Blackpool FC majority shareholder Owen Oyston must be forced to buy out club president Valeri Belokon to end a bitter legal dispute, a QC has told a judge.
The Oyston family has been locked in a High Court battle with Latvian millionaire Mr Belokon, who claims the family “improperly” extracted millions of pounds from the club when it enjoyed a cash “jackpot” after winning promotion to the Premier League in 2010.
Andrew Green QC, appearing for Mr Belokon, said he had suggested when the legal battle began some four weeks ago that “from the moment the cherries had lined upon on the Premiership fruit machine”, the Oystons had treated the club as “their own personal cash machine”.
Mr Green told Mr Justice Marcus Smith, sitting in London, that over the last few weeks in court the full extent of the Oystons’ misconduct in their dealings with the club and Mr Belokon “has come into sharp focus and makes a pretty ugly picture”.
It was “simply incontrovertible” that Mr Belokon had suffered unfair prejudice at the hands of the Oystons and their companies.
Mr Green argued the appropriate remedy “should be nothing other” than the Oystons and Oyston-controlled Blackpool Football Club (Properties) Ltd, formerly known as Segesta Ltd, buying out Mr Belokon’s interests.
Mr Green suggested that the result of the court making a multimillion-pound buyout award might be that Owen Oyston, and his son Karl, who is club chairman, would not have funds immediately available to repay the loans taken from the club following receipt of Premiership money.
In any event there was no realistic prospect of those loans being repaid to the club while it remained under Oyston control.
If a court order led to the football business having to be sold to a new owner to raise funds for the buyout, that was likely to be popular with supporters currently boycotting Blackpool because of the Oystons, said Mr Green.
During the trial Mr Oyston has denied personally exploiting the club funds.
Mr Oyston told the court that Mr Belokon, who purchased a 20 per cent shareholding in 2006, made a decision in 2011 to “exit the club and prepare for legal action” after his earlier bid to acquire a 50 per cent share failed, and nothing came of attempts to approve other financial arrangements.
Mr Belokon proposed in 2013 that the board should “buy him out for an exorbitant £24.15 million”, said Mr Oyston.
Mr Green told the court that Mr Belokon had invested in the club as a minority shareholder on the basis that he would eventually be entitled to an equal share of the management and profits.
He had reached an agreement with Mr Oyston entitling him to parity once loans he had made were converted into club shares.
As that agreement had not been honoured, said Mr Green, Mr Belokon was now entitled to receive a buy-out award in the region of £24m-£25m.
He argued Mr Belokon should not have to remain a minority shareholder “alongside people who behaved in the way that the Oystons did - that is, not only unfair but abusive, bullying and utterly unrepentant.
“If ever there was a case for a buy-out, this is it”.
Alan Steinfeld QC, appearing for the Oystons, asked the judge to dismiss Mr Belokon’s “confused” case, saying he had suffered no unfair prejudice.
Instead, Mr Belokon wrongly “thought” he had obtained a “gentlemen’s agreement” entitling him to equal shares.
The starting point for the High Court case was the “terrible fall-out” from a meeting between Mr Belokon and Owen Oyston in May 2011, said Mr Steinfeld.
Mr Belokon decided after the meeting to “disengage” from the club because Mr Oyston refused to accept they had an agreement and additional shares in the club should be transferred to the president.
Mr Steinfeld said Mr Belokon claimed that a gentleman’s agreement had been reached, but could not recollect quite when and where it was concluded, said Mr Steinfeld.
Blackpool was only briefly in the Premier League, being relegated at the end of the 2010/11 season to the Championship before subsequently sliding down to League 2, the fourth and bottom league of English professional football. It has just gained promotion back to League 1.
At the High Court, the Oystons have been accused of alienating both Mr Belokon and Blackpool supporters by paying out more than £29m from the club to family-controlled Blackpool FC (Properties) Ltd during the period of the allegedly “asset-stripped” club’s rapid decline.
In 2012, an £11m “directors emolument” was paid to Zabaxe Ltd, another Oyston company.
In final submissions to the court, Mr Steinfeld said almost all the payments into BFC Properties from club funds led to investments in some way directly or indirectly for the club’s benefit, including improvements to the stadium, and it was not simply a matter of “putting money into the hands of the Oystons”.
Mr Oyston had also, through Zabaxe, put millions of pounds into the club over the years to keep it afloat before its Premiership promotion.
The £11m was to recompense Zabaxe for the services and funding which it had provided to the club over those years, including the services of Owen Oyston himself, although the club accounts recorded it as director’s remuneration.
Mr Stein said of the Oystons: “Lots of ugly words have been hurled against them but they felt morally entitled to recover some of their monies.”
The judge reserved his judgment to a date which will be announced later.