The Sky Blue Trust in response to speculation around Coventry City entering administration following any takeover have today issued the following statement.
Spokesperson for the Trust, Natalie Cox, said:
"We are urging the Board of Coventry City Football Club to ensure that any potential offers placed before them do not include placing the club into administration. Some supporters may be under the misguided impression that going into administration would be the best thing for the Club, but they are not properly considering the consequences.
"The minimum deduction of ten points that administration would bring would move the club from playoff challengers to relegation possibilities and lower morale amongst players, management, supporters, and employees across the club. It would also damage our reputation in the local community and crucially with local businesses.
Frequently Asked Questions:
What would happen if Coventry City Football Club went into administration?
Many supporters are under the misguided impression that administration would be the best thing for Coventry City Football Club to do as it would clear our debts. Under current Football League rules, clubs in administration or Company Voluntary Arrangement's have to pay off football "super creditors" first, which include players, managers, other football clubs, the Professional Footballers' Association and the league - even before preferential creditors, as required by law for example the Inland Revenue and local suppliers.
How does the Inland Revenue fit into the picture?
Since these new rulings, the Inland Revenue has lost its right to be paid out before the others. It now has to wait with the rest of the crowd for what is left after the super creditors have taken their slice. Insolvency practitioners need to deal with two contradictory sets of rules - business and tax law, quoted by the Revenue, and the super creditor regulations, quoted by the conference, football league or premiership.
What would happen to local businesses?
The other people who could potentially lose out if the club went into administration are local businesses who supply goods and services to the football club; in many instances when the football club has gone into administration this has had a detrimental effect on the local business community. The requirement also prevents one club's financial difficulties impacting upon other clubs and generally encourages clubs to meet all of their creditors in full on an ongoing basis.
Therefore placing Coventry City Football Club into administration would still mean any footballing debts would need to be paid and the club would suffer a ten point deduction as per league rules. The Sky Blue Trust urges any potential investor not to place the football club into administration but rather restructure the debt for the benefit of the football club, supporters and the local community.