DLA has scooped an instruction from Deloitte & Touche in relation to the Leicester City administration, confirming the firm's position as the adviser of choice for financially troubled football clubs.
Leicester City FC and subsidiaries Leicester City Football Club plc and Leicester City Developments Limited were placed in administration last Tuesday. The new mandate follows DLA's involvement, in various capacities, with the Bradford City FC, Oldham Athletic and Carlisle FC administrations earlier this year. The firm has also advised on the administration of Maidstone FC and Millwall FC.
DLA's virtual monopoly in advising on football club administrations is down to a number factors. The firm has had plenty of practice and has extensive knowledge of the sector. DLA, in particular through London-based insolvency partner Michael Fiddy, has a strong relationship with the insolvency team at Deloittes, which is itself known for experience in football-related matters. Administrator Nick Dargan was also involved in the ITV Digital administration.
DLA has gained its market share at the expense of Yorkshire rival Hammonds, although if Hammonds had not spoilt relations with the Football League over the ITV Digital fiasco, the firm would have been a genuine threat to DLA's dominant position.
The Leicester City team at DLA will be led by Leeds-based insolvency partner Richard Obank, working in close collaboration with Fiddy. Fiddy is also currently acting for the Football League in connection with the collapse of ITV Digital, an event which has precipitated the demise of many clubs outside the Premier League.
Leicester City, which earlier in the month asked its players to defer a proportion of their wages, sought the administration order after failing to reach agreement with its major creditors. Dargan said: “The existing management team has worked incredibly hard to achieve a solvent restructuring. However, the group's financial position is complex and it became clear that a successful conclusion to negotiations would not be achieved without the protection administration brings.”
The administration order protects Leicester City from its creditors. The club's directors believe that administration should provide sufficient protection to enable the planned three-month restructuring to go through.
A consortium led by Gary Lineker, who played more than 300 matches for Leicester City in the 1980s, is interested in buying the troubled club. It is believed the consortium is backed by Leicester City management, Carphone Warehouse chief executive officer David Ross and SFX Sports Group managing director John Holmes.
Dargan said “We welcome the news that at least one consortium is expressing a desire to invest in the club and we look forward to opening discussions with it.”