Coventry City Football Club

Jim Cunningham Excerpts

Tuesday 12th March 2013 Westminster Hall

[Mr Bob Ainsworth (Coventry North East) (Lab)]

Thank you, Mrs Main, for presiding over this debate, which gives us an opportunity to discuss an issue of such concern to the city of Coventry, to local people and, most particularly, to Sky Blue fans.

Coventry City football club has been in deep financial difficulty for many years. Five years ago, when it had lost its ground, Highfield Road, and most of its assets, the club was sold to the hedge fund Sisu 20 minutes before the administrators were due to take over. Sisu specialises in acquiring distressed assets, and under Sisu the club’s ownership is multilayered, opaque and partly offshore in the Cayman Islands. It is claimed that Sisu has lost £43 million over the period, but nobody can be sure as substantial management fees of millions of pounds are passed between the layers of ownership and debentures seem to protect unknown investors.

A bitter battle has waged for the past year over the rent and ownership of the Ricoh arena, where the club play. The club’s owners have been on a rent strike. They say they are fighting for a more realistic settlement for a league one club, although Arena Coventry Ltd, which is jointly owned by Coventry city council and the Alan Edward Higgs Charity, believes the agenda has been to destabilise the company and thereby gain control at a fire-sale price. A much lowered rent has been offered, but the dispute continues.

Meanwhile, the fans and the people of Coventry despair as the club’s owners threaten to liquidate the business or move the club out of the city. I am grateful to the Football League, which yesterday, ahead of this debate, issued a statement reiterating its position:

“Any application to move the club to a stadium outside the city would need to be considered by the Board of the Football League. In doing so, the Board would require the club to demonstrate that it had a clear plan for returning to Coventry within a prescribed timeframe.”

I hope the Football League’s rules will therefore not allow Sisu to do anything like what was done to Wimbledon football club.

The Football League has a reform of governance programme under way, on which I would like the Minister to comment. However, the Football League, which is within the democratic control of the clubs themselves, can only do so much. Do the Government believe that will be adequate to address the challenges faced by Coventry City football club and the game?

Although the dispute between the parties over the rent level has been in the public domain for many months, and much innuendo and allegation inevitably surround such disputes, one key aspect has not had any public exposure. If we are to go forward, it must be flushed out. The football club’s owners are seeking to challenge the validity of the original rental agreement made back in 2002, and are using that challenge in an attempt to discredit the city council’s motives for paying £14 million to Yorkshire bank in December for the stadium’s debts. I cannot see what right the club owners have to issue threats on that front as they bought the club more than five years later. They had the opportunity for due diligence, and I would hope that the principle of caveat emptor meant something in that case. If the hedge fund is allowed to reopen the issue, it will be a blatant attempt to profit at the expense of those who built and paid for the stadium: in part, the people of Coventry.

[Mr Jim Cunningham (Coventry South) (Lab)]

My right hon. Friend has obviously done considerable investigation into the matter. I have the impression that the parent company, Sisu, bought the football club to acquire the stadium; that is my view, although I have not gone into it in depth. Has he considered a way forward? Is it worth while exploring arbitration? He will know better than I do; he has dealt with the matter a lot more than I have.

[Mr Ainsworth]

I will come to exactly that point later in my speech. It is a potential way forward that has been put to the club owners in the past few days.

To return to the issue of whether the owners will be allowed to reopen the agreements that existed long before they arrived in the city and took over the club, Martin Reeves and Chris West of the city council and Arena Coventry Ltd dismissed the threats as “desperate stuff”. However, in my view, the club owners must be prepared to justify their threats and allegations publicly or drop the issue if we are to find a way forward. I challenge them to do so.

The Sky Blue Trust, which represents fans, now has more than 800 members, an indication of the growing amount of alarm among fans. I thank the trust for helping and supporting me to prepare for this debate and for all the work that it has done over the past few years. The club has made a proposal that I put to the club owners yesterday: binding arbitration conducted by a well-qualified local man, Dr John Beech, who has a PhD in business strategy from Cranfield university and more than five years’ experience examining football finance.

Board member Mark Labovitch indicated his enthusiasm for that course of action. However, the response that I received today demonstrates how difficult it is to deal with Joy Seppala and her team. It seeks to turn the proposal of binding arbitration into an opportunity to investigate Arena Coventry’s finances and set the agenda for the arbiters. Of course, there is no suggestion that the football club’s finances or ownership structure should be subjected to investigation.