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Footballers face £100m meltdown

ian1964

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ian1964

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Top players accuse advisers of mis-selling; ‘They feel aggrieved, they feel duped — humiliated’

 

SCORES of leading footballers face losses totalling an estimated £100m, with some confronting potential ruin, after investing in film schemes and property ventures recommended by two financial advisers operating at the heart of the national game.

 

Some of the biggest names in British football are among those caught up in the crisis facing some players — including former England and Manchester United stars Rio Ferdinand and Andy Cole, and the Match of the Day pundits Danny Murphy, Martin Keown and Robbie Savage — according to leaked documents seen by The Sunday Times.

 

More than 100 players were advised by David McKee and Kevin McMenamin, whose firm Kingsbridge Asset Management earned more than £5m in commission on the players’ investments before they tanked or the footballers were hit with tax demands

 

Kevin Campbell, the former Arsenal and Everton striker, who invested in five film schemes and faces losses of up to £7m, is now at the centre of bankruptcy proceedings. Campbell alleges that he and other footballers have been the victims of “appalling mis-selling”.

 

Speaking publicly for the first time this weekend, Campbell said: “When I see the paperwork, it’s horrendous. I am not one to be bitter, but £7m is a lot of money.”

 

Danny Murphy, the former Liverpool midfielder, said he did not feel embarrassed because he considered the investments were mis-sold. “I feel angry” he said.

 

Craig Short, the former Blackburn captain and current first-team coach, who has lost an estimated £2.6 million, said: “These investments were sold for my kids’ education, for my children’s future.” He added: “I reckon over 100 retired players have been hit by this.

 

“They feel aggrieved, they feel duped, anger, humiliation, really. It’s wrong, totally wrong.”

 

He told The Sunday Times that many of his peers were too ashamed to speak about their financial demise.

 

A spokesman for McKee and McMenamin issued a strong denial and said “without exception” the pair’s clients were always advised of the suitability and risks of the schemes and were advised that such investments needed to be part of a balanced portfolio.

 

The film schemes sold by Kingsbridge involved footballers putting in some of their own money — which was then supplemented several times over with huge loans from banks, including Coutts. These investments then generated tax rebates for the players. Some of this money was invested in property schemes that subsequently failed.

 

The documents reveal Ferdinand was the biggest investor in film schemes — with nearly £24m in four partnerships, including loans. The former England captain faces large tax demands, but his advisers say he put in less than £5m of his own money, has not suffered losses or unexpected tax demands, and is happy with his investments.

 

Ferdinand has, however, lost an estimated £2.5m on properties in Spain and Florida recommended by Kingsbridge.

 

Cole, one of the most decorated strikers in English football, is in three film schemes worth almost £8m and faces substantial losses and tax liabilities. Murphy, Savage and Keown face tax bills of several million pounds.

 

Kingsbridge emails, documents, memos and other correspondence seen by The Sunday Times reveal the financial advisory firm invested and managed almost £400m of its clients’ money, including loans, between 2003 and 2007.

 

By far the most expensive investment made on the footballers’ behalf was more than £100m in film-scheme partnerships — aggressive, high-risk tax vehicles. Some have been challenged by HMRC as tax-avoidance schemes.

 

Coutts, the private bank that provides services to the royal family, lent Kingsbridge clients £40m for the schemes. The bank said it did not advise the clients and was not asked to advise them on the merits of the investments.

 

Some of the tax rebates generated by the schemes were invested in properties, many of which lost money for the players. The deals, however, generated hundreds of thousands of pounds in commission for the advisers’ firm.

 

The leaked documents show the amount from each footballer that Kingsbridge invested in each film scheme over a four-year period.

 

The risks were usually set out in the small print of the documents provided to the players, but they claim these were not explained to them.

 

The firm banked a total of £3m in commissions on those ventures, with the lion’s share generated by McKee and McMenamin.

 

The pair said their clients were fully appraised of the risks, that they never sought to benefit financially at the expense of their clients, and that their alignment of interests has always been clear.

 

Commissions paid to Kingsbridge were routinely disclosed in sales literature and the pair say during the period in question they did not personally receive any commissions earned on the players’ investments.

 

The footballers’ current representatives say the players may have been mis-sold the schemes. They claim the film schemes were not suitable investments, given the short career of footballers.

 

McKee and McMenamin said while there were countless examples of clients who have prospered financially from the pair’s expertise, given the nature of investing there would always be situations where clients lose money: “The fact that HMRC retrospectively ruled against many of these schemes clearly had a significant and unexpected impact across the whole industry. It should be noted that out of thousands of clients, only a very small proportion were introduced to these types of schemes.”

