NewsHong Kong

Soccer dream over for Hong Kong businessmen Carson Yeung and Balram Chainrai

How two Hong Kong businessmen took over English clubs - and saw their quest for glory in world's top league fall flat

PUBLISHED : Sunday, 20 January, 2013, 12:00am
UPDATED : Sunday, 20 January, 2013, 4:27am
 

Ask fans of English Premier League clubs Chelsea and Manchester City what they think of their foreign owners, and they'll cheer them to the rafters.

Cash lavished on players by Russian magnate Roman Abramovich at Chelsea and the Abu Dhabi oil barons at City has transformed their clubs into champions.

But ask the fans of Birmingham City and Portsmouth the same question, and they'll respond with a chorus of boos.

And what do these two clubs have in common, apart from languishing in the lower leagues of English football?

They have both been controlled by Hong Kong businessmen - Carson Yeung Ka-sing at City and Balram Chainrai, whose tenure at Portsmouth is over but who is still locked in a multimillion-dollar financial dispute with the club.

Both have been dogged by controversy. And to say they haven't shown Hong Kong in the best light when it comes to backing English soccer clubs is an understatement.

It has got to the point where the supporters' group at City, the Blues Trust, has written an open letter to the Sunday Morning Post outlining its concerns.

Yeung took over City for HK$731 million in October 2009, making lavish promises of huge spending on transfers.

But in 2011, the club was relegated from the Premier League and Yeung was arrested in June of that year on five counts of money-laundering in Hong Kong involving HK$723 million.

Yeung's assets were frozen and he was ordered to give up his house in Barker Road on The Peak after allegedly defaulting on the mortgage. He was also barred from leaving Hong Kong.

Despite a prudent response to relegation that saw most of the club's best players sold to balance the books, City's 2011-12 accounts failed to tell the whole story. Yeung, 52, said the club needed to raise more money "to continue its operations … through to December 2013".

But the accounts showed the club's overdraft facility had been withdrawn and it still owed £14 million (HK$173 million) to Yeung and £7 million to its holding company, Birmingham International Holdings Limited (BIHL), which is registered in the Cayman Islands. An unnamed director was paid £687,611.

These details infuriated their supporters, who were also bemused about a sponsorship deal agreed with a Hong Kong company, Xtep, negotiated by Vico Hui Ho-luek, another Hong Kong-based businessman who resigned as the club's chairman in July last year.

The deal meant Birmingham City had to pay Xtep for promotion of the club and BIHL in China. But after relegation, the payment due from the club to its sponsor was more than the sponsor had to pay the club.

Xtep pulled out of the deal in June and City have stated that a full review will be carried out.

In the letter to the Sunday Morning Post, the Blues Trust questioned how the club can continue to operate in an environment where its revenue is being reduced.

The trust points out that the club no longer enjoys the huge payments for television rights found in the Premier League, its ability to borrow money has been removed and any players with significant transfer value have been sold. "More questions need to be asked about the financial governance of the club," the letter states.

"The Xtep deal … is extremely worrying, not just because of its nature, but also how it would be possible for a single individual to negotiate and sign an agreement with such a significant risk to the club."

The trust is also worried that there are no written terms of agreement for the repayment - or details of the interest charges - on the loans from Yeung and other third parties, despite the fact they add up to a significant amount on the club's balance sheet.

The man entrusted with selling City is the club's acting chairman Peter Pannu, who is also the chief of BIHL. He divides his time between Hong Kong and Birmingham, but is the director most involved in the actual running of the club. Despite his legal troubles, Yeung also remains a City director and the only other director is his son Ryan.

Pannu, a lawyer and former Hong Kong policeman, has steadfastly refused to respond to fans' criticism. His only comment to the Post on the situation at City was that he would make an official announcement when a legitimate offer for the club was made - but not before.

The fans' grievances do not come into the equation, he said.

He ridiculed an attempt to take over the club last month by an Italian consortium led by Gianni Paladini, the former Queen's Park Rangers chairman, accusing the Italian of running a media campaign so that he could "get it on the cheap".

Nothing has been heard of Paladini's attempted takeover since then.

Meanwhile, Portsmouth fans are possibly even more unhappy with Chainrai, 54, who they blame for their financial woes.

They say he is standing in the way of a buyout that would put the club in the hands of its fans, through the Pompey Supporters Trust.

Chainrai briefly owned the club before it went into administration - a form of insolvency procedure intended to allow a business to reduce its debts while continuing to operate as a going concern - in February 2010. When the club won a battle against the tax authorities that August, it left him free to buy back Portsmouth with Israeli business partner Levi Kushnir and save the club from liquidation.

In June 2011 he struck a deal with the Russian consortium Convers Sport Initiatives to take over ownership and it was agreed his multimillion-pound loan to the club would be repaid over the ensuing years.

However, Convers itself entered administration in November 2011, forcing the administrators to search for new owners for Portsmouth, a task that has yet to be concluded.

Pompey Supporters Trust and Chainrai's company, Portpin, found themselves locked in a battle to take over the club.

Late last year, the administrators agreed to sell Portsmouth to the supporters' trust on condition that it takes control of Pompey's stadium, Fratton Park, which is controlled by Chainrai.

The administrators are trying to force the sale of the stadium through the High Court, but Chainrai is fighting the sale.

He claims he is still owed £12 million by Portsmouth and turned down a £2.75 million offer for Fratton Park, saying he valued the stadium at about £9 million.

It's a saga that will rumble on at least until the end of the month after the latest court hearing on Tuesday was adjourned until January 31.

The trust says the latest delay gives it more time to successfully complete its takeover, while Chainrai is hopeful everything can be resolved amicably.

"I still have a debenture over the club as security on the club's full assets, so one way or another I'm going to get my money back," he said.

"No matter what people may say, I've always had the club's best interests at heart. I just want everything to be resolved fairly."

Last week Pompey confirmed that six players had left the club following the expiry of their contracts, including captain Brian Howard.

The team, who won the FA Cup in 2008, suffered a second successive relegation last season and now find themselves in the League One relegation zone having failed to win any of their past 14 matches.

They face a 10-point penalty if and when they come out of administration and are all but certain to find themselves in League Two, the bottom tier of the English Football League, next season.

As with all love affairs, there was a point in the relationship between Yeung and Chainrai and their respective clubs when life seemed rosy. One match, in particular, stands out.

Billed as the first "Hong Kong derby", it featured Chainrai's Pompey playing Leung's City in the quarter-finals of the FA Cup in March, 2010, at Fratton Park.

Both owners watched the encounter together in what was a party atmosphere. Frederic Piquionne scored twice as Portsmouth won 2-0.

Portsmouth made it all the way to the final at Wembley Stadium, where Chainrai was seated in the Royal Box beside Prince William.

His team were beaten 1-0 by Chelsea, but only after Kevin-Prince Boateng missed a penalty that would have given Pompey the lead.

He said: "Running a club is a full-time job. You can't run it from Hong Kong. You have to be living in England and be hands- on every day."

He added: "This was not my regular business, so it was all new to me.

"I'd be more vigilant and careful before investing my money into anything like this again.

"When things start to go bad they go downhill fast."

Share

 

Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive