Oystons vs. Belokon – Blackpool's Boardroom Battle

As if the all the upheaval of the playing squad this summer wasn’t enough, with new manager José Riga struggling to build a squad to prepare for a challenging Championship season, the boat has been rocked further at Bloomfield Road with unrest between the club’s directors. It’s a storm that has been brewing for quite some time, but has intensified in the course of the past few days.

An open letter written by Valeri Belokon, Blackpool FC’s club president and 20% shareholder, was released last Thursday, in which the Latvian made the case for putting football first, rather than the Oyston family’s personal interests. The letter made reference to various payments made to Oyston-owned companies, as documented in great detail in the past few years here on Measured Progress:

Belokon’s letter went on to encourage the chairman Karl Oyston to rectify the dire squad situation by prioritising football matters, carrying the slogan coined by Blackpool Supporters Trust – “Put Football First”. It was a succinct letter which clearly resonated with a large section of ‘Pool supporters and its core message for more attention being paid to on-pitch matters is a difficult one to argue with.

Nonetheless, Karl Oyston has seen fit to respond with an open letter of his own, which makes a number of counter-allegations against his fellow board member. Such is the length of Oyston’s response it is worth picking out some of the specific points to analyse further. (N.B Some of Oyston’s claims in this letter have already been dissected in the various posts linked above)

Oyston begins his reply to Belokon with an allegation that the 20% shareholder asked the Oyston family to buy out his shares on a number of occasions during the 12 months. The claim is that Belokon has asked for sums which would result in a huge profit with a total of £24m being demanded by the Latvian. Summarising the offer, Oyston states the following:

“How could your £24 million extraction proposal amount to Putting Football First? If you take £24 million out of the club to Latvia, how does that put football first?”

Now, if the claim made by Karl Oyston is true, then there could arguably be a case to suggest Belokon’s plea to “put football first” is somewhat hypocritical. However, at this point we have no solid proof of this claim, and up until this point, such a transfer of funds has not taken place. On the other hand, it has already been proven that the Oyston family actually have removed hefty amounts from the club’s coffers both in the form of director remuneration and unsecured, interest-free loans to their many loss-making companies.

Quite how someone who has a proven track record of diverting club funds to benefit their family’s personal interests has the brass neck to try to take the moral high ground by lecturing someone else is staggering. Someone in the glassiest of glass houses should take a lot more care about the direction in which they are aiming their stones.

Indeed, one could quite easily argue that Belokon is deserving of an equal return, if not more, than that claimed by the Oyston family given his obvious impact in assisting Blackpool not only reach the Premier League by funding the Charlie Adam signature, but also hauling the club out of the third tier of English football in 2007 with his first tranche of investment. To have played such an important role in earning the club the riches of the Premier League, yet see the majority shareholders keep the rewards to themselves, one can hardly blame the club president for feeling a little short-changed.

Correspondence seen by Measured Progress over two years ago revealed that the relationship between the club’s Latvian investor and the Oyston family had broken down on the back of the £11m payment to Zabaxe Limited, as well as other unapproved transactions. With that in mind, it’s entirely plausible that the moves of the last 12 months to ask the Oystons to buy out Belokon’s shares was seen as a last resort; that is certainly one theory being discussed.

One particularly bizarre claim made in Oyston’s letter relates to the initial share purchase made by Valeri Belokon in 2006:

“I remind you that when you purchased your 20 per cent shareholding in the football club for £1.8 million, my father never took a single penny of it and made sure that all your £1.8 million went into the football club.

That was putting football first.”

The above statement hardly seems worthy of something to crow about. A £1.8m share purchase in the football club did indeed go into the football club – surely anything else would beggar belief? Trying to take pride in “not taking a single penny” of an investment designed to go into the football club is tenuous at best.

Furthermore, Oyston’s defence of the £11m payment continues to be on the flakey side:

“You say that my father and I took £11.5 million in salaries. The board approved the payment of £11 million to Zabaxe Ltd., a company owned by my father. The money did not go to him personally and it was paid in consideration to Zabaxe for its financial help and the help of other group companies for having supported the football club over a period of 24 years and building much of the stadium you see today. This involved large interest-free loans, without which support BFC would not have survived.”

Again, the statement that the £11m was approved by the board is highly entertaining given that the Oyston family have a controlling share of the board vote. Attempting to refer to the board as some distant and democratic third party being the ones who authorised the transfer of £11m straight out of the club is laughable. The above paragraph goes on to state that it has not gone to Owen Oyston directly, but it has gone to Zabaxe Limited whose sole directors are all Oyston family members and monies have since flowed from Zabaxe into other Oyston-owned entities; monies which the club’s own auditor AI Cherry has cast doubt on ever being recovered due to the uncertain financial viability of these loss-making Oyston companies.

Moving on to the infamous Travelodge land deal, Oyston had the following to say:

“The completed Travelodge hotel, with an income of over £500,000 per annum, was purchased as a long-term investment and enhances the assets of the group and the revenue of the football club and its parent company.

No-one has ever explained that it was my father who used his personal money to build the Travelodge and indeed it was he who bought the Travelodge land in the first place with his personal money, when he bailed out Blackpool Football Club 27 years ago. In effect, he paid for the land twice, when he bought it for a second time for £650,000 following an independent valuation. That was because Blackpool Football Club needed cash and he stepped in and put football first.”

It’s true enough that Owen Oyston did purchase the aforementioned plot of land for £650,000, but what the letter fails to mention is that Segesta Limited, using funds borrowed from Blackpool FC Limited, bought the same plot of land back for £6.825m. The 2010/11 accounts stated that an agreement had been reached for the land to be re-acquired at a cost of £6.5m, but the 2011/12 accounts revealed the final sum to be £6.825m.

