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Toxic tactics behind Coventry’s slide from FA Cup glory to brink of oblivion

Coventry’s slide

There are a couple of signposts to help navigate the barmy situation at Coventry City, to understand how a club can be about to make itself homeless again, and face a vote this Thursday to be actually expelled from the EFL, exactly 100 years since it first joined the Football League in 1919.

Most important is to be clear that the owner, the Mayfair-based hedge fund Sisu, has no need to move the club from the Ricoh Arena, the home Coventry city council built for it in 2005, to groundshare with Birmingham City at St Andrew’s, Coventry Rugby Club at their Butts Park ground (capacity 4,000), or any other unsuitable couch-surf.

Throughout the sorry recent saga of Sisu pursuing aggressive, losing legal actions against the council, it is clear the toxicity and insecurity surrounding the club are self-inflicted. Wasps, the Premiership rugby club that bought the Ricoh after Sisu had tried to financially ruin the ground with a rent strike and buy it on the cheap, have consistently said they want to keep City playing there, if Sisu will stop suing.

Yet Sisu has so far not accepted that reasonable invitation, and maintained its position set out in extraordinary public statements in March, that: “Litigation is the only route available to Sisu to protect the club’s interests in the long term.”

That litigious route has so far led to years of court defeats, failure to agree a deal to stay at the Ricoh beyond this season, despair of fans, ruined relationships locally, and now the prospect of another move not much more enticing than the generally boycotted groundshare at Northampton Town in 2013-14.

Keith Houchen heads past Ray Clemence as Coventry beat Spurs 3-2 in the 1987 FA Cup final.

Keith Houchen heads past Ray Clemence as Coventry beat Spurs 3-2 in the 1987 FA Cup final. Photograph: David Cannon/Getty Images

With neat timing, Sisu’s most recent legal attack on the council and Wasps concluded only on Thursday, the supreme court refusing Sisu permission to appeal against losses in the high court and court of appeal. Sisu has resoundingly lost two major legal assaults over the last five years, which have been enormously expensive, time-consuming and stressful for the council and the local Alan Edward Higgs charity, which previously jointly owned the arena operating company ACL, and Wasps. Despite that, the council, which supported the building of the arena for the club as a centrepiece for regeneration, still wants City to remain at the Ricoh and flourish. As do Wasps, whose chief executive, Nick Eastwood, responded to the supreme court ruling by saying: “We would urge the owners of Coventry City to take this opportunity and cease this legal action, allowing them finally to come to the table to discuss the club’s future at the Ricoh Arena – something all parties are keen to see happen.”

Yet from Sisu and its chief executive, Joy Seppala, there was no such reconciliation. Another key to understanding its approach remains a remark made by Tim Fisher, City’s Sisu-appointed chief executive, in 2013 at a fans’ forum: “Sisu is a distressed debt fund, and therefore batters people in court.”

By that time Sisu, which took over City in 2007 and spent hugely trying to win promotion to the Premier League, had sunk the club into serious financial difficulties and belatedly turned its attention to the terms of tenure at the Ricoh. From April 2012, the hedge fund withheld the rent, to put financial pressure on the council and the Higgs charity, to try to buy ACL cheaply. The charity had long links with City and had bought its half share to bail the club out of a previous financial crisis before the move from Highfield Road. The club had an option to buy the 50% back at any time, which the charity and council wanted and expected to happen. Sisu did make a £2m offer to the Higgs charity after two months of rent strike, but the option price was £6.5m and it came with unacceptable conditions, so the trustees rejected it.

Having stopped paying the rent, quite publicly, the following year, in 2013, Sisu was adamantly denying it had ever gone on a rent strike, claiming ACL had agreed on “a rental holiday”.

Coventry Bears’ 4,000-capacity Butts Park is under consideration as a new home for Coventry.

Coventry Bears’ 4,000-capacity Butts Park is under consideration as a new home for Coventry. Photograph: Lewis Mitchell/Alamy

The council and charity did not buckle, then the council helped secure ACL by lending it £14.4m to pay off its bank debt. That became the focus for Sisu’s first high court lawsuit against the council, arguing the loan was unlawful. Sisu lost, Mr Justice Hickinbottom delivering a devastating judgment in June 2014. Reciting the saga of Sisu’s mismanagement, failure to restore to the club the 50% share of ACL, withholding the rent from April 2012, then moving out completely to Northampton, Hickinbottom repeatedly called its non-payment of rent as a rent strike. Sisu stopped paying the money it owed, the judge stated, because it had decided on a strategy to buy the charity’s 50% share in ACL “at a knockdown price”.

“Sisu distressed the financial position of ACL by refusing to pay ACL any rent or licence fee,” he found. “Sisu’s strategy of distressing ACL’s financial position in these ways was quite deliberate … their strategy was dependent upon buying into the arena cheaply.”

Sisu appears to have always assumed that ACL could not find another major sporting tenant for the Ricoh, so the council and the Higgs charity would have no option, sink into further losses and surrender eventually. That was the context for the council and charity selling ACL to Wasps, a senior rugby club genuinely needing a home, in 2014. That deal then became Sisu’s next focus for legal attack, claiming that at £21m, the council undervalued the sale and grant of a 250-year lease, and Wasps should have paid £27m more.

That case, although again expensive, turned out to be somewhat thin, and it was straightforwardly rejected in the high court and the court of appeal – which described one of Sisu’s central arguments as “a fallacy” – ending with the supreme court refusing permission to appeal this past week. Under all this furious pressure and scrutiny, Coventry city council’s approach has been upheld as proper and professional.

In Sisu’s March statements, as the EFL’s deadline to confirm a home ground for next season approached, it set out an essentially unchanged narrative despite its serial rejection by the courts. Still, Sisu stated: “There was no rent strike;” “Sisu’s intention was not to distress ACL;” and the sale to Wasps was “unlawful”.

This is how a fine football club, which has made solid progress at the Ricoh under Mark Robins, having bounced back from League Two last season, finds itself needlessly facing homelessness again, even possible expulsion from the EFL. To coin a phrase, Sisu has battered itself in court. It could make it all stop, any time.

EltasZone Sportswriters, Sports Analysts, Opinion columnists, editorials and op-eds. Analysis from The Zone Team
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