Coventry City Football Club, SISU and Otium Entertainment Group Limited

So following on from this statement from Administrator Paul Appleton of David Rubin and Partners, the Administrator handling the current administration of Coventry City Football Club Limited (one half of Coventry City Football Club – CCFC), from a personal point of view, I think he has made the right decision by choosing Otium Entertainment Group Limited even though many have concerns as it is related to SISU Capital.

Yes, whilst SISU Capital – the company that purchased CCFC [comprising Coventry City Football Club Limited and Coventry City Football Club (Holdings) Ltd] – placed Coventry City Football Club Limited into administration and appointed David Rubin and Partners, they were well within their rights to do this as they and their related partner (Arvo Master Fund) were the largest creditors to my understanding.

Whilst the fans may not like the fact that SISU Capital are still involved, this is right in many ways – why? Let me explain in my opinion:-

– the club has been in decline since the 1970’s
– the decline has included the same people from Vice President level, non Executive Director level and upto and including main board level at various times during this period
– these people were behind selling Highfield Road and moving to The Ricoh
– The Ricoh was supposed to the first and/or, one of, if not the most advanced stadium in Europe
– the stadium was to have a larger capacity than it currently has, a retractable roof and a sliding pitch
– the plans changed due to cost control and as a result, it was decided to scale back by omitting the retractable roof and a sliding pitch
– after many delays, at some point the club could not afford to develop the stadium and outside support was sought
– it was then decided that the capacity was then reduced
– this lead to a new company being formed which developed and evolved into Arena Coventry Limited (ACL Limited) currently owned by The Alan Higgs Trust and Coventry City Council
– the administration was arrived at after ACL took CCFC to court over un-paid rent
– the yearly rent was in the region of £1,400,000 per annum with no break or rent review if the CCFC was relegated
– the rent is more equivalent to a Premier League ground and not a League One team
– my understanding is that the rent being charged by ACL includes a retractable roof and sliding pitch of which neither are part of the stadium!
– this has been mentioned to me on several occasions over the last 6 to 12 months by various people
– SISU Capital / CCFC researched comparable clubs/grounds and found a comparable yearly rent of £400,000 was more in tune to what they should have been paying
– thus trying to get a reduction proved to be sticking between both parties which resulted in ACL taking CCFC to court
to freeze asserts over non payment of rent which had been going on for a year

So yes, from a personal point of view, (based on the above points heard or seen via the media, told to me and my understanding of events), this decision I think is right one. SISU Capital are trying to do what any business (or turn around specialists) would do and get the club on a sound financial footing. What you have to remember is that when SISU Capital purchased CCFC they were 10 minutes from going bust (which I believe the words to be used by Joe Elliott who was acting Chairman and organised this sale to them). However, as I gather, they purchased a club which was in a far worst position then they were led to believe or told!

Yes, of course the question is why didn’t they do proper due diligence? From what I gather, they were asked to save the club by the board of CCFC at short notice (for some reason only a day or two before the deadline springs to mind from memory) and purchased the club to the approval of the board which included people who had been involved for many years at various levels at the club and through the revolving door process!

However, during the tenure-ship of SISU Capital (in conjunction with Arvo Master Fund) at least over £70,000,000 has been invested into both Coventry City Football Club Limited and Coventry City Football Club (Holdings) Ltd. (This is the figure quoted by Paul Appleton and/or the Media as the liability to both parties and being the largest creditors).

Thus, this is what confuses me, because,

– the club was mis-managed from 1970’s (for around 30 odd years)
– the fans shouted for the sacking (and succeeded) of various managers, sacking of the board and getting the chairman out

yet it just seemed a constant merry go round the people leaving/stepping down and then coming back! The Chairman (and/or Chief Executive) may have changed 3 to 5 times during this period but the people on the board down to non-executive Director’s plus members of Vice President’s club have virtual stayed the same but have been part of the merry go round / revolving door seniario that seemed to be evident prior to the SISU Capital takeover.

So why have the fans never really moaned about this when:-

– these people brought the club to the brink of going bust
– these people agreed and signed the lease with ACL
– these people are the ones the fans wanted out but kept asking back (merry go round / revolving door)

no they never did except for laying all the blame totally at the door of SISU Capital!

Looking from the outside in and media reports, when SISU Capital started to go through things (and this is my understanding and from information/comments I have heard/been told), they find more and more issues!

