Administration: What does it actually mean?

[Earl o'Montrose]

Following on from current news that Portsmouth are hopeful of going into administration as this would increase their chances of avoiding being wound up, and of course the long-standing Yammish connections with the phrase, can somebody kindly explain - in layman's terms please - what it actually means for a club to go into administration? It doesn't appear to stop a business (or a football club at any rate) from operating as such, and indeed I think perhaps Motherwell have been through administration and survived.
Any ideas

[greenlex]

Basically it is administered by a third party. The third party will not try and find a buyer/solution to the business debts. This will include redundancies and selling off of assets to pay debts. Having said that that might be receivership. **** it I dont know. What it will mean is a 10 point penalty. That cant be good for prospective buyers at Pompey.

[jgl07]

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Following on from current news that Portsmouth are hopeful of going into administration as this would increase their chances of being wound up, and of course the long-standing Yammish connections with the phrase, can somebody kindly explain - in layman's terms please - what it actually means for a club to go into administration? It doesn't appear to stop a business (or a football club at any rate) from operating as such, and indeed I think perhaps Motherwell have been through administration and survived.
Any ideas

Motherwell went into administration and were then able top cancel the contracts of a number of under performing players on long contracts. They were able to use the protection of administration to negotiate with their creditor so that they may accept a proportion of the sum outstanding.

Leeds paid something like 1 penny in the pound. I understand that this was accepted as some of the big creditors were 'sweetened' with share offers.

It is clearly giving the club some advantage. I am sure that Hearts would love to be able to cancel the contracts for some of their £10,000 a week duds.

Motherwell were able to go into administration, restructure and emerge without most of the debts (a lot of which were owed to John Boyle anyway) without any penalty.

Livingston did the same after signing players they couldn't afford to enable them to beat Hibs in the CIS Cup again without penalty.

I suspect that whatever happens, if Portsmouth go into administration, the PL will keep them at least on life support until the end of the season rather like the SPL did with Gretna last year.

[mim]

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Basically it is administered by a third party. The third party will not try and find a buyer/solution to the business debts. This will include redundancies and selling off of assets to pay debts.

Skip the 'not' and you're pretty much right.

It's an attempt to make agreements with creditors and cut costs to make the business viable. If the business is not viable, liquidation may be inevitable.

[The_Todd]

In football terms, it's cheating IMHO.

[CropleyWasGod]

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In football terms, it's cheating IMHO.

Disagree.

Living beyond your means is the cheating bit. Going into administration is the "being found out" bit.

[The_Todd]

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Disagree.

Living beyond your means is the cheating bit. Going into administration is the "being found out" bit.

Not having to pay up for all your debts after you're found out is the continuation of cheating.

All IMHO, of course.

[weonlywon6-2]

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Not having to pay up for all your debts after you're found out is the continuation of cheating.

All IMHO, of course.

i dont think it works that way, you may still have to pay but the way its done changes.you also get black listed so to speak and cant spend or buy as you have no credit score, all very similar to bankrupcy i guess.

i do know what you mean though. i`ve seen companies fold, then before you know it it opens in a different name a week later !!

[The_Todd]

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i dont think it works that way, you may still have to pay but the way its done changes.you also get black listed so to speak and cant spend or buy as you have no credit score, all very similar to bankrupcy i guess.

i do know what you mean though. i`ve seen companies fold, then before you know it it opens in a different name a week later !!

You don't pay back the full debt, a huge chunk gets written off.

To me, this equals cheating and the punishment doesn't even come close to fitting the crime - there needs to be more severe punishments handed out to dissuade more clubs going down that route.

There's no doubt in my mind that if Motherwell were made to pay back everything they had borrowed before going into administration they wouldn't exist today instead of coming back debt free. That would be a shame, I know, but it would have been wholly their own fault.

[Phil D. Rolls]

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Not having to pay up for all your debts after you're found out is the continuation of cheating.

All IMHO, of course.

Depends on your morality. To some it's just good business practice.
I wonder what Willie Miller's view of borrowing other people's money and p*ssing it against a wall is.

[Alicky Ranks]

IMHO it's time more clubs went out of existence in order to bring an end to the absurd over-spending that has caused so many clubs to struggle. Administration seems to be used as an escape clause by too many.

[Caversham Green]

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You don't pay back the full debt, a huge chunk gets written off.

To me, this equals cheating and the punishment doesn't even come close to fitting the crime - there needs to be more severe punishments handed out to dissuade more clubs going down that route.

There's no doubt in my mind that if Motherwell were made to pay back everything they had borrowed before going into administration they wouldn't exist today instead of coming back debt free. That would be a shame, I know, but it would have been wholly their own fault.

I kind of agree with you Todd, but the thing is, the owners and directors give up all control of the club to an independent practitioner who then forms his own opinion as to the viability of the business. Motherwell were a bit of an exception though, as the practitioner decided that the best course of action was to sell the club back to Boyle (who I think was the biggest loser as far as the debt deals go).

Administration should be a last resort, but I have seen it used as a business strategy by a parent company wanting to offload a worthless but expensive division - which is where I think it could be used in the case of HoMFC, probably to the club's long-term benefit.

[down the slope]

Promising Youngster




Join Date: Jan 2008
Posts: 53
Administration: What does it actually mean?

It means you are unlucky enough to be a Hearts fan.

[WindyMiller]

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I kind of agree with you Todd, but the thing is, the owners and directors give up all control of the club to an independent practitioner who then forms his own opinion as to the viability of the business. Motherwell were a bit of an exception though, as the practitioner decided that the best course of action was to sell the club back to Boyle (who I think was the biggest loser as far as the debt deals go).

Administration should be a last resort, but I have seen it used as a business strategy by a parent company wanting to offload a worthless but expensive division - which is where I think it could be used in the case of HoMFC, probably to the club's long-term benefit.

Due to the debt being >£70m, and their players being valued well below that, will the administrators also be looking to selling the ground?

[Earl o'Montrose]

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Promising Youngster




Join Date: Jan 2008
Posts: 53
Administration: What does it actually mean?

It means you are unlucky enough to be a Hearts fan.

Cheers folks. Going by the descriptions given, it does seem like administration is a relatively easy way out for cubs who have been financially reckless.

Down the Slope: I hope that's a general dig at Yams, and that you're not inferring that I'm one of the deuded . I know 53 posts since Jan 08 isn't a huge amount, but I tend to read the boards rather than regularly posting. I'm kinda shy you know

[down the slope]

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Cheers folks. Going by the descriptions given, it does seem like administration is a relatively easy way out for cubs who have been financially reckless.

Down the Slope: I hope that's a general dig at Yams, and that you're not inferring that I'm one of the deuded . I know 53 posts since Jan 08 isn't a huge amount, but I tend to read the boards rather than regularly posting. I'm kinda shy you know

A general dig at the yams , no offence intended.

[Earl o'Montrose]

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A general dig at the yams , no offence intended.

Dunno how I would cope with being labelled as one of 'them'. Pardon my paranoia DTS.