Reading Posh
Sophisticated rhetorician
No, not the skinny bint...
The Moy's End Millions
The purpose behind the purchase of Peterborough United Football Club (PUFC) and the subsequent separation of the club from the valuable London Road freehold has finally been revealed by the recently-submitted planning application for a residential development at the Moy's End.
It always looked strange when we were told in late April 2003, that the club had been saved from the property developers, as it turned out that the club had in fact been bought by Wetmore Foundation, understood to be controlled by a property developer, Colin Hill, who had no previous connection with Peterborough United, but was a long-standing friend of Barry Fry.
The developer behind the application and the principal beneficiary of any profit from the proposed 135 flats is Peterborough United Holdings Ltd (PUHL), the property side of which is controlled by Wetmore Foundation. Under the current outline proposal not even £1 of cash will go to PUFC but this has not stopped PUHL from using the club to justify obtaining planning permission for the development of the flats - …“the residential element is required to fund the new stand”…. (Letter from David L Shaw to the Head of Planning Services at Peterborough City Council 3 rd April 2006 , submitting the application.)
It is difficult to see the proposed new stand as much more than a necessary aid to gaining planning permission for the residential development. The club has no urgent need for a new away stand and has not been campaigning for one. If anything it has been prioritising other improvements such as the pitch and team strengthening. A new stand for away supporters may be welcome, but it would hardly be seen as vital. The planning application shows that PUHL is also trying to offset the cost of the stand against the “other planning obligations which would be required”. We have yet to see any plans for the stand or how it will benefit the club, but why not be straightforward – it's mainly about the flats. 96 two-bedroom and 39 one-bedroom flats would be worth around £18 million.
So how did a league football club, run by individuals who have been repeatedly quoted as saying they had the best interests of the club as their priority, lose its most valuable asset with barely a murmur?
On 29 th April 2003 previous owner Peter Boizot sold the club to Wetmore Foundation who were represented by long standing Posh director Alf Hand. But that is not how it was explained publicly at the time, as a series of statements to the media portrayed the club as having been bought solely by Alf Hand. Mr Hand, who has had a long association with the club, was described as having saved the club from property developers. It was also claimed that the deal had to be hurried through “in an hour”, and also as having ‘saved football in Peterborough'.
For six months after the sale, the Peterborough public continued to be under the impression that it was Alf Hand who had bought the club and that there were no plans to sell the ground, although the playing part of the ground was protected by a long-standing covenant from the City Council, allowing only sporting activity, and should not, on the face of it, have been a property issue.
Six months later, Alf Hand was quoted as saying … “we were fortunate for Colin Hill to be able to provide the finances to secure the club.” (ET 1 st October 2003.) The next day Barry Fry said that Colin Hill (not Alf Hand) was the owner of the club and that he, Barry Fry, had now bought it from him and added… “It's fair to say that Colin Hill has accepted less than what he paid for it”… (ET 2nd October 2003 ) . But it was only at the meeting called to explain the deals to supporters that the official, and therefore presumably correct, version was given….. “On 29 th April 2003, Mr. Alfred Hand, on behalf of Wetmore Foundation acquired approximately 99.6% of the issued ordinary capital of the company” - PUFC Financial Review (Baker Tilly notes provided for the meeting) . Why had we been misled? Why was it necessary to withhold the true nature of the ownership?
In retrospect it is clear to see that on 29 th April 2003 the date of sale of the club, Colin Hill's control was confirmed by the appointment to the PUFC board of the Colin Hill linked personnel, Karen Haylock, described as Colin Hill's accountant, and Shaun Keegan. Iain Forsythe and Barry Fry were also appointed to the board on the same day.
Subsequently a decision was made by the PUFC board to sell the ground. At the point at which such a sale was proposed, we believe that the directors should have obtained an independent and fair valuation of the stadium, in light of the property development potential and the fact that it was the most significant asset of the company. We were told that no such valuation took place.
We also believe that the directors were fully aware of the property potential, but don't seem to have pursued an arrangement where the ground is sold subject to a sharing of the benefit of any development. This would not have been an unusual route for a property owner and developer to take, so that the owner of the property gets a share but so does the developer, who has to take the risk involved with the development. It seems that the ground was sold hurriedly, quietly and quite possibly below fair value, for the ultimate and principal benefit of the property developer and not the football club, a view backed up by Alf Hand's later comment at the 2004 club AGM that “The sale had not been a good deal for the club.”
Another protection to help ensure a fair deal in the event of the sale of a major asset, such as a property, is an extraordinary general meeting of the shareholders to approve the sale, as admitted by PUFC chairman Steve Holt at the 2005 PUFC AGM. No such meeting ever took place.
Unusually, in the case of Posh's stadium, there was an additional safeguard. Under the terms of the 1955 Conveyance of the land from the City Council to PUFC, the council held a pre-emption right to buy the land if PUFC ever decided to sell. This pre-emption right was inserted to protect the ground for the long-term benefit of the city. The club had to submit a written offer to sell back the stadium to the council. No such written offer was ever made. In a letter from Michelle Grove, Solicitor to the Council, to The Posh Supporters' Trust, it was stated that “since there was no formal offer in writing, the procedure envisaged by the Schedule to the 1955 conveyance did not operate.” She added that a meeting took place on 10 th October 2003 at the football club, attended by Colin Hill, to “discuss what the Council's view would be of the transfer of the ground to a holding company.” It is not clear whether the three council officials who attended knew that this proposed “transfer” was in fact the sale of the ground to a company controlled by a third party and that a written offer was required. The written offer would have made the nature of the sale clearer. This type of “holding” company structure and “sale” has been used elsewhere in football - for example and with disastrous consequences at York City - to make it look like a form of internal transfer. As a result of the absence of a written offer, there was no opportunity for the City Council to utilise the six-month period mandated in the conveyance to consider whether it wished to repurchase the stadium. To the best of our knowledge, the council representatives took the decision themselves and no PCC elected councillors were aware that the option to buy the ground had been rejected or even existed.
If the six month period had been exercised as required, it would have resulted in the City Council considering how the whole of Peterborough could potentially benefit financially from the development of the stadium's non-covenanted land adjacent to the South Bank development, as is now proposed for PUHL. The football ground was finally sold by PUFC Ltd to PUHL on 14 th November 2003. No cash changed hands, the consideration of £3.5m being satisfied by PUHL taking over existing debts owed by the club, a considerable sum of course, but not when set against the potential property value of the development. PUHL additionally retains the rest of the potentially valuable London Rd site.
The Posh Supporters' Trust is not suggesting that it is in any way wrong for property developers to make a good return in light of the risk they take, and to help a club develop its assets, but we believe there were ways in which a fairer outcome should have been obtained for the club. This could have resulted in a substantial amount of cash coming into the club, to be used to improve the playing squad, provide better facilities for supporters, develop the youth scheme, or build new stands as required, but with the choice being made by the club. There were, and continue to be, many fine words about the benefit to the club of the deals done and the new stand, but the facts seem to us to show that neither the club's, nor the city's best interests were put first.
All this will be said by some to be history, to be glossed over, portrayed as unimportant and to be ignored. But we have highlighted it mainly because it is not too late for a much fairer outcome for the club. PUHL, who control the club, could still decide to create that fairer deal by sharing any development profit that may arise, with our cash-strapped club. The constant need for new funds would be eased if the club had a fair share of the development taking place on its doorstep.
We hope that the current PUFC board, supporters, councillors and the City Council itself will support and argue for a fairer outcome for the club, in view of the information and events that we have brought to light.
THE BOARD OF THE POSH SUPPORTERS' TRUST
