McCrory vs Power: Bout of the boardroom for Swindon takeover
Despite club director Sangita Shah’s post-match comments on the McCrory vs Power bout of the boardroom, confusion still reigns over the ownership situation at Swindon Town and how this arose…
‘Black Friday’ is what Americans label the final Friday in November and for different reasons it was embarrassing Friday for Swindon Town. Within two hours of a club statement being issued ‘confirming’ that the Football League had sanctioned a change of ownership from Jed McCrory to Lee Power, this was withdrawn and removed from the website. Importantly this statement and its supposed ‘facts’ were not retracted by a subsequent article, by Sangita Shah, nor with this April 1st.
Subsequent media questioning yielded claim and counterclaim from both parties that they were the true owners of our club. A boardroom summit was called for midday on Saturday between the three remaining directors – Jed McCrory, Lee Power and Sangita Shah – to thrash out the ownership claims; yet it transpired that McCrory had earlier decided to postpone this to seek legal counsel on the matter.
We had only silence until Sangita Shah was sent out to field the questions after the Carlisle United match. Her calm and considered response on BBC Wiltshire confirmed, “Currently Jed is the chairman and the owner of the club”. However, she acknowledged that “the Football League have confirmed a clearance for an option to be exercised for the 60% of the club by Swinton Reds 20, which is owned by Lee Power, I think there is another individual involved, but it overwhelmingly it is Lee Power.” That other individual is suspected to be chartered accountant Stephen Crouch.
The origins of the deal can be found back to February 2013. Jed McCrory’s Seebeck87 consortium acquired 98% of Swindon Town Football Company Ltd for £1 from Andrew Black; while taking on £3m worth of liabilities and the day-to-day running costs of the club. While the initial business strategy revolved around cost-cutting and broadening the income streams, equity funding still remained essential in the short term to meet those transitional requirements. The search was always on for the consortium to add financial clout, with particularly pressing need to remove the Football League’s transfer embargo.
The former Norwich City striker Power was first introduced to us back in April 2013 as a vital investor to aid the consortium. Immediately Town fans typed ‘is Lee Power a fit and proper person’ into Google and what they found largely didn’t impress.
At that time, McCrory spoke to the Swindon Advertiser and advised that Power was poised to put around £1.5million into the club in an “equity partnership” while taking on a chunk of the substantial running costs at the Robins, as and when he passes the Football League’s fit and proper persons test. This ‘test’ was eventually passed in late June and Power became involved as a Director of Football Operations, is expected to be responsible for the link with Spurs; being formally appointed to the board on 20th September 2013.
Taking the withdrawn club statement at face value, Power has invested a significant sum by providing £1.2m back in March to release the transfer embargo and a further £1m of funds to meet ongoing costs. The first statement of funds raises questions about a legal letter from McCrory that was seen by the Supporters Club and Trust in April; in which McCrory stated only he had provided £1.2m of funding to the club in the form of a loan at 0% interest, repayable by end of 2015.
If the withdrawn club statement is correct, it would now appear that Lee Power may have loaned McCrory the money in order to bring the club out of the embargo. This and the second statement, that Power provided additional funds to meet ongoing costs, would only serve to reinforce a view that the Seebeck87 consortium were in desperate need of funds to avoid the club being placed in administration. Any clarification from McCrory on what funds he has personally invested would clarify this point and whether the arrangement between the two lived up to it’s billing as an ‘equity partnership’.
Now a few months later the two are embroiled in a public spat over the ownership as McCrory is potentially at risk of losing his controlling interest – with an option for 60% of Seebeck87’s holding being exercised by Swinton Reds 20. The roots of this option would appear to stem back to an agreement reached between the two in order to deliver the investment. From similar circumstances elsewhere in football – notably Portsmouth – where a Wonga style short-term loan to a cash-strapped owner, if not repaid (i.e. typically through a sale of the club as the owner has no funds) could be called in after a period and result in the lender taking majority control of the asset. This moves the lender to preferred creditor status in the queue should the business enter into administration.
McCrory ultimately opened the County Ground gates to Lee Power, welcoming his investment and publicly defending his past; we trusted his judgement. Yet now we see a trail of comments on Twitter with Jed acknowledging and RT’ing Power’s previous failed attempt to takeover at Luton Town along with the hashtag ‘#againstfraudsinfootball’ and tweeting ‘well here we go again’. And when asked why, if he was so concerned why he brought Power to the club in the first place, he answered “of course it is I didn’t no till recently …?.. Won’t happen here either …”. Very worrying stuff for Town if McCrory’s allegations of Power’s intentions and practices prove to be true.
The chasm between the two is more significant than the potential 20% difference in their shareholding. McCrory has sent an email to County Ground staff insisting he retains control and is seeking legal advice on the position; as he tries to protect his stake, or the club’s future. Shah was confident that this will be resolved soon, stating “the fans need to know nothing is actually changing”, which is somewhat understandable considering it has been Power who appears to have funded the club since March. Whether McCrory was expecting any arrangement between the two to be 50/50 “equity partnership” might be the issue he is fighting..?
We know from experience that boardroom battles can drag on. Remember the status of Bill Power’s ‘investment’ of £1.12m back in 2006? The arguments and subsequent court case of whether this was a loan or shares continued until 2009. In this case, if any assurances provided to Lee Power to securitise any investment through a controlling interest in the club is not confirmed, I can only assume that he would be reluctant to invest further money to cover the day-to-day running costs. With the January transfer window only weeks away, at least the club have assets to sell as a last resort, notably Wes Foderingham, to meet the needs for short-term funding. At that point, the battle in the boardroom could impact on performances on-the-pitch, so hopefully this matter is quickly resolved, whichever side wins…
Still confused..? I am…