Sky Blues chief executive answers questions from the Coventry Telegraph
In this morning’s Coventry Telegraph, we have answered several questions on the issues facing the club and wanted to share those with all of our supporters via the club website today.
1. Is there any chance of Coventry playing at the Ricoh Arena next season?
None. We have left the Ricoh Arena but that does not mean the club is leaving the Coventry area for good. We were told categorically by ACL and by the council that there was 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 - whilst we deliver the long term vision.
2. When will you make a decision on where Coventry City will be playing next season and start selling season tickets?
As soon as possible. The ground share is an interim measure only while our new home is being erected, plans will go in front of the League at the start of June.
We will make an announcement in due course on season ticket sales.
3. Are you intending to build a new stadium?
Yes. Our long-term vision has the Club playing in the Coventry area in a new stadium that will be designed and delivered in 3 years.
We have started the process of procuring land so that we can shift the new stadium build forward at a pace. We retained specialists some months ago to advise us on where to build a new stadium for the club in the immediate Coventry area. We are not leaving Coventry in the long term.
The stadium will be in the Coventry area in accordance with Football League rules.
4. Do you think you have the moral right to take Coventry City out of Coventry?
The Club is the city of Coventry's football club and of course we have a moral obligation to keep the club in or very close to the city. This does not mean that we have to keep the club at a stadium owned by a third party which has consistently sought to charge an unaffordable rent. In addition to charging one of the highest rents in football, ACL systematically inflated the service charges it passed on to the club (telephone, utilities, cleaning, etc.), adding mark-ups of between 20% and 300% in some cases. It was not right to exploit the club in this way - and prevent it ever from ever being financially viable - in order to subsidise ACL's overheads.
It’s worth noting at this point that when it became clear that they would not do the deal that had been agreed, we asked to negotiate a sensible three-year exit strategy that would have meant us playing at the Ricoh until a new stadium was built. Effectively, a longer version of the three-game deal we did last season. Again, that was refused so we have been forced to look elsewhere on an interim basis.
The club has a vision and plans to play in the Coventry area at a new stadium. A stadium which ensures the club can take all the revenues and reinvest it back into the team. A stadium owned by the club. That not only means revenue but also that we can realise our vision of being a true community club. We play 23 league games at our stadium but the football club should be at the heart of the local community 365 days a year. That means training ground, community work and our administrative office too.
5. Will Sisu guarantee funding for the club so last year’s accounts can be signed off and the transfer embargo lifted? If so when?
Be clear, it was ACL and the Council that subjected the club to an administration order which created huge financial stress for the club. Sisu not only continued to finance the club through very difficult times where the club’s income was nil but Sisu continues to financially support the club – now and in the future. As with all rational investors, Sisu simply wants to see the business move to at least a break-even position and is prepared to finance the club through to break-even. This is not unreasonable.
The transfer embargo will be lifted once the administration situation is resolved because Sisu will then be in a position to sign-off the accounts. This period has been deeply frustrating in so much that it was needless and pointless exercise by the council which has cost us both wasted money and lost time. We need to make changes to the squad which has not been possible.
6. You have told us that Sisu has pumped more than £40million into Coventry City yet the debt was revealed in the High Court recently to be around £60m. Who is the other £15-20m owed to?
There is old, aged debt that was on the balance sheet at the time of acquisition. This debt is owed to Sky Blue Sports & Leisure.
7. Do you feel that you have a moral and/or legal obligation to pay ACL the rent you owe them, given that it is half-owned by the taxpayers of Coventry, many of whom are your supporters and customers?
The monies owed will be made good but, as has been proven, it’s nowhere near the level that had previously been claimed. While negotiations were ongoing, we are agreed an interim rent of £10,000 per match and, in addition, more than £500,000 of club money was drawn down by ACL from an another account. So, last year alone, we paid in excess of £800,000 for the use of the Ricoh – an extraordinary sum for a League One club. We are often asked why we didn’t make a contribution to the rent while we were in negotiations and the answer is always the same: we did, we made a huge contribution, and that point seems to get missed.
