Future of Cork City to be decided within days

Fri, Aug 15, 2008, 01:00

LEAGUE OF IRELAND NEWS:CORK CITY'S immediate future is set to be decided at the start of next week, according to the club's CEO, Patrick Kenny, amid reports that its owners, the Arkaga Trust, are to cut their losses and put the League of Ireland outfit into examinership.

Kenny didn't rule out that possibility last night but insisted it was only one of a number of options being considered. Liquidation is not viewed as an option, he said, as "things aren't that bad at this stage".

It is abundantly clear, however, that things are pretty bad, and Kenny, who was appointed only last month - when he talked of how excited he was to be joining City, how confident he was about its future and how he was relishing the challenge of running it - will spend the weekend trying to find new investors willing to take over or, at the very least, share the burden of funding a club expected to lose over €1 million this year.

The precise scale of the club's debts are unknown but, says Kenny, they are "not in the same league", as those run up by Shamrock Rovers or Shelbourne prior to the dramatic restructuring of those clubs in recent years.

"The situation is that there are some problems there and I wanted them to be addressed before very serious problems arise," he remarked.

"Everything will be looked at over the next few days, and early next week decisions will be made very quickly. But what Arkaga are doing or not doing I do not know at this stage."

His comments follow several weeks of speculation that Arkaga, a London-based venture capital group specialising in the healthcare sector, had decided to stop funding the club.

The company's founder, Corkman Gerard Walsh, was expected to meet the players earlier this week, when it was hoped the situation would be clarified. But the meeting was cancelled, apparently because Walsh had more pressing business elsewhere.

There have been repeated signs of trouble over the past few months, with the club's landlords, the Munster Senior League, local suppliers and City's kit manufacturers, Hummel, among those to have been owed money.

With Hummel, things reportedly became so bad the company stopped providing stock to the team and club shop, with the result that when striker Denis Behan ripped a shirt during a match recently and a replacement was sent for, a member of the shop's staff had to visit a branch of a sportswear chain to secure one.

Further evidence of the corners being cut came when the newly-signed striker Lawrie Dudfield made his debut recently wearing a shirt with his name printed on the back over that of Admir Softic, who left the club a couple of months ago.

Kenny acknowledges there have been problems but says, "There's nothing unusual about owing money. Any business big or small will have bills outstanding.

"The situation is not out of control if we got investment into the club down the road."

How realistic that is remains unclear. The club is probably the best-supported in the league and there has been nothing out of the ordinary to radically alter its financial prospects. It simply appears Arkaga have realised they are involved with something likely to remain a persistent drain on their resources and want to offload.

Persuading others the club is a good investment may not, in the circumstances, be easy, though much would depend on the terms on which they would be willing to walk away.

A couple of local consortiums, one said to be backed by the property developer Owen O'Callaghan, had expressed a firm interest in acquiring the club last year when Arkaga arrived on the scene.

It is believed locally that such interest could be revived, although at least one attempt by the current owners to secure a sale in recent days are said to have come to nothing.

In the meantime, the club's players have said they will continue to work normally for as long as is practicable while a way out of the crisis is being sought.

The squad recently went a couple of weeks without pay but subsequently got the money in question and were paid again, a day ahead of schedule, on Wednesday.

At that stage, it is claimed, they were told Arkaga would not be paying their wages again.

Kenny denies this but admits it may yet happen.

The situation may prove an important test of the FAI's ability to enforce the financial guarantees it now demands from owners as part of its licensing scheme.

The association issued a strongly worded statement yesterday in which it insisted Arkaga had an obligation to fund all of City's liabilities until the end of the current year.

"The FAI," read part of the statement, "has contacted the Arkaga fund with regard to a written undertaking made by one of its companies to guarantee all liabilities arising from Cork City Investment FC Ltd for a 12-month period from 29th January 2008 through to 29th January 2009.

"It is the FAI's view that the club's sustainability depends on its investors and directors managing the company's affairs as a sensible business," it continues.

"We await news of what the Arkaga Fund, as investors in Cork City Investment FC Ltd, intend to do. If Cork City Investment FC Ltd is in financial difficulty, then the onus is on the club's investors and directors to take all necessary corrective action to ensure its survival."