The Long Read: Southend United's 18th nervous breakdown
After two wins to the start the season Southend United looked set to buck some trends, but the wins are drying up and patience is running out with the way they're being run.
Life comes at you fast. At the time of writing these words, it’s been less than two weeks since Southend United had a glimmer of hope. Among the weeds, a flower was growing, a team which against the odds won its first two league matches of the season at home against one of the pre-season favourites and away to the nearest thing they have to a local derby in the league at the moment. 4-0 against Oldham and 2-0 against Dagenham & Redbridge. Considering the club’s ongoing transfer embargo and the savage effect on their ability to make any squad-building efforts over the summer, even this felt like a significant achievement.
But even while the season started with a bracing pair of results, objects in your rear view mirror can be closer than they seem. Southend United were due back in court on the 23rd August, a timely reminder of the extent to which the finances of a football club and the fortunes of the team can become untethered from each other. Southend came close to snatching a place in the six-team National League play-offs at the end of last season. This might all have been the EFL’s problem and the story might have had a far bigger profile. But instead, Southend United are a non-league club nowadays and subject to different rules.
So, a quick recap. Southend United appeared in court over their 18th winding up petition in 25 years in the middle of May, yet again for the non-payment of tax and National Insurance. The club’s owner Ron Martin has in the past been accused of using the non-payment of tax as a ‘free overdraft’ for many years, but it has felt over the last couple that sands in this respect have fundamentally shifted. Relegation from the EFL in 2021 further cut commercial opportunities. Southend were repeatedly unable to pay their staff on time at the end of the month last season. This is about more than ‘free overdrafts.’
Martin put the club up for sale earlier this year, but he also owns Roots Hall and wants a non-insignificant amount of money for it. Talk came and went of a group who may or may not have been interested, but nothing came of that, but it was enough to persuade the court that a takeover was imminent, which resulted in their petition being deferred by 56 days to the 12th July, and when that date came around they were given a further 42 days. But this cycle of not paying the wages, not paying tax and NI and getting winding up petitions deferred didn’t seem to have fooled the National League. Two weeks after that deferral, they had a comment of their own to make on the matter:
The National League appreciate the current unsettling time for the supporters of Southend United FC and would like to set out the current position.
Following extensive and positive dialogue, including sight of suitable evidence provided by the Club, appropriate steps are being made by the Club to satisfy the League and secure its participation in the 2023/24 Vanarama National League season.
The Club has now cleared the debts owed to football creditors and as such the League has issued a licence for the Club to participate in the 2023/24 Season.
The Club, who can now move forward to commence the season, are also required to fulfil the following conditions:
a. The Club HMRC debt is to be discharged in full by their next court date, 23 August 2023. It should be noted that this remains a requirement from the League even if the court hearing is further adjourned past the 23 August 2023.
b. In addition, having discharged all outstanding Football Creditors, and all HMRC debt by 23 August 2023, it will be a condition of the license to ensure all new or any Football Creditors debts or HMRC debt are cleared on time to the satisfaction of the League at any point during the 2023-2024 season.
Should the above, set out in a or b not be satisfied, the Club will be subject to an immediate and automatic 10 points deduction. This is in addition to any other action deemed appropriate by the League when considering any new debt.
The League has made it clear to the Club the importance that not only the current debt is settled but the Club operates in a manner that ensures they operate sustainably moving forward.
So in other words, the National League were informing the club that even though they’d paid their football debts to get those up to speed, just getting the winding up petition deferred again on the 23rd August would not be enough to avoid further sanction and that anything short of settling the amount outstanding would result in a ten point deduction. The National League, you see, have had their fingers burned by clubs starting the season with no—or next to no—chance of surviving the season. And when you’ve repeatedly not been paying your staff, your tax or your NI on time, it starts to feel as though there is a strong possibility that this could be the case.
And if this sounds harsh, there are good reasons for it being the case. Football matches require both cost and commitment from a large number of stakeholders in order to take place in the first place. For home clubs, switching the floodlights on costs money. Security staff cost money. Getting programmes printed costs money. For away clubs, travel (and often accommodation) is extremely expensive.
It’s no different for fans. Buying a ticket costs money and committing every Saturday afternoon for ten months a year costs commitment. And all of this is based on the fundamental premise that it matters, that there is a broader context and significance to football matches that comes from the very fact that they are played in a league, or in a cup. If those results are subsequently expunged from the record, then everybody else has effectively wasted both their money and their commitment.
In short, no-one can ‘afford’ for Southend United to go pop during the season. It simply isn’t fair for this one club to put this burden onto others, especially when it’s all as a result of their own financial incontinence. Stripping a football match of its entire context after the event feels like ripping a large number of people off, and that’s before we move onto conversations about the distorting effects of some teams playing a club in one set of circumstances, and others playing the same team under a completely different set. And the warning quite literally couldn’t have been made any clearer.
