• Hedge fund withheld Ricoh Arena rent of £100,000 a month
• Club has lost £40m since Sisu took over in 2008
Sisu, the hedge fund owners of Coventry City who moved the proud club to Northampton, have suffered total defeat in a high court judgment damning their “mismanagement” and a “rent-strike” they conducted to imperil the owners of the Ricoh Arena.
In the action, Sisu made allegations that Coventry City Council and its officers behaved improperly when the council refinanced a loan to the arena operating company, ACL, in January 2013. Mr Justice Hickinbottom found that the council behaved properly throughout, but was prompted to buy out the loan partly because, in April 2012, Sisu had withheld rent due at the Ricoh in order to financially “distress” ACL and buy a half share of it “at a knockdown price”.
Sisu had by then “seriously mismanaged” the club, the judge found, having lost around £40m since 2008 – when the hedge fund bought City, then in the Championship and playing at the Ricoh, as a “commercial investment”.
Under previous owners, the club had spent the proceeds of selling its Highfield Road ground, so had also sold its initial 50% share in ACL to the Alan Edward Higgs charity, which had strong local links and a long affinity with Coventry City.
The rent, high at £100,000 a month, and all other arrangements, including that food and drink income went to ACL, were known to Sisu when they took over. They spent three years and huge money on a failed effort to win Premier League promotion before seeking to renegotiate the rent and arrangements, which ACL were prepared to do. However, while negotiating, Sisu withheld the rent to “distress” ACL, which had from the beginning envisaged the club buying back its half share from the charity for a fair price.
By 2012, the judge found: “Sisu had no strategy for maintaining a sustainable football club, except one which involved the purchase, at a knockdown price, of at least a 50% share in ACL and thus the Arena” and the purchase of ACL’s bank loan, also “at a knockdown price”. Trying to secure those aims at the lowest cost, Sisu stopped paying the rent, doing so for the last time in March 2012.
“Sisu distressed the financial position of ACL by refusing to pay ACL any rent or licence fee,” the judge found. “… It had the effect of reducing the value of the share in ACL that Sisu coveted. Sisu’s strategy of distressing ACL’s financial position … was quite deliberate.”
The 49-page judgment is shot through with references to this “rent-strike”. It says: “CCFC [owned by Sisu], fallen into a parlous state as a result of mismanagement, had unilaterally refused to pay the contractual rent it was legally obliged to pay to ACL.”…
Yet Sisu have not acknowledged that: they have said the judge got it wrong and that they may appeal.
And so they batter on, the dislocated club a blight on the Football League, which unfathomably allowed Coventry City to be moved by a hedge fund seeking to “distress” the operating company of an arena built for the club, owned by the local council and a charity.