 

The documents, seen by The Sunday Times, also reveal a system of undisclosed payments operated by Kingsbridge. The company paid a percentage of the commission earned on each deal as “introducer fees” to companies including Proactive, the football agency founded by Paul Stretford, who represents Wayne Rooney, the England and Manchester United star.

 

All the players interviewed by The Sunday Times said they had no knowledge of the payments. It is understood McKee and McMenamin’s position is that there was no requirement to disclose such arrangements at the relevant time.

 

Stretford said he never personally received any payments from Kingsbridge as commission. He introduced players to Kingsbridge openly and acted in their best interests and not for personal financial gain.

 

Stuart Cotton, a former senior HMRC investigator who now represents several players, has estimated the total losses and tax liabilities each player is facing from film scheme investments. He said: “The estimated £100m is just a fraction of the losses. From what I have seen the total liabilities will be well over £1bn. These players were sold film tax schemes which were totally inappropriate, especially for those at the end of the career.”

 

A three-month investigation by The Sunday Times, including interviews with eight former Premier League footballers, also reveals:

 

Several players say they did not know that McKee and McMenamin, through a front company, had an interest in a property deal in Spain the pair sold to the players

 

Kingsbridge earned £570,000 in commission on a failed property venture in Florida. Footballers, including Rooney and Ferdinand, ended up losing £16m on the deal

 

Clients of Kingsbridge, including Ferdinand, bought 14 Florida boat docks each worth up to £45,000. Some of these docks are now worthless because the owners have no access to the waterside.

 

McKee and McMenamin say they personally invested in the Florida investment on the same terms as the footballers and it is understood their investment has also depreciated.

 

They say that without exception, clients were always made aware of the products in which they were invested. It is understood that Kingsbridge maintain that all interests in property deals were fully disclosed to their clients.

 

Blackburn coach Short told The Sunday Times that many of his peers were too ashamed to speak about their financial demise.

 

Murphy is one of the few willing to publicly speak out. “We were the victims and you shouldn’t feel ashamed, you shouldn’t feel embarrassed,” he said. “We were just young lads trying to better ourselves and secure our future. I’m not ashamed to put my name out because we’ve got to expose this crisis.”

 

A statement issued on behalf of McKee and McMenamin said they never sought to benefit financially at the expense of their clients. It stated there were “countless” examples of clients who had prospered from the advisers’ advice.

 

It added that the pair sold film schemes when the financial industry considered such products had benefits. It warned that such investments need to be part of a balanced portfolio. They said some individuals approached the advisers with the “sole intention” of investing in the film schemes. The statement said: “Without exception clients were always made aware of the products in which they were invested.”

 

http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1630337.ece

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From 2012 on McConvilles website;

"Amazingly the SPL, SFA, SFL and Woody Allen & Spice Girls were all connected with a now liquidated company that Charlie helped float on the Alternative Investment Market (AIM) back in 2000 and I can’t help but wonder if the SPL and SFA remember much happier times as valued customers with their name and reputation, along with Woody and the Girls, helping boost business and share prices.

Kingsbridge Holdings Plc is an interesting study in a company brought to market with a successful flotation and dazzling share performance sizzling upwards from 25p to 94p in months. But the company value collapsed from £60 million to £2 million in little over a year as shares slumped to 2.5p.

Things became so bad that in March 2003 ‘substantial shareholders’ were forced into a desperate bid for a board seat to protect their interests. This was rejected but within months the board capitulated and the shareholders’ choice was appointed Chief Executive as the storm clouds surrounding the troubled company thickened and darkened.

 

A number of factors contributed to the failure of the company which eventually became a cash-shell, changed its name and was finally liquidated and dissolved. This post doesn’t cast blame or responsibility on any director for the outcome. Dealing in shares can provide salutary lessons and it is always worth remembering that what goes up can also come down so don’t gamble on shares unless you can afford to lose the cash :)

Kingsbridge Partnership was founded in 1992 by Kevin McMenamin and David McKee and provided specialist financial advice and services to high net worth clients, including players, managers, coaching staff and administrative personnel from English professional football clubs.

The two partners were joined by Charles Green who became chairman of Kingsbridge Holdings Plc which floated in July 2000 at 25p per share to raise £14 million funding for an aggressive expansion programme which saw them open offices, within a couple of years, in Nottingham, Glasgow, Harrogate, London and Sunderland with new client groups in non-football sports and the entertainment industry.

In September 2000 £3.99 million was spent buying John Murray & Company (Scotland) Ltd – a leading football focused independent financial adviser whose clients included, at that time: Scotland Manager Craig Brown; Christian Dailly, Blackburn Rovers & Scotland; and Jack McGinn, President of the SFA; as well as the SFL and SPL.

