Earlier this week CAST wrote to club Director Marian Mihail as follows with a list of questions submitted to us by Charlton supporters. His written replies are recorded below. We are grateful to him for the time he has taken to respond but, like most Charlton fans, we are disappointed that there is little in what he has been able to tell us that helps to reduce our anxiety about the future of our club.
There is currently considerable anxiety amongst Charlton fans, so this week we are focussing on two critical matters at the heart of this; payment of funds into the Club, and the outstanding regulatory issues with the EFL.
Let us set the scene:
Our understanding is that in the three and a half months since the purchase of the Club (separate from the property assets) ESI has paid no monies into CAFC. After many years of ownership where development opportunities were consistently missed, fans are deeply sceptical about any owners. Currently they think this lack of investment puts into question the intentions of those involved, sending a warning sign of serious problems ahead.
The delays in satisfying the EFL regarding sufficiency and source of funds further increase these concerns.
The apparent lack of care in recruitment of the previous Executive Chairman and his team does nothing to build confidence.
The fans’ view is that the combination of these factors is reason to be seriously concerned about our Club.
At this very difficult time in our lives generally, fans are fearful their beloved Charlton is in danger of going out of business.
In light of this, this week’s questions are aimed at providing some clarity/comfort for fans:
Q1 - Are we correct to assume that to date no monies have been paid in to CAFC by ESI?
That is correct, as of the time of writing, April 23rd 2020, there has not been an injection of funds into the club by East Street Investments or by any of its two shareholders.
Q2 - Bearing in mind the end of April is 10 days away, what is the latest regarding the planned investment?
I know there are concerns about the finances of the club. These concerns are very valid, especially given the large spending of the club compared to what was budgeted. Last month, Tahnoon Nimer publicly said that he will not invest in the club while Mr Southall is still involved in any capacity. While Mr Southall has been removed from the club’s Board of Directors, he remains a minority owner of the company that owns the club, East Street Investments. Mr Southall’s capacity as minority shareholder gives him no authority over the club, staff and contractors.
With Mr Southall still not gone and given the overspending, Tahnoon Nimer does not want to put substantial funds into the club at this stage. However, he has pledged some financial relief to the club by the end of the month. The initial pledge was of a cash injection, but with the investigation putting in question the entire ownership of the club, I do not know if these funds will turn into a loan.
Q3 - Can the monies be paid in the next few days to help reassure fans?
This is something that, like the fans, I am hoping for. While as a director of this club I may not be happy with the uncertainty behind the immediate injection of funds, I understand the difficulty of Tahnoon Nimer’s situation. Based on the club’s financial forecast for 2019/20, an injection of funds would not have been necessary right at this moment, but became so due to the developments we are all aware of. And now Tahnoon Nimer must inject funds without the guarantee that the sale will not be unpicked in the future and without the guarantee that the EFL will approve the takeover – without any guarantee that he keeps the business.
Q4 - What form will these funds take?
The original plan was to have the monies in from Tahnoon Nimer as an injection, just to top up the balance, until Mr Southall is no longer involved. Tahnoon Nimer said he will not invest until Mr Southall is out of the picture. This has not happened yet, he is still a shareholder in ESI and an ESI board member. Tahnoon Nimer is aware that some funds need to come into the club and had hoped Mr Southall would take a step back by now.
Now, with the pending EFL investigation, these funds are likely to be just a loan, but this is entirely up to Tahnoon Nimer and his associates.
Q5 - Will these funds be paid via ESI or through a different entity?
Mr Southall is still a part-owner of ESI and there have been no talks of him bringing funds into ESI. So, I do not see these funds coming in through ESI.
Q6 - Will these funds be sufficient to pay the staff in full and settle any other liabilities that are due?
The plan for the initial injection of funds, until Mr Southall has gone, is to top up the balance from time to time, to cover salaries and liabilities to football and non-football creditors.
Q7 - What communications have there been with the EFL in the last week?
I joined a call with the EFL on Tuesday to discuss the current EFL investigation into the takeover and the outstanding issues with the club.
As part of the investigation we submitted an independent audit highlighting the spending over budget in the immediate period after the takeover. The audit shows the spending, initiated by Mr Southall, has committed the club to at least £1.8m that wasn’t budgeted for. Some of that will have been justified, with well-deserved new contracts for the footballing management, but the majority of it was not spent so wisely.
I also expressed my hopes that, should the alleged misconduct be proven, the sanctions would focus on the persons found guilty, rather than the club, which is already suffering from this takeover.
Q8 - What developments have there been with the EFL towards conclusion of the various outstanding issues?
We have received feedback on the OADT (Owners’ and Directors’ Test) applications submitted for Claudiu Florica and I. The EFL has said it will issue its final position on the test in the near future. I remain very confident in a positive outcome.
The issue for the source and sufficiency of funds is taking longer and there has been a lot of back and forth. As some fans may have heard from his interview on TalkSPORT, Tahnoon Nimer believes he has shown he has the funds but satisfying the EFL is taking longer than we initially expected, while Mr Southall hasn’t made any effort to even mention his funds. We are continuing to work with the EFL on this topic, but it is all up to the two owners.
Q9 - What needs to happen for the EFL issues to reach a conclusion and what is the Club’s timescale around this?
At the moment, there are two issues: the investigation and the source and sufficiency of funds. On the investigation, the EFL has taken the documents and positions of the parties filed on Wednesday and will likely have sent them to the independent investigation team. The timeline is uncertain and nothing official has been given.
The source of funds needs to be proven to the EFL and unfortunately that is taking longer than we initially expected. From my understanding, it is ESI as a company that needs to provide the source and sufficiency of funds, since the company owns the club. The strategy by ESI since the takeover took place was to only use Tahnoon Nimer’s funds as proof. Since my appointment last month I tried to focus on this as well, but there is still work to be done.
Given the recent developments and public statements, I feel that a satisfying conclusion for the club can only be reached if the dispute between the owners is settled. Either they get on the same page or one of them backs down. Unfortunately, the EFL cannot weigh in on this.
Some may have heard on TalkSPORT yesterday news that IPS Law are no longer the club’s lawyers. This is not true, to clarify IPS Law is still retained by the club and are managing legal action on behalf of the club.
Before finishing, I would also like to place on record our gratitude to the club’s first-team players and senior football management, who have all agreed to substantial pay deferrals to help the club get through these difficult times. I’d also like to thank the staff for their continued commitment to doing all they can for the club. I would also like to add that I understand and share the fans’ current concerns about the football club. Frustratingly processes are taking longer than we anticipated and the situation is far from ideal. We will continue to share as much information as we are able to and I will continue to answer questions from fans.
We are very aware of what this club means to thousands and thousands of people and we wouldn’t keep going if we didn’t think we could help restore the club to some sort of levels of normality.
If you have further questions for us to put forward to the club, please email these to email@example.com.