Southend all at sea; an update from the edge of oblivion

Bottom of the National League and with only 14 available players, you might have thought that things couldn't get any worse for Southend United. Until they did.

Rooted to the foot of the National League table, the problems continue to mount for Southend United. By Tuesday afternoon they were back in court over an unpaid (and apparently disputed) power bill. That evening, they were due to be playing Maidenhead United in a National League match, despite reports that they only had twelve fit and available players.

And as if that wasn’t enough, there is still the ongoing small matter of the much-deferred winding up petition brought against the club, which is due to be heard again at the High Court on the 4th October. The National League have already made it very clear what they think of it all, having docked the club ten points after they failed to discharge their obligation to HMRC at the previous hearing on the 23rd August.

So, a quick catch-up. Southend United have now been under transfer embargo for 355 days and started the season with sixteen players. By the time of their trip to York City on Saturday they were already down to a squad of fourteen, with just three substitutes and they ended the afternoon having lost 3-0 and having finished the game with just nine players after picking up two red cards. The fourteen-player squad had become a twelve-player squad, as confirmed by the National League the following morning. After the match, the comments of manager Kevin Maher felt like cries into a void: 

"I’m proud of the players and proud of the fans for how they supported the team at the end there and how they support this club.” Maher told the Southend Echo.

"But there’s so much out of control and all we can do is our best.

"We need help and something’s got to change because we can’t do anything about it.

"We fight every day for the football club as staff and players but other people need to step up and do what’s right for the club.

By Monday afternoon, they were being reported as being potentially down to ten men for this match, while (perhaps unsurprisingly, considering that all of this has been going on in the background) ticket sales were sluggish, although they picked up on the afternoon of the match, as it became increasingly apparent that it would be played after all. Finally, after 3.00 in the afternoon, Chris Phillips of the Southend Echo tweeted: 

Seen a few tweets and mad I have to clarify this but Blues do have a team for tonight. There will be at least one sub. 

A small number of supporters protested outside club owner Ron Martin’s house on Sunday, but at this stage in proceedings something approaching a sense of resignation is starting to settle over Roots Hall. But there do remain escape hatches, at least to buy the club a little time. Can a sale be completed? Can HMRC get paid in full? Is there anything genuine about this debt dispute, or is Ron Martin just stalling until, whichever way the cards fall for Southend United, at least this isn’t his problem any more?

But let’s be realistic for a moment, here. Why should supporters believe the current takeover talk? Are there any buyers prepared to move beyond the tyre-kicking stage? There has been talk of the involvement of an Australian consortium, but while Ron Martin has previously said with confidence before that he believes a sale will complete by the end of September, there has been precious little actual evidence that this is likely to happen. It may well be the case that the potential buyers would not even be interested in looking at the club until the current round of court cases is decided. 

A further potential issue is that HMRC were given secondary preferred creditor status in at the start of December 2020 and, as Begbies Traynor point out here: “Being a secondary preferential creditor means HMRC are only preferred creditors in relation to certain types of taxes - in this case the taxes collected by a business on their behalf, such as PAYE and VAT.” All of which is precisely what Southend United owe to HMRC. 

This has had inevitable knock-on effects. Even in cases where there is a new buyer and a sale can proceed fairly smoothly, it means significantly reduced returns for the small and medium-sized enterprises (SMEs) who so often find themselves making up a shaming list of creditors receiving at best coppers in the pound back for their putting their faith in this football club to pay its debts.

And from Southend’s perspective, that matters. Even in administration, HMRC would not have to accept any club-rescuing CVA which didn’t pay them 100 pence in the pound. The simple fact of the matter is that Southend United cannot just walk away from this debt. The combination of the winding up petition and the fact that HMRC have secondary preferred creditor status means that nothing prevents that debt having to be paid in full. 

It has been suggested that a pre-pack administration, in which a deal is already agreed between the biggest creditors and a new buyer already agreed and with the subsequent CVA being merely waved through, could be on the cards. If you’re thinking this is shady behaviour which has been controversial you’d be right. There’s been talk of outlawing them in recent years. and a game which is trying to get its financial house in order should really outlaw them.

But once a winding up petition has been served, it is no longer simply the case of organising a pre-pack sale or placing the company into administration yourself. To use either of these options, the club would have to apply to the court for the winding up petition to be adjourned before it can consider whether an administration order would be in the best interests of the both creditors and the petitioner. And Southend have already had several adjournments to little obvious effect and been warned that they are coming to the end of the road.

Elsewhere, everything remains as murky as ever because whatever happens next will be dependent on the specifics of their other debts. Football creditors would also have to be paid in full because the leagues and other governing bodies require those debts to be paid in full. How much is Martin owed? Would he write it off, if Southend’s salvation depended upon it? Until a full breakdown of the outstanding debts can be seen and the current court cases have been satisfactorily resolved, it’s difficult to say what a proposed takeover would even look like.

Later in the afternoon, the matter of their court case was adjourned until the 3rd October. With a winding up petition the following day, it promises to be a busy week for Ron Martin and a nerve-shredding one for the supporters of Southend United. The case, regarding an “application for warrant of entry” over what Martin considers to be a disputed utilities debt, is understood to be for a significant sum of money. At least the lights stay on for now.

As ever, where there is a beacon of light in the darkness of a time like this, it comes from the supporters themselves. On the same day that the club seemed to be falling apart at the seams, those who haven’t given up the ghost were keeping its spirit alive with the announcement of a Community Ownership Fund, which has been started with the express aim of returning Roots Hall to the purpose originally intended for it. Perhaps the stadium itself, so long neglected by an owner who seems to consider it little more than a pawn in his own failed property development attempts, finally deserves to be put into the hands of those who care about it for what it actually is.

And there was a further little glimmer of hope in the midst of the madness, too. In the evening, Southend United had a home match against Maidenhead United. It was a fractious evening, disrupted by tennis balls and furry toy rats being thrown from the Roots Hall stands to disrupt the game after 25 minutes had been played, but when the match did reach its climax the team did deliver, winning 2-0.

The players and manager Kevin Maher deserve enormous credit for playing through such testing times behind the scenes at the club. After all, their jobs are on the line, here. They were able to add goalkeeper David Martin and midfielder Mauro Vilhete to their squad as emergency signings shortly before kick-off but were still only able to select two substitutes. The win lifted the team off the bottom of the table, and all this was watched by 4,748 supporters.

That’s the bottom line, with Southend United. The team is quite clearly good enough. Even with injuries, suspensions and just two substitutes, they won again. Without that ten point deduction, they’d be in 6th place in the National League table on goal difference. The crowds are big enough. Plenty big enough.

No-one should have to see their football club in this shape, and that Southend United have ended up at this point after years and years of warnings being sounded about the way in which the club was being run is yet another permanent stain on this country’s attitude towards football governance. With this sort of support and at this level of the game, Southend United should be a viable business. That they aren’t is to the embarrassment of those who’ve been running the club, and not the club itself.