Yet again the revolving door of personnel continues until SISU Capital step up to the plate and stop this. In turn a similar story was starting to appear involving the merry go round/revolving door until SISU Capital says enough is enough and takes control which I believe seems to relate to many people being shown the door in various formats.

So, as an outsider looking in, my summary points are:-

– mis-management by personnel lead the club to being 10 minutes from going bust
– these people are the same ones who also took part and were involved in the sale of Highfield Road and agreed the rental deal with ACL
– these same people drag SISU Capital in at the last minute with not all the facts to save CCFC
– SISU Capital then support these people from behind the scenes but place one or two people in key positions to public facing and their representatives
– when they eventually start to un-ravel things, they start it would appear, to take control and start bringing in all their own people removing all the people that have been in and around or involved with the club prior SISU Capital arriving
– now all these previous people then start trying de-stabilise the club by trying to get investors in to buy the club and The Ricoh whilst ACL Limited have consistently refused to discuss or sell to SISU Capital but are happy to support these people
– strangely the row between ACL and CCFC/SISU Capital takes a turn for the worst and becomes very Public around the same time
– now some of these people are the ones getting backers and supporters to help put bids together to purchase Coventry City Football Club Limited off the Administrator
– some of these people, their bids never got to the final last four
– whilst some of these people we can assume did

Thus, whilst the fans are annoyed – and take to Social Media (and are organising trips today [Saturday 15th of June 2013] to London) to protest at/to the Football League and SISU Capital – that the Administrator has agreed the sale to Otium Entertainment Group Limited which is connected to SISU Capital, yet are happy to support bids been put together which involve or may have involved the people that lead to mis-management before SISU Capital became involved!

In conclusion, I feel that time needs to be given to Otium Entertainment Group Limited (& SISU Capital) whilst the re-structuring brings in fresh business ideas and funds to run Coventry City Football Club as a business which is what is needed in today’s football world without carry the legacy of the past. The club has facilities such as Legends, Premier Club and Vice President’s facilities for these people and other prominent people from around the City of Coventry whilst the day to day running of the club is left to Otium Entertainment Group Limited (& SISU Capital).

Long gone are the days when football clubs were the play toys of rich local businessmen who never ran football clubs as a business.

So, with football now needing to be run as a business with clubs needing to meet Fifa, Premier League and Football League rules, we need to move on from what was in place in the 20th century and allow people that run businesses worth 100’s of millions of pounds to control the clubs if you want to aim to be a consistent top half Premier League team.

This development with a complete fresh broom and funds from Otium Entertainment Group Limited ( & SISU Capital) is what is required and not with the 20th Century ideas people trying de-rail the scheme and run The Ricoh, unfortunately the move to the stadium is a necessary evil that needs to take place.

Why is it a necessary evil? Well I foresee a game of blackmail appearing over The Ricoh as with Coventry City Football Club moving away to ground share and build a new stadium, what are ACL Limited going to do with an empty football stadium? Who is going use that pitch and pay six figures or more a year rent? No one!

With this in mind, ACL Limited (which is half owned by Coventry City Council) will utilise the media and these people to say how Otium Entertainment Group Limited ( & SISU Capital) are costing the city and the area money by not using a stadium that is lying empty and losing money. So when they offer to buy The Ricoh, there will be a big gap in the valuations by both parties and yet again this will lead to Otium Entertainment Group Limited ( & SISU Capital) painted with a bad image yet again.

So, in my opinion, the fans need to stop blaming SISU Capital, and start:-

– questioning the people who brought the club to within 10 minutes of going out of business
– ask why these people set up The Ricoh deal and agreed the rent with no break clauses
– sought to actively get Coventry City Council to buy the mortgage which equated to a 50% share of ACL Limited
– ask why ACL Limited have refused to discuss any possibility of a sale of The Ricoh to SISU Capital yet were more than happy to allow Coventry City Council to buy the 50% share of ACL Limited
– ask why ACL Limited have refused to discuss any possibility of the sale of The Ricoh to SISU Capital yet were more than happy to allow perspective bidders (seeking to buy Coventry City Football Club Limited off the Administrator) to discuss purchasing the whole of ACL Limited
– why ACL Limited decided to bid and where was the money coming from? Coventry Taxpayers?
– why did ACL Limited announce that CCFC could play rent free for the whole season free of charge at The Ricoh whilst they remain in administration to the media full way knowing that Paul Appleton had stated that the issue of coming out of administration had to be resolved prior to the announcement of the fixture list and the start of the new season

So will the fans do this and allow Otium Entertainment Group Limited ( & SISU Capital) to get on with running the club, purchase The Ricoh and return to top class football?

