Joy’s arrogant claims to the contrary, since these announcements never amounted to anything more than cheap words and pretty pictures.
3. Many months before the deal with Wasps, Ann Lucas stated publicly on more than one occasion that Sisu should make an offer in respect of the Stadium, or the Council would seek alternative options for the future of the Ricoh. These invitations and warnings were ignored by Sisu, as was last year’s warning by Nick Eastwood of the consequences if legal action did not cease. The failure of CCFC’s owner to listen and act accordingly has been a major factor in the present situation.
4. When returning to the Ricoh from Northampton in 2014, a return secured by pressure from supporters, the club would still only agree a 2 year firm + 2 year option arrangement, because Sisu were persisting with the myth that the future lay in a new stadium.
5. Only when the sale to Wasps was announced did Sisu kick up a fuss, using the sale to launch a further attempt to obtain the Ricoh on the cheap through legal action.
6. Even then, Sisu/Otium had a final chance to buy the Higgs’ shares. While offering similar headline financial value, we were informed by the AEHC Trustees that the Otium offer was wrapped up in conditions and structures which depreciated the real value, whereas Wasps offered cash upfront and unconditionally.
7. The council made statements of re-assurance that the deal with Wasps should not adversely affect CCFC, but to the best of my knowledge these were non-contractual. Even a contractual covenant would not give a tenant carte blanche to behave in anyway it wants, protect the tenant from the consequences of its own actions or allow the renewal of a lease in all or any circumstances. The accusation that this “covenant” had only a 4-year life is a direct result of the short-term nature of the Club’s commitment to a tenancy and the continuance of litigation that threatens Wasps’ survival.
8. Even after Wasps completed the purchase of 100% of ACL, Fisher and Seppala still insisted that Plan A was a new ground. Then, when it was obvious that Stadium would not be delivered, the preferred option ie. Plan A Version II, became a groundshare at BPA. Only now, when they've failed to deliver on either of those commitments, Version III of their strategy has become: "Plan A has been and remains staying at the Ricoh Arena ". This declaration frankly insults the intelligence of Supporters, Wasps’ Management and any other interested party.
9. The owner and directors have always been ready to apportion and deflect blame onto others yet are rarely willing to acknowledge fault on their own part, recently implying that onus of responsibility is all on Wasps and the Council to ensure that a new deal is done at the Ricoh.
10. Sisu and Otium can solve this problem immediately. They should drop the JR2 court case, not just because it threatens CCFC’s very existence but fundamentally because the core of the case, that Wasps underpaid for the shares in ACL, is without foundation. One High Court Judge and three Appeal Court Judges have taken this view. My professional experience suggests from a different perspective that the actual events of Autumn 2014, in which Otium ducked the challenge to outbid Wasps for the Higgs’ shares, supports the view of the Justices.
But please don’t just take my word for it. The Judges view is also supported by the statements from Tim Fisher and on behalf of Otium, that the offer was “generous” and “guaranteed above market value price”, comments which undermine the central argument of the JR2 Applicants.
Joy, Tim and Friends …. Condemned by their own words!
Countdown to Homelessness Part 2 – The Final Countdown?
Yet the owners and director of Coventry City FC remain hellbent on risking the future of our Club by continuing a Court Case which seems doomed to fail.
“I don't go for wasting time in negotiations.” said Joy. Apparently, she would much prefer to waste time in Court instead. There have now been enough judges to form a football team, ruling on various stages of the legal action.
Less than 3 months and just 7 home games remain. The sands of time are running out rapidly with no solution in sight. We can only hope that the Supreme Court reject the JR2 Application and that Sisu finally recognise that Enough is Enough.
Preferably, they will Sell Up & Go and let Coventry City Football Club thrive with new owners who actually give a damn!
Firstly, many thanks to John Fletcher and Maggie Johnson for marking my homework, correcting mistakes, giving encouragement and constructive criticism.
I wish to express my warm gratitude to the Editor of the Coventry Telegraph / Coventry Live, Keith Perry, for allowing me to call upon the archives of our local paper. The team at the CT has reported the ongoing drama thoroughly and fairly and continues to do so. Most of the quotations in my work are sourced from articles written in their publications.
My deep appreciation also to Simon Gilbert, now of the BBC but formerly of the Coventry Telegraph, for being able to take guidance from his fantastic book “A Club Without A Home”. It is a volume that all Coventry City fans should read and tells the story up to early 2016 in far more detail, with a deeper history and with greater talent than I possess. Of course, Simon wrote many of the pieces in the CT that I have called upon.
Finally, I must stress that what I have written reflects solely my opinions and there is no implication that any of the above-mentioned persons would agree with any of the conclusions that I have drawn.
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