David Conn: Icelanders draw veil over Stoke groundshare

Bedlam in Burslem as local rivals toy with tradition by planning to relocate Port Vale to Britannia Stadium

Football fans in the Potteries horrified at the idea that Port Vale could be taken over by arch rivals Stoke City's owners, be uprooted from their Vale Park home and moved into a groundshare of Stoke's Britannia Stadium, received cold comfort this week when the Football League told Port Vale's administrator they cannot rule out the bid.

League regulations do prohibit anybody from owning shares in two clubs, but, crucially, and somewhat bafflingly, include a get-out: "In exceptional circumstances the [League] Board may allow an individual to have a dual interest, subject to conditions to safeguard the interest of the League and its clubs." In that phrase, as the League knows to its cost following the Wimbledon-to-Milton-Keynes débâcle, lurks plenty of room for manoeuvre.

Mindful that Wimbledon successfully argued that the League did not properly consider the club's circumstances when it initially, quickly, ruled out their move, the League has been careful this time not to declare its position. The bad news for Stoke and Port Vale fans, who relish one of football's most historic and bitter local hostilities, is that Stoke's Icelandic owners are serious and believe they can force the issue. Insiders say the investors, who have lost £8m on Stoke with no escape yet in sight, do not intend to close Vale, but to sell the club on eventually; their aim is a groundshare which will cut costs, they argue, for both clubs.

Put simply, if they make the highest bid to the administrator – they are reported to have offered £1.6m – he could be bound to accept it. The investors could then sell Vale Park for housing and play poker with the League, promising to put Vale into liquidation if the League does not accept the club's new ownership. The administrator, Bob Young of Poppleton & Appleby, is understood to be examining whether that might allow him to turn the bid down because it offers no future, even if it promises most now for Vale's current £2.4m creditors.

For all the local outrage, there is still no official confirmation that the Icelanders have even made a bid, but Young, and Stoke's chairman, Gunnar Gislason, have this week given the hugest of hints to even the dimmest observers. Gislason pointed out that Stoke is one of the smallest English cities with two football clubs and pointed to the "economies of scale" of groundsharing.

"The financial merits of having only one football ground in Stoke-on-Trent are overwhelming and it makes perfect financial sense for any new owners of Port Vale to sell Vale Park to a property developer and negotiate a ground share agreement with Stoke City," he said.

Young met Vale fans on Monday and confirmed that if the "mystery bidder" succeeds, football will no longer be played at Vale Park. He then wrote to the League's new chairman, the former Tory party chairman, Sir Brian Mawhinney, seeking clarification of the League's dual ownership rules. There is fear within the League that the rules will be put to an unforgiving test and the affair could be a "new Wimbledon", with an outcome, takeover and groundsharing wanted by nobody in football.

The Vale supporters trust, Valiant 2001, has put its own bid in, against the Icelanders and three from local businessmen whom the trust bitterly opposes. Already, some are arguing that if they lose, the fans should form their own club – an "AFC Port Vale" – rather than accept a loveless cohabitation with their neighbours.

The Icelanders did not expect to be mired in the intricacies of insolvency when they watched millions pour into English football in the 1990s and decided to buy Stoke as a ticket to a piece of it. "We never made it a secret," Gislason told me this week, "that we intended to make money."

The takeover of the former club of Gordon Banks, Sir Stanley Matthews and Dennis Violett was somewhat complex. The money was raised mostly from 10 Icelandic investors by a venture capital company, Uppspretta, formed by Kaupthing, a bank based in Luxembourg. Uppspretta's website promises "attractive long-term capital gains for its shareholders". The investors are still waiting. Uppspretta's vehicle, Stoke Holding, paid a reported £3m in November 1999 to buy around 60 per cent of Stoke City from the former major shareholders Peter Coates and Keith Humphrys, who together still own 26 per cent of the club. They secured guaranteed directorships for life as a condition of the deal, earning them the scorn of many Stoke fans.

The Icelanders unveiled a five-year plan to take Stoke to the Premier League, but were only promoted to the First Division last season and, with spiralling players' wages and the collapse of ITV Digital, are struggling. Stoke's most recent accounts, to May 2001, posted losses of £1.7m and debts of £13.4m, including £4.55m owed to the investors, a state Gislason described as "not sustainable in the long run", a "harsh reality" and "a grave situation". Since then Gislason said investors have stumped up a further £1m, bringing their investment to £8m. They were offered a reported £1m-£2m last summer by Phil Rawlins, a Stoke fan now based in Dallas, which they turned down.

The bid for Vale is believed to come not from Stoke City or Stoke Holding but from among the individual Icelandic investors in Stoke Holding. When Gislason talks of "economies of scale", he is referring to Vale sharing the rent on the Britannia Stadium, £280,000 annually, and the ticket office, shop and other facilities. The investors plan to sell Vale Park, although planning permission is tricky and opinions vary about the site's worth to housing developers. Whatever, if they buy Port Vale, the bulldozers are heading for the ground. The investors, though, are expected to assure the League that they want to sell, not destroy, the club.

Vale, under their chairman Bill Bell, a car dealer, went into administration on 16 December last year with debts reportedly reaching £2.4m. The club has lost money for years while the new Lorne Street Stand has languished unfinished. Crowds are down to around 4,000, although a candle of optimism flickers with the youth team, run by Vale stalwart Martin Foyle, which knocked Everton and Chelsea out of this season's FA Youth Cup and could meet Manchester United in the quarter-final if they beat Tranmere next.

Paul McCann, a director of Valiant 2001, said Vale fans would not accept the takeover: "Stoke-on-Trent is parochial; we're fiercely attached to our towns – in Vale's case, Burslem. We might have accepted groundsharing had the council built a stadium for both clubs, but not being dragged in by Stoke's owners to save money. We believe the club is sustainable, and want to hold it in trust, and make it healthy."

Gislason acknowledged that his job is to staunch Stoke's losses and recoup investors' money. He had tough words for football's financial meltdown: "People are forgetting that Port Vale is in administration and football is in crisis. Administration is being used in football not to pay creditors, which is bad business and ethically wrong. Groundsharing makes financial sense, and soon football will have to face reality."

The rivalry between Stoke and Vale featured memorably in The Card, Arnold Bennett's 1911 novel chronicling the wily social climbing of the hero, Denry Machin, in Stoke-on-Trent's five towns. He completes his ascent from washerwoman's son to mayor by signing an ageing former playing hero for the local football club, Bursley – Bennett's name for Port Vale. The context is worth quoting: "There were two great football clubs in the Five Towns, Knype [Bennett's name for Stoke] in the first division while Bursley was only in the second... Both were, in fact, limited companies engaged as much in the pursuit of dividends as in the practice of the... sport. [Neither ever paid a dividend.]

"Whereas the Knype Club was struggling along fairly well, the Bursley Club had come to the end of its resources... and it was the intention of the directors to wind up the club."

Machin saves Bursley by signing a once great striker from "the York Club, which is... suddenly in bankruptcy". Adored by the crowd, Machin is soon elected mayor. It cost him, he says slyly, about £800.

Still the sharpest satire of football boardroom machinations, The Card remains painfully familiar to football fans almost a century later. But Machin's civic cynicism seems rather quaint now, compared to a proposed takeover of Vale by the major Icelandic investors in Stoke City's Luxembourg-based holding company, looking to minimise their losses. Arnold Bennett himself might have struggled to make this up.

davidconn@independent.co.uk