Today Portsmouth City Council is expected to approve a £1.45m loan to help fans bid for Pompey.
And as judgment day for the club approaches, all three of the local authority’s political parties have publicly pledged to try and support the community buy-out of Portsmouth FC.
The News understands that following a Lib Dem group meeting on Tuesday night, the council’s majority party decided to pursue the loan – but attach strict conditions.
One crucial requirement for using taxpayers’ money is that there is no other option for saving the beleaguered club. So Pompey’s fate may now rest in the hands of administrator Trevor Birch, former owner Balram Chainrai, and the two players who have yet to agree compromises to end their contracts.
Everything rests on cutting a deal with Liam Lawrence and Tal Ben Haim, but if that can be achieved the trust may be free to enter negotiations with rival bidder Portpin to determine who will take over.
Council leader Gerald Vernon-Jackson is adamant that no public money will be put in danger of vanishing into the Pompey black hole that has eaten so much cash in recent years.
He said: ‘What I am trying to do is find a way to balance protecting public funds with helping the club survive.
‘There are people in the council who are worried about putting public money into the football club as they see the huge financial mess the club has been for some time. This is all about reducing risk, because it isn’t our money we’re spending.’
In its report council officers write: ‘The city council should only consider providing financial loan support to the Pompey Supporters’ Trust and put public funds at risk if there is no other commercial alternative to bringing the club out of administration.
‘In the event that a commercial deal cannot be concluded and the bid from the trust is the only alternative to liquidation, then it is recommended that the city council considers and approves one of three options.’
These are 1) to not provide any loan support to the trust, 2) to provide support with tough financial conditions, or 3) to provide a loan but with less strict conditions.
If the council votes for option two, as it is expected to do, it will loan the trust £1.45m for 12 months, ending August 31, 2013, with the following requirements:
· That the club owned and operated by the trust is the same club that was relegated and has membership of the relevant football league.
· That the club and its assets are bought for £7.68m, which includes provision for the full and final settlement of the football creditors.
· That the club owned and operated by the trust obtains all rights to the £11.7m of parachute payments.
· That the trust obtains a legal charge over Fratton Park.
· That no other legal charges are made against the income or assets of the club, beyond those set out in the trust’s business plan, without the prior consent of the council.
· That the council receives an assignment of parachute payments to repay the loan or that an investor guarantee is provided by the trust for the full £1.45m.
· That a subscription agreement for the trust’s Fan Share Scheme, High Net Worth Investors and Associate Director Scheme is in place, which has been approved by the city solicitor and does not allow money to be taken out of the club until the council has been repaid.
· That proof of funds from the three schemes has been demonstrated.
· That a suitably skilled and experienced chief executive is appointed by the trust.
In addition Cllr Vernon Jackson sent a letter to trust representatives this week outlining further conditions to be met. These include a written agreement by the Premier League, Pompey and the trust that the loan will be paid from parachute payments in August 2013; that the trust’s business plan is approved by the Football League; and that trust directors should take a personal charge upon their assets to a council loan to guarantee repayment, or an investor guarantee to the value of the loan.
Leader of the council’s Tory group, Cllr Simon Bosher, said he knew using public money might not be popular, but that Pompey was too valuable to lose.
He said: ‘Pompey is a community asset for the people of this city. When we won the FA Cup the feel-good factor that brought to the city was something you could never put a price on.’
Labour leader Jim Patey agreed and said history wouldn’t forgive the council if it let Pompey go under.
He said: ‘It’s important the club survives. It is a difficult one as there is a lot of money at stake and the question over the trust’s first year is a crucial part of this, If they can survive past the first year then they are OK.’