Birch keen to see ‘ugly’ side of game given face-lift

Tal Ben Haim's huge contract is a financial burden to Pompey. Picture: Robin Jones
Tal Ben Haim's huge contract is a financial burden to Pompey. Picture: Robin Jones

It has been labelled the ugly side of the beautiful game.

Yet the lengthy wait continues for the outcome of a court case which could provide crucial help to clubs entrenched in administration.

For Trevor Birch, however, the likelihood is the potentially ground-breaking result could arrive too late to substantially help Pompey.

It was back in November when the Football creditors’ rule case opened at the high court.

Brought by HMRC, it was a challenge to the Football League’s system which gives preferential treatment to football creditors upon administration.

As Portsmouth businesses have found to their cost, football creditors must be paid in full, while community creditors receive a fraction of what they are owed.

Adjudicated by Mr Justice David Richards, the case drew to a close after five days.

Some five months on, the English game still awaits a verdict.

In theory, the ending of the football creditors’ rule would grant clubs like Pompey the opportunity to restructure player contracts – like Tal Ben Haim’s huge deal, which is reportedly worth £36,000 per week.

Irrespective of entering administration, the £10.5m wage bill remains water tight and hampering efforts to wrestle down the cost base.

The Football League argues the current arrangement is designed to give protection to financially, well-managed clubs against the risk of other sides being unable to meet their financial obligations.

It also insists the system is necessary to protect the integrity of its competitions.

As the wait goes on for a judgement, though, Birch is concerned if HMRC triumph there may not be enough time to aid Pompey.

He said: ‘The case could have a big, big impact on football in terms of clubs in administration not having to pay that debt in full.

‘We have been waiting since Christmas for this decision.

‘The problem is you cannot put a time frame on it, it is up to the judge. But I would have thought something will be decided any day now.

‘I suppose the length of time it is taking can be put down to the judge working on different cases or there being administration issues.

‘For Portsmouth, though, whatever the outcome, I would have thought it would be too late.

‘Of course, if the judge calls it very soon there still may be a chance.

‘Even then, however, the issue is how quickly the Football League implement any potential rule changes. They will want a variation in an attempt to counter the effect.

‘Regardless, if successful, this could make a real difference in football.

‘As an administrator, restructuring is very, very difficult in terms of players’ contracts. You cannot change them and that is a problem.

‘Should HMRC win this case, in theory you could make players redundant and then they are an unsecured creditor. We are all waiting with interest.’

In Scotland, the absence of the football creditors’ rule was recently highlighted in the on-going problems at Rangers.

Given such freedom, club administrators threatened to axe the club’s top-five earners, plus 10 others, as they tried to reduce monthly outgoings by £1.2m.

Subsequently, there were three voluntary departures, while players agreed to 75-per-cent wage reductions.

Speaking at the November court case, Gregory Mitchell, QC for HMRC, described the football creditors’ rule as the ‘ugly side of the beautiful game’.

The situation is being closely followed by sports finance expert Dr John Beech.

And Beech, a Pompey fan and senior research fellow at Coventry University, believes the legislation should be scrapped for the good of the game.

He said: ‘The purpose the football creditors’ rule serves is allowing clubs to happily make rash signings without the concern of whether they will be paid.

‘No other business trades with that level of uncertainty. It is an artificially-created market which has become completely dysfunctional.

‘Should the rule come in, the ability to renegotiate contracts would put clubs in a much better position.

‘However, what is wrong and just plain bad practice is that clubs like Portsmouth didn’t have player contracts which automatically drop salaries when relegated.

‘You only have to look back at Bradford to see the problems with that.

‘They were buying madly just before Premier League relegation in 2001 in a desperate and unsuccessful attempt to stay up and didn’t have any non-performance clauses in their contracts.

‘They ended up paying way over odds in the Championship, it escalated and they fell down the pyramid.

‘And, of course with Pompey, one of the things putting off getting a buyer to the club will be the wage bill.’