Portsmouth’s current cash flow problems revolve around a £1 million payment owed to Chelsea and further complications over Lassana Diarra’s move from Arsenal.
Pompey owe £1 million to Chelsea over deferred payments on the purchase of Glen Johnson, and have a similar situation with Diarra. The situation with Diarra is further complicated by a sell-on clause relating to his subsequent £20 million move to Real Madrid.
The Premier League have the power to take some of Portsmouth’s £12 million broadcast revenue due at the beginning of next year and give it to any club that is still owed money if debts have not been settled before January.
New owner Ali Al-Faraj is still in the process of restructuring the financial situation he inherited from the previous owners and, according to chief executive Peter Storrie will do so by the end of November.
A £15 million loan from Balram Chainrai and Levi Kushnir secured against assets of the club will cover the latest cash flow crisis for the late payment, plus cash needed to pay off debts to HM Revenue and Customs.
Storrie told ESPN Soccernet: “They are providing a loan to the club. They will not be new owners as it is being suggested, this is well off target.
“The loan was in place when they were involved with trying to purchase the club originally, but the new owner plans to completely re-finance the business and that should be in place by the end of November.”
The Premier League has imposed a transfer embargo meaning other clubs must be paid in full and on time before Portsmouth can buy any new players. So too are debts to the Inland Revenue. Meanwhile, Storrie has been working to reschedule payments due on player purchases.
Manager Paul Hart wanted to bring in free agent Eugen Bopp earlier this week but was refused permission, with the league arguing that it would be irresponsible to allow Portsmouth to take on further financial liabilities.
Despite their current predicament the club is optimistic the sanction will be lifted shortly.
“This concerns unpaid money to other clubs,” Portsmouth spokesman Gary Double said. “We are confident the situation will be sorted by the end of the week.”
Clubs can agree to stagger payments over the balance of a player’s contract, but there is now pressure to move back to the system in which 50% is paid up front and the remaining balance settled within a year.
Portsmouth have only paid off some of their debt to Revenue and Customs and, despite reducing their bank loans from £40 million to £10 million, they also remain in debt to Barclays.