Cause of Action
Which is where we get to the crux of the current problem.
It’s September 2014 and Coventry City have just returned to The Ricoh Arena after that most shameful period of absence in Northampton. The mood amongst Coventry City supporters, indeed in the whole City of Coventry, was one of euphoria that the football club had been re-united with the stadium which was built for the Sky Blues. Therefore, the shock that was to come was only intensified, since it was in such stark contrast with the feel-good factor that we had just enjoyed.
On 18th September, less than 2 weeks after the first game of the new Ricoh era, the news broke via the Coventry Telegraph that Coventry City Council were in advanced discussions to sell its shares in ACL to a London rugby club, Wasps. In addition, it transpired later that the lease on the stadium, held by ACL, had been extended to 250 years. The deal was finally concluded early in October.
There were many misgivings about this turn of events:
- The deal had been done in secrecy which seemed inappropriate for a public body.
- Coventry City had agreed to return to the Ricoh without being in possession of the knowledge that ownership was about to change.
- Because the new owners were another sports club, the Sky Blues could lose priority of stadium use.
- The length of the lease meant the deal was tantamount to a sale of the freehold.
- Wasps’ presence in the City was perceived as a potential threat to Coventry Rugby Club.
- By selling to a club from out of the area, Coventry Council were enabling Wasps to do exactly what Sky Blues supporters had protested so vehemently against when our club was removed to Northampton, arguably on a worse level because of the greater distance and permanency of the relocation.
These misgivings were not without foundation to a greater or lesser extent. It is not my purpose to defend the actions of Coventry City Council or their decisions. Throughout the whole Ricoh Arena saga there have been a number of actions taken by the Council that may have been unhelpful, some would even say harmful to CCFC. Equally, many actions have been extremely beneficial, to the point of actually saving the club. Without the intervention of the Council in the previous decade, I think that it is doubtful that there would be a Coventry City FC today.
But for good or bad, the fact is that Coventry City Council are not accountable to the football club or its supporters. They are required to act in the best interests of the Council Tax Payers and residents generally and Councillors are accountable at the ballot box for their actions. As the leader stated:
“We are charged with representing you and I’m sorry that each and every decision we make can’t have a referendum, but that’s what democracy is about.
“You elect us and then decide whether or not we have made those decisions in your interests. We don’t take our responsibilities lightly, in a decision like this we serve the interests of the people of Coventry.” Ann Lucas, October 2014
On a political level, there was unanimity across both political parties and all Councillors. And the number of people who are both Coventry City Fans and resident in the City probably only represents around 10% of the total population of Coventry. While some of that 10% can be a noisy minority, they are still a marginal faction. The other 90% and some of the 10% have greater concerns, including not wishing the entanglement of the Council with CCFC and Sisu in respect of the Ricoh, or the Ricoh and ACL, to be a drain on a hard-pressed public purse.
The deal with Wasps not only put money back into that purse but it de-risked the Council’s exposure to the Ricoh situation, as the arrangement also paid off the loan that the Council had made to ACL, which was the subject of the first Judicial Review.
For ACL, which had undoubtedly been suffering financially since the Rent Strike begun in 2012 and then from the lack of an anchor tenant when CCFC upped and left in 2013, Wasps’ takeover meant there was a strong chance of the business being re-invigorated. As one of Ms Lucas’s Conservative colleagues pointed out:
“We have to do what is right, which may not always be what is popular.
“It must be made absolutely clear the position of ACL is uncertain after the club made it clear they were returning on a temporary basis, but that creates a lot of uncertainty to the future. This is the best way of protecting ACL’s financial interests.” Councillor Tim Sawdon, October 2014
Sisu’s reaction to this development was to launch a second Judicial Review, two days before Wasps played their first game at the Ricoh in the week before Christmas:
“Today, our lawyers have filed papers relating to the on-going legal action with Coventry City Council.
“This step has been taken as a precautionary measure to safeguard Coventry City FC’s position in relation to the outstanding legal appeal [in JR1].
“We believe that some of the decisions the council has made were not taken in the best interests of Coventry taxpayers and had a seriously damaging effect on the club.
“Commercially, it is the right thing to do and is necessary to protect the club’s position as a tenant in Coventry.
“It also ensures that all the outstanding legal action reaches its natural conclusion.” Sisu Capital, December 2014
After all those statements from the owner and directors of Coventry City FC that the future lay in a new stadium beyond the jurisdiction of Coventry City Council, owned by the club so that 100% of revenues could be accessed, here was Sisu lashing out because they had lost out on a deal to obtain a share of ACL and the control of the Ricoh.
Of course, the objective of all this legal action and other tactics, such as the Rent Strike, appears to have been to get the Ricoh Arena, which was funded by local, national and EU taxpayers, on the cheap. Not only has that strategy failed dismally thus far, it left the way clear for Wasps to move in.
If only Sisu had applied themselves to the situation in the same way that Wasps had done, in a professional business-like manner, it is highly probable that Coventry City would have been permanently coupled with the Ricoh Arena and Wasps would have had to build a nest elsewhere.
Two key points that we were to discover down the line:
- The action was being brought in the names of Otium Entertainment Limited, ie Coventry City FC, Sky Blues Sports & Leisure (“SBS&L”), the parent company, and Arvo Master Fund which holds the debenture over all the football clubs’ assets.
- Although the action is about Coventry City Council’s behaviour, the purpose of the case appears to be to put Wasps out of business. The Applicants claim that the Rugby Club underpaid for ACL, with the enhanced lease, by £28 million, an amount which they will try to force Wasps to pay to the Council.
Therefore, Judicial Review 2 pitted the Football Club against the Rugby Club; Tenants against Landlords. That was never going to make for a happy relationship.
And it is precisely why we are now in this crisis, with probably just 7 home games left at the Ricoh.