Ex-Gulf owned Portsmouth FC needs luck to keep funds

Premier League club passed from Dubai businessman Sulaiman Al Fahim, to Saudi’s Ali Al Faraj, now to seek bankruptcy protection
Ex-Gulf owned Portsmouth FC needs luck to keep funds
Portsmouth Football Club may seek bankruptcy protection
By Bloomberg
Tue 16 Nov 2010 05:42 PM

Hong
Kong-based Balram Chainrai and his business partner Levi Kushnir took over
Portsmouth Football Club for a second time last month.

They
got control after loaning the English south-coast team £16.5m ($26.5m), and
almost lost the entire investment when the club twice came within hours of
closure over debts of £100m. They are interested in selling the team.

“Both
of us got stuck in this situation and the both of us became accidental owners,”
Chainrai, who runs a consumer products business, said in an interview. “If we get out of this without getting hurt, we’ll consider ourselves
lucky.”

Portsmouth
sought protection from creditors in February after UK authorities tried to
force its closure over unpaid taxes. The team was demoted from the top division
at the end of last season after being hit with a nine-point penalty that left
it last in the standings of the world’s richest soccer league.

Chainrai
and Kushnir, who’ve worked together on property deals, became the club’s fourth
owners in six months earlier this year when a group controlled by Saudi Arabian
Ali Al Faraj couldn’t repay them the loan.

The
club was then taken over by administrators, who ran it for eight months, before
the duo took over again October 24. They’ve agreed to repay creditors about 20
percent of what they’re owed.

The
112-year-old club was twice close to liquidation.

On
February 10 a judge in London’s High Court turned down a request from tax
authorities to close the team. Then, three weeks ago, administrators UHY Hacker
Young said Portsmouth would go out of business if Alexandre Gaydamak, one of
the club’s former owners and main creditors, didn’t sign off on the deal to
Kushnir and Chainrai. He’s owed £30m.

“We
were on the verge of losing everything,” Kushnir said.

Portsmouth
was forced to sell players who’d helped the club win the 2008 FA Cup, its first
major trophy in more than half a century. Those sales brought in more than £80m,
yet the team still owed in excess of £100m.

Kushnir
said officials are still looking into records to see where the money went.

Gaydamak
put the club up for sale in mid-2009, saying he wasn’t prepared to fund it, and
Standard Bank called in its loan.

Sulaiman
Al Fahim, a Dubai-based businessman, took control for 44 days before he
couldn’t find the finances to run it. The club was then passed to Saudi’s Al Faraj
before being seized by Kushnir and Levi and placed into administration, a form
of protection from creditors.

The
negative publicity generated by the financial problems forced the Premier
League and the Football League, which is responsible for English soccer’s three
lower-tier professional divisions, to change their rules on ownership and
governance.

Al
Faraj was able to take control of the team on the strength of legal documents
and without meeting Premier League officials. That’s no longer possible.

Potential
owners are required to undergo an interview with league officials, provide
future financial information and explain how they plan to operate the team.
Portsmouth needs the Football League’s permission to sign new players.

 “What was before in Portsmouth will not be in
the future as long as we are owners,” Kushnir said. “There will not be a
shopping spree of expensive players, taking commitments on a company knowing it
will not be able to be settled.”

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