No end in sight for Everton's anguish

Governing bodies fail to impose their authority despite Peter Johnson's breach of rules over ownership of two clubs

Another potential suitor has apparently thought better of Everton, walking away on Tuesday from the sagging Grand Old Lady of English football, leaving her still in desperate need of a makeover. Warburg Pinkus, a US finance house supporting the proposed bid by Paul Finnegan, a Merseyside computer games entrepreneur, may yet return. But their withdrawal from bidding for Peter Johnson's controlling interest leaves running the saga, of high farce and financial machinations, which has now enveloped Everton and Tranmere Rovers for more than a year.

Another potential suitor has apparently thought better of Everton, walking away on Tuesday from the sagging Grand Old Lady of English football, leaving her still in desperate need of a makeover. Warburg Pinkus, a US finance house supporting the proposed bid by Paul Finnegan, a Merseyside computer games entrepreneur, may yet return. But their withdrawal from bidding for Peter Johnson's controlling interest leaves running the saga, of high farce and financial machinations, which has now enveloped Everton and Tranmere Rovers for more than a year.

Johnson has been offering his Everton shares for sale since early this year, while also owning Tranmere. His dual ownership is a flagrant breach of the rules of all three football governing bodies (the Football Association, the Premier League and the Football League), which forbid one man owning two clubs. While the authorities watch helplessly, Johnson has reportedly attracted a rich collection of bidders, from the Sultan of Brunei to Chris Evans and Terry Venables.

Although Everton's parlous finances alarm some suitors, there are reported to be three realistic bidders: Finnegan, a consortium fronted by the theatre impressario Bill Kenwright and another consortium, "The Toffee Project", comprising a group of local Everton-supporting businessmen. The US diamond dealer Hedy Shor is another whose name has been thrown up. Johnson, a Jersey-based tax exile since February 1997, is keeping Everton supporters and the powers-that-be waiting while seeking a deal acceptable to him.

Johnson, the owner of the Birkenhead hamper company Park Foods and a Liverpool season-ticket holder for 25 years, paid £10m for Everton in the summer of 1994, beating off a five-man Everton-supporting consortium, which included Kenwright. At the time he owned Tranmere, the local club whom he had steered from the old Fourth Division to the brink of the Premier League. "I'm loyal to wherever I am at the time," he said on taking over. "You can move your passions."

Johnson said he wanted to restore Everton to their former glories, but he has never convincingly denied his intention was also to make a fortune by floating the club. First he had to satisfy the authorities that he had sold Tranmere. The ban on owning more than 10 per cent of more than one club was introduced following Robert Maxwell's late-80s exploits, owning Oxford United and Derby at the same time.

In June 1994, Johnson's advisors gave written assurances to both leagues that he had sold his Tranmere shares to his associate, Frank Corfe. Johnson even owned shares in Liverpool, which he had also undertaken to sell.

Minutes of Everton's board meeting on 1 July 1994 record that the Premier League was "content that there was no breach of the rules", and that "the Football League's requirement had also been met".

Corfe was said to have bought the shares and taken on the loans made to Tranmere by Johnson. Installed at Everton in 1996, Johnson invested another £10m in a rights issue. Everton's subsequent failures under him, continually surfing the relegation zone, resulted mainly from unsuccessful signings. Off the field, assured management was often lacking, seen most clearly in the near-£22m overdraft which resulted in the sale of Duncan Ferguson and also in the failure to achieve a move to a new stadium, which has never progressed much further than a sketch in a brochure published in May 1997.

The controversy which has enveloped Johnson and both clubs in scandal began last September. Corfe, who was in financial difficulties, was forced to resign by a fellow director, Fred Williams, who had uncovered what are said to be "discrepancies" in the running of Tranmere. Merseyside Police confirmed yesterday that a fraud squad investigation is "proceeding", although Corfe has denied reports of wrongdoing.

Johnson, said to still be owed £6.8m by the Prenton Park club, returned to take control of the Tranmere shares he had originally sold to Corfe. He has never publicly disclosed how he had the right to do so but David Dent, the Football League secretary, said that Johnson referred to a clause, in his original 1994 agreement with Corfe, enabling him to claim the shares back. "We were given assurances in 1994 that Johnson had no links remaining with Tranmere," a Football League spokesman confirmed yesterday.

If Johnson's arrangement to take back the shares is proved to conflict with assurances he gave the League, Johnson may have been in breach of the dual ownership rules for four years. Regardless, he has been in open breach since last September. Yet the authorities have been unable to act decisively against him, waiting only for him to sell one of the clubs. With no bids accepted for Tranmere, he is holding out for the Everton sale. Sources close to the dealings say that Kenwright was talking of a £30m bid at the beginning of the season, but has heard nothing since from Johnson. Sources say that Johnson, encouraged by lucrative recent share dealings in Leeds United and Liverpool, is now looking for £35m. Whatever the price, the Jersey-based Johnson will not be subject to UK tax on the deal.

Andy Williamson, a senior league official, has been placed on the Tranmere board as an observer, and financial dealings between the clubs, including transfers, have to be vetted by the League. This follows last year's sale to Everton of Tranmere's goalkeeper, Steve Simonsen, a deal arousing severe scepticism amongst supporters but whose legitimacy appears to have satisfied the authorities.

Beyond this, however, no sanctions are being imposed on Johnson, and no firm deadlines have been set. Tranmere's indebtedness to Johnson, which dates back to the glory years, which were financed by his loans, means that if his hand were forced, he could put Tranmere out of business. Hence the authorities' reluctance to act. The League, however, suggested yesterday that it may move against Johnson for the breach of the rules - but not before Everton has been sold.

"We are looking for the dual ownership issue to be resolved," said the spokesman. "When it is, we might then look further into the issue of what Mr Johnson disclosed to us in 1994."

The wait has proved too much for Peter Kilfoyle, the Labour MP for Goodison Park's Walton constituency. In June, he wrote to all three governing bodies demanding they enforce their own rules. Dissatisfied with the response, in September he asked the Department of Trade and Industry to investigate. The DTI would not say yesterday what its response has been.

"Football clubs are great community institutions, to which supporters feel a huge sense of belonging," Kilfoyle said. "But the reality is that they are owned by private businessmen, using them for their own purposes, who can ride roughshod over them. And the authorities are absolutely incapable of monitoring the game."

The affair raises many serious questions, shining an unforgiving light on the administration of English football. At Everton's AGM a fortnight ago the manager, Walter Smith, said Johnson had been guilty of "gross mismanagement" of Everton. Yet the authorities' apparent solution to Johnson's breach of the rules is to allow him to retain control of Tranmere, where he has installed his girlfriend, Lorraine Rogers, as chairman and chief executive.

The absence in football's rulebooks of any vetting of club takeovers is a longstanding weakness in the regulatory framework. Yet this case exposes an even greater problem. Johnson has broken one of the few rules there are, yet the authorities seem powerless to act.

The case of Everton, a founder member of the Football League and one of its greatest clubs, is exposing dramatic weaknesses in football's administration which are surely long overdue for correction.