Mark Fry from Administrators Begbie Traynor talks about Southampton's administration

• He demanded Rupert Lowe and the club’s board resign.
• His decision to give Pinnacle exclusivity was one of “desperation.”
• The club almost folded numerous times, with liquidation “almost inevitable” at one point.
• He believes his bill for administration represented value for money.

Q. How did you initially become involved at Saints?

The bank had been advised by a firm of accountants that had been looking after Southampton for about 18 months.

It had got to a stage where the football club was insolvent.

It couldn’t meet its liabilities as and when they fell due and the bank weren’t prepared to fund it to the extent that was needed.

An administration for the football club was considered, but the accountants concerned, when they looked at it, weren’t prepared to take the appointment. Their reason was that the football club just didn’t have the financial capability to make it to the end of the season. Bearing in mind they had been involved for some time, that was quite a shock to the board and to the bank.

We are on the bank’s panel of advisors, and they phoned us and said ‘Would you be prepared to have a meeting with the board and see if you can come up with any innovative alternative strategies that could help save this football club?’ Our strategy was a little bit entrepreneurial.

It was based around using the holding company as the vehicle to take control, i.e. we got appointed as administrators of the holding company.

The football club would continue to trade for as long as it could.

The key part of the strategy was getting the gate numbers up, as you were getting an average at that time of around 15,000.

And it was by being very cautious around spending and getting creditor buy-in and it was around donations from fans.

We felt by adopting that strategy we could probably generate the extra cash needed to get to the end of the season. Bear in mind, at that point, there was an expected shortfall of about £1m.

We felt it couldn’t be achieved if the board as it was stayed in place. The research we managed to do on a very quick basis showed there wasn’t a particular, I’ll use the expression ‘love’, of the existing board.

We felt we could get a lot more traction if the board stepped down. So the condition on which we were prepared to adopt this strategy and appointment was if most of the board resigned.

Q. How difficult was it to get the board to resign? IT wasn’t easy, but the bottom line is I wasn’t prepared to accept the appointment unless they did it and I was very firm about that.

It got to the stage of a board meeting and it was that simple – if you don’t do this, then I’m not accepting the appointment and you’re left to your own devices.

Ultimately, they accepted that.

They all in fairness at that point were conscious they needed to do the right thing for the football club.

Q. You had a huge number of inquiries to start with. How easy was it to whittle them down to the serious parties? IT WAS a very time consuming process.

Some of the initial inquiries fell away very quickly when they saw the extent of the proposition. A number of them it was extremely difficult to actually get proof of funding.

You realise you’re dealing with people who are not as serious as they’re making out to be.

But you still have to go through the process with them, which just becomes time consuming and laborious.

Q. How many parties did you believe could seriously enter into an exclusivity period? THERE was about three at that time.

Q. You chose Pinnacle. How was that decision made? IT WAS one of desperation in a sense at that point. We needed to get somebody over the line.

We hadn’t paid the wages.

You've got to understand how difficult it was. We started with a very insolvent football club and couldn’t meet the expenses.

It was a very difficult time and not paying the staff and keeping everything together to enable it to be sold, it could have fallen apart very easily.

Whether or not we had preferred options at that point, unfortunately we just didn’t have the luxury of time, so it was really just a case of the first across the line with the non-refundable deposit.

Q. Was Pinnacle actually your preferred choice at that point then?

I CAN’T say who my preferred choice was at that time. All I can say is I was in a position where I had to find a buyer for the club and that was the agreement that we entered into.

Q. Nicola Cortese publicly said in the Daily Echo that the Swiss felt “a bit misled”

after Pinnacle won exclusivity.

What would you say in response?

I AM BOUND by confidentiality agreements, relative to all our agreements with the Swiss, so I’m not going to make any further comment on that at this time.

Clearly, if it’s mentioned again at some point, we may feel the necessity to explain our side of the story.

Q. How confident were you Pinnacle could complete when they entered exclusivity? WE HAD a number of meetings with individuals as part of that consortium.

They had convinced other credible people they were a group that were able to do it and we believed they were a group that were able to do it.

