Players sold to secure club's future

THE future of football at Portman Road would have been under threat without this week's sale of stars Darren Ambrose and Hermann Hreidarsson, Ipswich Town chairman David Sheepshanks said last night.

Speaking at the end of what he admitted had been one of his toughest weeks at the club, Mr Sheepshanks said the sales had been the only way to raise vital cash, without which the club would have been unable to pay further bills.

The chairman said the sums raised meant the club could now meet its cash needs for the rest of the season – and progress continued to be made towards agreeing a Company Voluntary Arrangement (CVA) with its outstanding creditors.

The sale of favourites Ambrose and Hreidarsson to Premiership clubs Newcastle United and Charlton Athletic respectively, has dismayed many Town fans still hoping to see Joe Royle's team force their way into the Division One promotion play-offs.

But, ironically, it was the team's current league position, just below the play-off spots, which left the club with no alternative way of raising the cash it required.

In an exclusive interview with the EADT, Mr Sheepshanks said that when the club went into administration at the end of January, it was clear that it would "run out of cash" at some point before the end of the season.

Companies in administration were not allowed to incur "negative liabilities", meaning in effect that all new debts had to be covered by cash.

In the case of paying players' wages, this included not only the wages themselves but also the tax which would become due to the Inland Revenue the following month.

This week, the club had reached the point where the directors and the administrators were not able to "juggle" the cash-flow any longer, and fresh funding had to be raised.

Had the club's league position been better – an automatic promotion spot, like Leicester City, or even an established play-off spot – it might have been possible for the club to borrow additional funds, said Mr Sheepshanks.

In its present position, however, no financial institutions were willing to lend additional money and the only other option apart from player sales was to raise new investment, which was still more difficult for a company in administration.

While the weeks in administration had been difficult, and the past week worst of all, there had ultimately been no alternative but to sell the players, said Mr Sheepshanks.

Failure to do so would have left the club unable to pay any further bills, including those for policing, which would have threatened the future of football at Portman Road. This in turn would have been to the disadvantage of creditors.

He said: "Nobody at the club wanted to make these sales but, at the end of the day, our responsibility is the future of the club. The amount of money raised from these sales has secured the club's cash position until the end of the season.

"Ghastly as it was to have to sell one of our brightest young players and one of our favourite stars, at the end of the day the sales equated to the cash the club needed. They have given us the breathing space to agree permanent refinancing when we come out of administration."

Mr Sheepshanks stressed that the cash-flow issue was a short-term matter and, with it having been resolved through the sales, did not alter the club's prospects of achieving a CVA with its creditors.

Progress was being made and there was optimism that "a path to exiting administration" could be achieved. In parallel with the CVA talks, efforts were also being made to get refinancing in place at an early stage so that the club did not come under further pressure post-administration, he added.

Mr Sheepshanks said it was natural for supporters to focus on what they perceived to be relatively low amounts received for the players sold this week but the transfers needed to be viewed in context.

The sales of Darren Ambrose and Hermann Hreidarsson, together with that of Jamie Clapham in January, were probably three of the five largest deals in England since last August, with only the fees paid for Robbie Fowler and Jonathan Woodgate being higher.

As a result, Town had received £3 million in revenue - more than Derby County, for example, had received for Malcolm Christie and Chris Riggott, both also now in the Premiership at Middlesbrough.

Just as the FTSE-100 share index was now trading around 3,700 rather than at more than 6,000, where it stood three years ago, so transfer values had also fallen, even since the start of the season when West Bromwich Albion offered more than £3 million for Hermann Hreidarsson.

In addition, Ipswich were known to be in a weak negotiating position, said Mr Sheepshanks. Although attempts had been made to achieve sales earlier in the administration, from a position of greater strength, offers had not been received.

As the need to achieve sales became greater, administrator Nick Dargan had personally contacted a number of clubs to indicate that an offer would be accepted.

Although several clubs had expressed interest in Darren Ambrose, none except Newcastle had come forward with a firm bid, with the rest all wishing to wait until the end of the season, and, apart from Charlton, Portsmouth had been the only other club to come in with an offer for Hermann Hreidarsson.

"At the end of the day, a player's value is what it is," said Mr Sheepshanks. "It is not a case of us accepting too little."