Chairman Charlie stated: ‘The acquisition of John Murray, a leading adviser in Scotland, is an important step in the development of the Group. The deal is expected to be earnings enhancing and will strengthen Kingsbridge’s position not only in Scotland but also throughout the UK.’

The share price soared to 85p in mid September and was tipped to trade up to 100p.

In October 2000 Maxdelta Ltd, a subsidiary of Keysports Management Ltd with clients in the media, entertainment and sports industries, such as ‘the Spice Girls, Beautiful South and Woody Allen’ was acquired and Charlie said: ‘At the time of listing we indicated our ambition to diversify into other high net worth areas beyond premier league football where we sit as a market leader’. He promised even more buy-outs and a widening of the Kingsbridge client base.

The following month Kingweb was acquired – the website of the professional managers in the FA Premier League and Nationwide Football League – which Charlie described as: ‘One of the most important in football’. Agreements were reached with other companies bringing clients from: Rugby League, Rugby Union, horse-racing, rugby, golf and cricket.

In April 2001 the dizzy round of acquisitions continued with the £12 million purchase of the Stafford Group Plc and in July, Kingsbridge’s main competitor Benson McGarvey Limited was snapped-up for £13.5 million with Green stating: ‘The acquisition will help Kingsbridge to achieve its stated aim of becoming the leading provider of financial services and advice to sports personalities’.

By November 2001 Charlie was able to report: ‘A very active and successful period of some fourteen months since the flotation of the Company on the Alternative Investment Market. The Board believe that the future for the enlarged Group is exciting and we are optimistic that the current year will be a year of continuing progress and expansion.’

In May 2002, Green reported: ‘Your Board is optimistic that the second half of the current year will show continuing progress and expansion’ but Kevin McMenamin and John Murray stood down from the board at the same time and by July, Charlie was predicting Group results for the year ended 31 August 2002: ‘Will be significantly below current market expectations’.

Come September 2002 the Board announced a review of its non-sports division because of continuing uncertainty in equity markets and low activity generated by the Group’s non-sports client base although it noted the sports division continued to ‘trade satisfactorily’.

The end of January 2003 saw the publication of the prelim results for the year to 31/08/2002 which revealed a loss before tax of £25.69 million as opposed to an £0.82 million profit the previous year. Green stated: ‘Set against a year of weak investor confidence and poor stock market performance and when judged against others in our quoted peer group, the results achieved are quite satisfactory.

‘As a consequence of my other business commitments, particularly my role as Chief Executive of Medical Solutions Plc, I have decided, with immediate effect, to step down as Chairman and will continue as a non-executive director’.

At the end of February 2003 Kingsbridge reported: ‘The Group continues to experience extremely difficult trading conditions. In the absence of any improvement in the general economic climate, results for the financial year to 31 August 2003 will be substantially worse than current market expectations’.

What wasn’t known publicly at the time was that a number of substantial shareholders ’were extremely concerned that the company’s value had plummeted from more than £60m to less than £2m in little over a year’.

Laurence Turnbull was sent as an emissary from the concerned shareholders to meet with the Board on 12 March 2003 but was refused a place on it to represent shareholder interests. The Board rejected Mr Turnbull as it: ‘wished to continue with their plans for the company’.

However, days before the end of the company’s financial year, they contacted Mr Turnbull to offer him a non-executive directorship and on 27 August 2003 he was appointed Chief Executive.

Turnbull, then chairman and chief executive of the privately owned conglomerate Texas Holdings Limited, brought in a Company Secretary and non-executive director, both personally known to him, and later stated: ‘Within days I became aware of the grave difficulties facing the Company’. This included a steadily increasing overdraft and substantial payments due to major creditors including HMRC. In order to gain support from the company’s bank Turnbull personally provided ‘comfort’ to them.

The new chief executive added: ‘Within days, two of the cornerstones that made up the company had been sold, in effect to the management, and the company had no financial facilities to see it through the disposal of the remaining two businesses.

‘To compound matters, one of the businesses, had virtually been sold, in a separate management buyout. This then left a small operation in Scotland to be dealt with and a heads of terms for its disposal were in existence.

‘It is not appropriate for me to comment on the previous board of directors however I am pleased to inform you that from the date of my appointment no fees or salaries have been paid to a Director of the Company.’

Company Chair Eric Cater added: ‘The market difficulties and the collapse in the share price meant that our key people were disillusioned with the public status of the Company’. "

 

On the day Turnbull was appointed chief executive, Charles Green resigned as a non-executive director to concentrate all his efforts on his role as chief executive of Medical Solutions Plc and was replaced by Brian Willmott who had been brought in by the new chief executive.

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