We worked closely with them throughout the exclusivity period and we genuinely felt that they would complete on the transaction.

Q. There has been a lot of questioning about whether Pinnacle could actually fund a deal. What is your view? I SAW evidence from them that they had financial backing. There are a number of stories that you get around these situations that are just not appropriate for me to comment on in any respect.

But, certainly at the beginning, there was evidence they had the ability to complete the transaction.

Q. Did that change towards the end of exclusivity? I WAS NOT as confident towards the end.

Q. At what point did you start to think they would not complete? WE HAD concerns probably midway through (exclusivity), but I didn't really make up my mind until very near the end.

Q. Do you think Pinnacle’s bid failed because of Football League issues, as they have said, or financial issues? I CAN’T speculate. All I know is we had our defined strategy, the bid with the Pinnacle Group got us through a very difficult period and I’m just pleased that, ultimately, we were able to conclude the sale to another party.

Q. Was Michael Fialka a name you had from the start? HE WAS always one of the people that was around.

Q. What did you think of his television appearance? WE WERE putting a lot of pressure on them at that time and I think him coming out was to show that actually they were completely committed and serious about doing the transaction, otherwise he would have stayed in the background.

But he was only one of a number. It was a consortium.

Q. Do you regret giving Pinnacle exclusivity? NO, you can’t. At the point we got involved, that football club was not going to survive – it genuinely was close to liquidation.

Within a three-month timeframe, we got to the end of the season and actually sold it, so overall it has to be deemed a success.

Q. When Pinnacle’s deadline expired, how bleak was the outlook? IT WAS clearly the bleakest point in the whole cycle. We knew then we were running out of cash.

Everybody’s confidence was beginning to wane, so it got harder and harder to hold it together. That was the lowest point, but we immediately got on to the people that had expressed an interest.

There were a number of people that appeared to be very serious and quite keen, quickly after the Pinnacle bid expired, so that gave us a bit of a lift again.

Q. How many serious parties were left after Pinnacle failed? THERE were three parties at that time and we were in serious discussion with two of them, but the Swiss were the ones that were ahead.

Q. What made them the best option? I’M GOING to have to leave you to draw your own conclusions, because of confidentiality agreements.

Q. Was the club ever seriously close to folding? THERE were a number of occasions when it was exceptionally close to folding and we were always running different contingency plans, none of which were very attractive.

Q. Was there any time you lost hope? YES, there was a time when I felt liquidation was almost inevitable and we were almost back to where we started. We did have those dark moments.

Q. Can you say at what point in the process they were? IT WAS probably shortly after the Pinnacle bid expired and we were trying to draw the other parties together and we couldn’t meet the wages.

Q. How pleased were you with the party that won? I WAS absolutely delighted, because I felt we’d achieved what we set out to achieve and, for the future of the football club, it was now considerably brighter than it had been for a very long time.

That’s my personal feeling, as opposed to an opinion or a comment about anybody.

Q. It has been a stressful 100 days or so for everyone. What were your emotions when the deal was finally done? ABSOLUTELY delighted is the only way to describe it. To know you’ve played a part in the survival of that football club and feel that it’s moving forward in great hands is a very rewarding feeling.

Q. Looking back on it, is there anything you would have done differently? THERE may be some things we would do differently, but I think overall we set a strategy out. It was a very difficult strategy with risk associated with it right from the very beginning, because it was a task deemed by others not to be achievable.

I think sticking to our guns all the way through and being firm but fair worked.

So the overriding principle I wouldn’t have changed.

Q. Could you have asked for a better outcome? NO, I think it’s a great result and we’re very pleased with it.

Q. There have been reports your bill ran to about £500,000. Can you comment on that? I’VE GOT no comment. I feel that whatever it was, it was value for what was achieved ultimately. People refer to my involvement, but what you must remember is I didn’t do this on my own.

I was supported by my team here, a legal team, a surveyors team, PR people. It was a big team.

Q. Was the money Begbies Traynor were paid part of the deal to buy the club?

YES, it was all priced within the transaction.