So what happened when Southend finally did get back into court on the 23rd August? Oh, ah, umm. Well, that’s awkward, and the National League’s response was about as unsurprising as we might have imagined:
Following the statement issued on 26 July 2023 concerning Southend United, the National League can now provide a further update.
The League made the club aware on 26 July 2023 that all outstanding debt to HMRC should be discharged in full by their court hearing on 23 August 2023.
The League are now aware of the court hearing adjournment and that outstanding debt to HMRC has not been discharged in full.
As a result, Southend United Football Club have been deducted 10 points with immediate effect.
The League will make no further comment at this time.
So, exactly what they’d said would come to pass, came to pass. A ten-point deduction because they gave very clear instructions that they didn’t really give a monkey’s whether the petition was deferred by yet another six weeks. What they care about is the League as a whole, and the carry-ons of this particular club are frankly doing its reputation no good whatsoever at the moment. Southend, of course, drop immediately to the bottom of the National League on -4 points, dropping them from ninth place in the table to the very bottom, where they are five points adrift of second bottom Dagenham & Redbridge and seven points from the dotted line of safety.
And in turn, all of this led to a statement in response from Southend United themselves which raised more questions than answers:
Today the Court granted the Club a further 42 days to settle its debt to HMRC and those supporting the winding up petition, those payments will be facilitated by the sale of the Club.
Negotiations are at an advanced stage with a consortium led by an Australian national, and comprising of a group of local businessmen. Completion is targeted before 1 October.
Until the sale of the Club completes, everyone involved with the Club, supporters, staff and stakeholders will of course be anxious about its future. We also know that people are concerned about the prospect of a points deduction for apparent non compliance with the conditional licence we have been granted to play in the National league’s competition. We believe that the correct sanction for non payment of HMRC is an embargo, not a points deduction. We are talking to the National League on this point. If agreement cannot be reached we will immediately pursue an appeal.
We would like to thank our staff and supporters for sticking with us as we move towards a new era. We would also like to thank Kev, the coaching team and the players for their incredible efforts so far this season.
Well, there’s a statement which raises more questions than it answers.
“We believe that the correct sanction for non payment of HMRC is an embargo, not a points deduction.”
Okay, well that’s very nice for you, but you were informed of the sanction—which sits comfortably within National League rules; in fact, under National League rules you’re a little bit lucky to not have been kicked out just yet.
If agreement cannot be reached we will immediately pursue an appeal.
Sorry, but is the argument here that, “we never paid HMRC on time when we were in the EFL and they never deducted points then, so what the fresh hell do you think you’re doing?” Because lads, that doesn’t really sound like the winning strategy that you seem to think it does. You’d be appealing the National League essentially applying its own rules. Section 13 here (PDF), for those who’d like a little more information.
Completion is targeted before 1 October.
The six week deferral expires on the 4th October. You can’t be “targeting” the 1st October. This takeover needs to be signed, sealed and delivered by then, or the risk of the petition finally—and yes, since it was first heard at court in May, “finally” is definitely the appropriate word to use here—being approved.
And there ain’t no appeals at that point. As somebody who’s attended this sort of hearing before, I can say from experience that you’d be surprised at how quickly a football club of more than a century’s standing can move from the present to the past tense. By the 4th October, they need to either have paid the remainder of what they owe to HMRC, have sold the club, or both, and having three days from a date that the club itself says it has “targeted” to the date by which it has to be completed sounds extremely tight.
It didn’t take long for fresh takeover rumours to start circulating, this time of an Australian bidder looking to buy the club in association with aa ‘consortium of local businessmen”. The public face seems likely to be Justin Rees, co-founder of Eighty20 Solutions, a data company that he sold his share of in 2021. There are no particular red flags to be seen from a surface reading of his history. In this case, the biggest red flag is that 41 days, because in terms of multi-million pound business transactions, it really isn’t very long.
Southend United have been stagnating for a very long time. Due diligence is seldom a quick process, no matter how “advanced” those with a vested interest in quelling growing protests against Ron Martin may wish to suggest otherwise, while the fact that Martin owns the ground as well is unlikely to expedite completion. Can they complete due diligence, meet the approval of the National League, and get everything else paid and in order in less than six weeks? We shall see.
Because it certainly seems that the patience of Southend United’s supporters has run out. There have already been protests outside Martin’s home, and there doesn’t seem to be much of a mood to indulge him any further. To be fair, that has really been the case for many years. But with important dates looming, the team on a negative points tally and bottom of the National League, it is beyond understandable that onlookers with a vested interest might be viewing all this with a gimlet eye. Trust in the current owner ran out years ago, but now they’re reliant on him on doing something approaching the right thing competently. Draw your own conclusions. At the moment it feels like life is moving a little too fast for Southend United. We’d love to be proved wrong.
(Note - I feel as though I should point out that the accompanying image for this piece is a result of me typing “Southend United new stadium” in an AI art generator. This is in no way an official representation of the new stadium. For one thing, they’d need to take a long look at both the positioning and number of floodlights they’ve got going on, there.)