8. Do you feel that there is any possibility of meaningful talks with ACL, the Council and/or the Higgs Trust in view of the current animosity between the parties?
We made an incredibly generous offer around the rent and match day revenues. ACL’s bankers were willing to support the offer which would have stopped them from foreclosing on ACL and which would have left ACL debt free, while the Council’s deal has not. For reasons which are beyond us, the Council then spent £14m of public money to take over as ACL’s bankers and, hence, terminated discussions.
Further to the end of the discussions, the club has now moved on and is making its plans to play in its wholly-owned stadium where we will own all the revenues we generate. In effect, we will become a normal football club. The stadium will, of course, be in the Coventry area.
9. Would you accept that there is little or no chance of any such talks reaching a satisfactory conclusion unless Coventry City/Sisu and ACL change their negotiating teams to remove some of the mutual animosity from the situation?
The club comes first. As such, we have moved on. We are entirely focused on the new stadium build. The plans will be developed in full consultation with the fans. Please be absolutely clear, there has never been any intention to leave Coventry in the long term - just temporarily while the new stadium is constructed in the immediate vicinity of Coventry. This should take less than three years.
10. Why is Coventry City/Sisu continuing to spend money on lawyers and public relations companies rather than paying their rent?
We have been forced to retain lawyers and other advisers to defend the club's interests. A deal was on the table in December last year - reached without expensive advisers - which would have provided a viable commercial solution for ACL and the club, but ACL declined it and went on to launch a series of legal measures using two law firms.
11. Have your business tactics over the past year been designed to bankrupt ACL so you can attempt to wrest control of the Ricoh Arena?
In an attempt to put both the club and ACL on a sound financial footing we had a series of meetings in 2012 aimed at resolving the financial difficulties facing both parties.
As part of this, we reached agreement with the Council to buy out the ACL debt in return for a half share in the stadium business and extension of ACL's lease to 125 years, which means it would remain 100 per cent council-owned – we would just access the revenues, which is crucial. This deal was documented, signed by all parties and then reneged on by the council. The Council made the problem even worse by then using public funds, something that is now subject to the judicial review proceedings.
We need to be very clear that this is not about ownership of the freehold in the stadium, which would have continued to be held by the Council, with the club taking back the 50% interest in head-leaseholder ACL which it was always intended to have. We believe the conduct of the Council was motivated, not by what was in the best interests of the club, but by a desire to unlawfully wrest control of the club from Sisu.
We have always wanted this to be a mutually beneficial partnership instead of an outdated agreement that is more likely to lead to mutual self-destruct.
12. You are mounting a High Court challenge to Coventry Council on whether their bailout of ACL was a lawful use of taxpayers’ money. Why is this any of Coventry City’s concern?
What we are seeking is a viable future for the Sky Blues. Given that an offer was already on the table, it was a completely improper use of taxpayers’ money for the Council to take on ACL’s £14 million debt money at a time when the council were cutting jobs and services. There was absolutely no commercial or moral basis for doing this.
By providing state aid then any incentive for ACL to accept a market rate for the club's use of the stadium has disappeared and this has led directly to the club moving to its own stadium.
These are the questions we think need to be answered:
• Why did the Council reject a deal which would have seen ACL debt free and the Club staying in the Stadium and instead chose to use £14m of taxpayers’ money to bail it out?
There is no commercial logic to this decision which is why we believe it was for an ulterior motive to unlawfully wrest control of the club from Sisu.
• Why have we put CCFC Limited into Administration?
We simply couldn’t afford to continue paying ACL the levels of rent they were demanding because it is more than the income the club receives. We negotiated in good faith to then find that the council had plans to force us out of the city. ACL issued the administration order as part of this plan. Having read the ACL proposed administrator’s proposal, which included a radical chopping of jobs at the club and non-payment of players then Sisu moved to pre-empt the administration. We have put forward proposals to the Administrator which would be seen all creditors at the date of the Administration paid in full, including ACL.
• Are you moving the club to a venue outside Coventry?
No. We fully intend to build a new stadium in the Coventry area. We are Coventry City after all. This will be a stadium for the fans to be proud of and importantly a stadium to call home.