Oyston proceeds to explain that the land generates income in excess of £500k per annum but as yet, it does not appear that this revenue is being used to repay the ever-growing debts that Segesta owes the football club. One must also question whether a cash outlay of £6.825m at a time when those funds could have been used to help secure Blackpool’s Premier League survival in 2010/11 was the wisest use of that money.

Remaining sections of the open letter seemingly seek to discredit not only Belokon, but also Blackpool Supporters Trust (which has been founded on the back of the now disbanded Seasiders Independent Supporters Association). Sticking with Belokon for the time being, Oyston makes reference to Belokon’s other business interests, which would appear to be intended to muddy the waters on the character of the club’s 20% shareholder.

“How would you feel if we then complained in an open letter to a Latvian newspaper about the bank’s activities in Kyrgyzstan, where your Manas bank and your gold mine were confiscated after the fall of the Bakyiev government?”

It feels a little petty and needless to raise irrelevant issues such as this which are completely unrelated to the football club, when one wonders if the time and space on the page could have been better served responding to the legitimate supporter concerns raised in Belokon’s original letter; a more blatant sidestepping of the issues at hand it is hard to imagine.

It is certainly worth Blackpool fans bearing in mind that there are shades of grey, and that viewing this disagreement as a polarising ‘Oyston = bad, Belokon = good’ is a little simplistic. Belokon is still something of an unknown and as fans kept on the outside by the club’s notoriously poor communication, we may not be in possession of all the facts. Heralding Belokon as some sort of messiah could be viewed as being premature and naive. Yet at the same time Oyston’s intentions in planting this seed must be scrutinised also.

Words are words, and actions are actions. Taking only the latter into account, it’s understandable that Belokon seems to curry more favour with a good proportion of Seasiders at the moment. Belokon’s investment delivered the club from the bottom two divisions and set Blackpool on a course for top flight football for the first time in 40 years. Belokon’s loan also allowed the construction of the South stand to proceed, ending the interminable wait for Karl Oyston’s much-discussed pre-lets. It’s little coincidence that Belokon’s proactive involvement in the years 2006-2010 coincided with a period of unparalleled success in modern times. Allegations of demanding £24m from the club to sell up are just that at the moment, allegations.

Conversely, the money that has found its way from Blackpool FC and into Oyston businesses is well documented fact. There need be no allegations when it is there in black and white in the annual accounts for the past few years.

It is also something of a change of tune from the Oyston family. Going back to 2009 when the South stand finally opened, Owen Oyston gushed about the influence of Valeri Belokon in pushing the club forward, as shown in the clip below:

In the above video, Owen Oyston explains that in his view, without Belokon’s involvement there would be no South stand, no signing of Charlie Adam (among others) and that Blackpool would not have made it to the Championship. Despite all of this, once elevation to the Premier League was assured and the funding provided by Belokon carried less importance, the relationship fell apart and the reasons for that don’t take much imagination to work out why.

In terms of the club’s existing relationship with fans, it would be fair to say it is close to an all-time low. However, rather than seeking to build bridges, show contrition and aim to get the fans back onside, Oyston instead fired a shot across the bows of the fledgling Blackpool Supporters Trust:

“We are surprised that you have so easily persuaded SISA/BST to support your extraction of £24 million from the club or alternatively that SISA/BST were unaware of your 2013 proposal, subsequent discussion or the follow-up visit by Mr Malnacs as recently as last week. It appears that SISA/BST singularly failed to carry out any proper, or any, due diligence, unless of course they support the extraction of £24 million to Latvia, which is certainly not putting football first.

We are hopeful that the members of SISA/BST will examine the conduct of their leadership in this matter, as I do not see any circumstances where the football club would be able to take their current leadership seriously.”

Once again, it is a statement which appears to lack any semblance of class and has the effect of slinging mud to deflect attention when the opportunity was there for Karl Oyston to meet a number of serious issues head-on. It’s true that BST need to be clear on their independence – and a statement from BST themselves has since re-affirmed their stance – but why Oyston chose to target them when the Trust appears to be developing as a sensible and measured group who want the best for the football club is unclear. At best it is misguided, and at worst a deliberate attempt to try and undermine a group whose scrutiny he is not enjoying.

Oyston chose to sign off his letter with bullish claims that all is going swimmingly at Bloomfield Road, despite mounting evidence to the contrary in a summer that has been filled with chaos:

“We have a position that is virtually unique in football. We are a debt-free, cash rich club, unlike many of our competitors that will suffer the ravages of transfer embargo as early as January 2015, when they fall foul of the Financial Fair Play regulations.

This strong position does not come easily, or without cost, in the way in which we sometimes have to operate. Please be assured that the club is in the best possible hands as we are in this for the long term.”

“A position that is virtually unique in football” is certainly one way of putting it. There can be few other clubs, if any, who would find themselves acting like a club in administration despite an embarrassment of riches having been accumulated in recent years. It is in no way acceptable that any football club should enter a new campaign in such an unprepared state, let alone a club receiving its final share of a £90m+ Premier League bonanza. Cancelled pre-season tours and friendlies does not point to a “strong position” and it is frankly worrying that the chairman of the club can be so blind to the chaos that surrounds him.

In the short-term, it is hard to envisage much changing with regards to the ownership of the club. After all, the Oyston family possess all the power with the majority shareholding and despite a media shitstorm that has enveloped Blackpool FC in recent weeks, there’s little that can realistically be done to force their hand. However, poor on-pitch performances, as evidenced last season, tend to rouse angered fans like nothing else and a poor start to the Championship season – a likely scenario given the shambolic summer – could mean that the pressure only mounts, both from the supporters and the club’s Latvian shareholder.

Interesting times, indeed.