Saints battle to stay in business

Administration and a 10-point penalty loom large for struggling Southampton

(GETTY IMAGES)

Southampton's future was in the balance last night after trading in shares in the club's parent company, Southampton Leisure Holdings, was halted as SLH braced itself for administration.

In a worst-case scenario, SLH will fold and the club will follow suit later this year if a buyer cannot be found. More likely is that SLH – or rather its administrators – will try to cut deals with SLH's two major creditors, Norwich Union and Barclays Bank, while the club itself changes hands, either to a new parent company or an individual.

SLH's most recent financial results for the year to June 2008 showed that £23.1m stadium financing from the 2001 move to St Mary's was still owed to Norwich Union. At the same time, Barclays were owed £4.4m. It is understood that only with reluctance have Barclays continued to help pay player wages, via extended credit, in recent months.

Senior club officials remain hopeful that the club itself, as a separate legal entity from SLH, can stay out of administration, and therefore avoid any points deduction by the Football League. League rules state that clubs entering administration are docked 10 points. By the letter of those rules, Southampton FC has to enter administration to trigger that penalty. If only SLH enters administration, that penalty should not apply.

"We're not so much in a grey area as in a watching brief situation full of complex legal issues," said a source familiar with the situation. The Football League is likely to discuss the implications for Southampton FC of SLH's situation at a League board meeting next Tuesday.

Southampton are in 23rd place of 24 in the Championship, three points shy of the current safety zone, where Plymouth are in 21st place on 40 points having played a game more than Saints. Norwich are in 20th place, also on 40 points having played one game more.

As recently as five weeks ago, Saints looked certain to drop to League One, having amassed just 28 points from 33 games. But three wins then three draws have given them a fighting chance of survival – if no points are deducted. Four of Saints' remaining seven games are against teams in the bottom half, and three of those are relegation rivals. Bottom-placed Charlton visit St Mary's this weekend.

A buyer for the club is more likely to come forward for the club if Saints maintain Championship status. "It's now about keeping Southampton Football Club alive," plc chairman Rupert Lowe said in a radio interview, stressing the legal separation between SLH and the club.

SLH sparked fears for the club at 7am yesterday with an announcement to London's junior AIM stock exchange that trading would be halted while it "talks to a number of parties about an urgent injection of finance."

Saints have sold all their major playing assets, including academy products Theo Walcott and Gareth Bale, since relegation from the Premier League in 2005.