Chairman's plea as Town's cash woes bite

By Duncan Brodie

IPSWICH Town chairman David Sheepshanks last night called for a "siege mentality'' as the cost of relegation from the Premiership finally caught up with the club.

The closure of the latest transfer window on January 31 left the club facing the imminent prospect of insolvency – chiefly as a result of the crippling wages bill left over from its two seasons in the top flight.

Town's financial troubles stem from the summer of 2001, when highly-paid signings such as Finidi George and Matteo Sereni were imported. They failed to make any impact, and the club plummeted to relegation.

Yesterday, an administration order was granted by the High Court at the club's own request, giving it vital breathing space in which to restructure its debt.

The administrators – from accountancy firm Deloitte & Touche, a specialist in the professional football industry – have been charged with the task of negotiating a "Company Voluntary Arrangement" (CVA) with creditors.

Club employees, including the players, will continue to be paid and so fans should see no change, with manager Joe Royle retaining his current squad to mount a late push for a place in the Division One promotion play-offs.

And it is hoped that there will be no need for further redundancies, on top of the 18 staff axed by the club in a round of cost-savings measures last month.

"The very best way to address our situation is to stick together, continue to support the club to the hilt, like on Saturday, and adopt a siege mentality that Ipswich Town Football Club is ours, a club to be proud of and that we will prevail,'' said Mr Sheepshanks.

The pain from yesterday's move will be felt by the club's creditors, many of whom are now unlikely to receive the full sum owed.

"We have strenuously sought to avoid this eventuality by all reasonable means," said club chairman David Sheepshanks. "However, in the end, it has proved impossible."

Despite making every effort, the club had not been able to cope with the net loss of £15million in income resulting from relegation and the collapse of the transfer market which immediately followed.

The collapse of ITV Digital, which had cost a further £2.5m, and the introduction of the new transfer window system had added to the problems, he said.

"We deeply regret this action and the pain that will be felt by our creditors and suppliers, including many that are local and of long standing," said Mr Sheepshanks. "If there had been a better alternative we would surely have taken it."

Options considered had included seeking outside investment through a share or loan stock issue but the club's legal advice was that its financial position made this impossible for the time being.

An alternative form of administration, involving a sale of the assets and a change of control – as has happened at other clubs – would have left unsecured creditors unlikely to receive anything, he added.

Nick Dargan of Deloitte & Touche, who has been appointed administrator together with partner Nick Edwards, said the aim was to speak to major creditors within the next seven to 14 days, in the hope that the entire CVA process could be concluded in four to eight weeks.

However, he said it was too early to comment on what proportion of debt particular creditors might expect to receive.

Mr Dargan added that many of the steps necessary to restore the club's viability had already been taken by the management. It had adopted a "reasonable" contingency plan, but this had proved impossible to achieve before the transfer window closed.

Mr Sheepshanks said that just one more substantial transfer deal during January – on top of the sale of Jamie Clapham to Birmingham City – would have seen the club through to the end of the season but no other offers had been received.

He stressed that the decision to seek the administration order had been taken by the directors and not by the club's bankers or bondholders which, he said, remained supportive of the board.

In addition, the directors – and himself as chairman in particular – accepted "full responsibility" for the decisions which had led to the club's current difficulties.

It was, said Mr Sheepshanks, "neither a case of over ambition, nor lack of ambition".

Money had been made available to then manager George Burley to improve the squad on the strength of the club's successful first year back in the Premiership and the belief, based on past experience, that players could be sold if necessary to retrieve any losses.

The collapse of the transfer market, compounded by the introduction of the new transfer window system, meant that it had been impossible to "right the ship" in the way expected.

Mr Sheepshanks also stressed that the construction of the new stands at either end of the Portman Road ground was not a major cause of the club's problems, as these had been funded through a long-term bond on which the payments were affordable, even in Division One.

It was also now necessary to get the rest of the club's finances on to a sound footing for the First Division – even though promotion through the play-offs remained a possibility this season and represented "the ultimate solution" to the club's problems.

Director John Kerr made an impassioned plea for the whole community to get behind the club in their months of need.

He said: "The people of East Anglia and beyond have supported our club superbly. Now, if we sell every seat in the stadium from now until the end of the season and if businesses use our function and meeting rooms we can get through this.

"Nothing will help the club more. This is the way we will get out of this situation and avoid any further redundancies."