I very much doubt this but it needs to be done!

So PLAY UP SKY BLUES and get behind a complete and united club which means Otium Entertainment Group Limited ( & SISU Capital) being able to buy The Ricoh from ACL Limited and completely develop a unified united club that will be back knocking on the Premiership door with 3 to 5 years and enter on a sound financial stable footing……

This article is wrote by myself purely based on my own views, read in the media, heard in the media, discussions and conversations with various people. Whilst yes I am supporting SISU Capital, this is done from a business point of view and not because other reasons and is done completely independently.

3 responses to “Coventry City Football Club, SISU and Otium Entertainment Group Limited

  1. Ian

    I am an ex pat in melbourne and finding any balance in this story is impossible. I am gutted that Cov are going to move to sixfields but always thought there was something not quite right about the media’s presentation. However, I am not a business savvy man but can you explain how playing in front of crowds of 2k to 3k can possibly be the solution? Surely crowds of 10k plus at the Ricoh, with a rent of 400k a year makes more sense? I get that Otium and SISU want the stadium but can’t see the strategy in what they are doing. If you can shed some light I would be most grateful.

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    • Mark,

      From what I have found recently since I wrote this, it is totally amazing but in summary:-

      – CCFC and Coventry City Council (CCC) to develop Ricoh (ACL)
      – CCFC could not afford to develop
      – Company formed to do this which was onwed 50/50 between CCFC & CCC
      – Then CCFC could not afford to continue so sold to Higgs Trust (HT)
      – CCFC signed 48 year lease at £1M a year unless promoted to Premier then £3M a year but if regulated no reduction
      – CCFC only got gate money all other monies went to ACL
      – CCFC in trouble so Joe Elliot and co sold to SISU
      – SISU asked to but Ricoh – CCC said no
      – ACL in trouble so CCC asked SISU for help
      – SISU offered to buy ACL stake stake as CCC would not agree 100% sale
      – SISU arrange to meet bank and help re-organise and buy debt
      – Bank agree a fee around say £4 to £8M but meant it would be distressed sale and mean ACL may have to change and contracts re-organised
      – CCC agreed but not happy as they thought SISU getting ACL share on cheap
      – CCC decided to speak to bank and paid £14.4M which was a lot more plus fees to stop SISU buying into stadium even though they asked SISU for help to organise the purchase by SISU from bank
      – Head of CCC after work done by 3rd party that SISU valuation of £200K was fair rent
      – Head said councilors would not approve it but wanted £400K plus but SISU refused and again offered to buy 100% of Ricoh or HT 50% share
      – CCC said no as it was too low even though it was over market value
      – SISU offer still available but CCC are refusing to to speak to SISU
      – So now SISU virtually brought new site and ground will be built within 3 years on the edge of Coventry
      – CCC made offer of free rent for the season via ACL whilst CCFC in administration but Administrator had always said CCFC would be out of administration before start of season or end of August at latest so free rent was just a publicity stunt to get fans against SISU
      – ACL is not viable under current structure and even if CCFC where promoted to Premier within 3 to 5 years ACL would most likely be bust before then!
      – SISU have tried to resolve this but CCC / ACL are not interested as this would prove CCC wasted taxpayers money buy over paying for buying out the bank and that ACL is being run wrongly

      So, in answer to your question, playing to low crowds is not want SISU/CCFC want but nothing can be done CCC/ACL will not talk about re-negotiation of monies. SISU need 100% of the money to comply with Football League Financial Fair Play rules but playing elsewhere is the only option.

      It needs the fans to turn on the Council and not SISU as the fans are not listening to this truth which is in the public domain was all done before SISU but CCC/ACL are not willing to change anything even though SISU subsidising CCFC is breaking new League rules. Which makes things even worst as all this was agreed and set up prior to SISU by the people the Fans want to buy the club off SISU which would be a disaster.

      Furthermore, it would seem that whilst this is all in the Public Domain, Coventry Evening Telegraph refuse to report this and I believe this is because they don’t want to upset CCC. Hope this helps……

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  2. It always gets complicated when a club goes into administration, arguments , contracts and legal disputes. Messy stuff.Coventry is just but one of the many clubs that have suffered the fate of administrators knocking on their door.Leeds , Stockport, Portsmouth and loads of others have been involved in messy insolvency issues!

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