The first round of mediation between Tai Po players and the club failed to result in an agreement. They will meet again next week.
Tai Po players and club management met with mediators at the Labour Department’s office in Sha Tin on Wednesday in hopes of resolving the ongoing arrears owed by the club. Representing the embattled club were general secretary Chan Ping and assistant coach Chan Yuk-chi, while the players were represented by Felix Luk, Philip To and former head coach Fung Hoi-man. The three hour meeting failed to culminate with an agreement on compensation, but the two sides agreed to meet again next week.
During the meeting, Chan Ping proposed to pay the players the remainder of their March salaries through his own personal funds. The players are still owed 40 percent of their salaries for March after the club’s main sponsor HONGDA ceased payment of their sponsorship fees in February. Additionally, Chan proposed to pay April’s salaries through a mix of fundraising and borrowing. He asked the players to join the club in demanding May and June’s salaries from HONGDA.
“The unfortunate thing is that the players don’t trust the sponsor (to come through with the money),” Chan told reporters after the meeting. “The club will have to borrow in order to pay April’s salaries so as a gesture of good faith, I have proposed to pay the rest of March’s salaries out of my own pocket by the end of this week.”
However, the players demanded to be paid May’s salaries as well which complicated matters.
“It’s going to be difficult to obtain a loan so that we can pay April’s salaries, but it’s manageable,” he responded. “Now, if we have to borrow even more money on top of that to cover May, then it’s going to be exceedingly difficult.”
The secretary stressed that club had no ill will towards the players and that both sides were “victims” in his opinion.
Sponsorship contract revealed
Speaking to reporters following the meeting, Chan brandished a copy of the contract between Tai Po and HONGDA. In the contract, the sponsor agreed to pay the club a total of $12 million for the year between July 2019 to 30 June 2020, as well as any cost overruns up to 120% of the original agreed to amount. Crucially, the sponsor promised to cover the salaries of all players and staff until the end of the contract without interruption.
In a stunning revelation, the contract stipulated that HONGDA’s first obligation would be an advance payment of $2 million, while the rest of the contract would be paid out in monthly instalments of $1 million, beginning in October 2019. The upfront payment is important for two reasons: First, the money was deposited into the hands of the club’s honorary chairman Gary Choy in July 2019. It was Choy who, coincidentally, loaned the club exactly $2 million in late April to deal with their salary arrears.
Second, when the loan was announced, Chan admitted that the sum of money was originally a sponsorship payment owed to the club which was deposited into Choy’s hands as a result of an “administrative mistake.” He stated that such a mistake would be “addressed internally” and would be dealt with “properly” in the future.
This payment has been made relevant once again due to allegations by two Tai Po District councillors that HONGDA had made the July 2019 payment in cash, while another councillor has speculated whether this was done to facilitate money laundering.
In terms of unpaid salaries, Chan disclosed that HONGDA are on the hook for roughly $4 million – $450,000 for March and $3.5 million in total for April, May, and June.
Fung: players are working part time jobs while they wait
After the meeting, Fung regretted that the situation had necessitated mediation and lamented at the lack of communication between the two parties at an earlier stage in the process.
“From March until today, neither the club nor the sponsor sent representatives to explain things to the players,” he expressed. “I had previously spoken to management about the issue, but they never gave any definitive answers. Today was the first time we’ve gotten a sense of direction from them.”
Though the meeting did not result in an agreement, the coach claimed that he trusted Chan’s sincerity but understood that the player’s requested amount was too large for the secretary to bear at the moment.
“Right now, we don’t have an agreement on March’s salaries,” he said. “We’ve countered their proposal with our own, but the club will need some time to consider it. We’re not trying to be difficult. We’re just trying to recover as much of our salaries as possible.”
Fung added that during this time of uncertainty, some of his players had already found part time work in other professions. “Some are driving for Uber, some are cleaning air conditioners while others have become electricians. I, myself, will be a full time dad for the time being!”
Club hopes to avoid legal action, players skeptical
Chan expressed the media that he remains hopeful that Tai Po will not have to resort to legal action in order to retrieve the missing sponsorship fees.
“I really hope that we don’t have to go to court,” he said. “I hope that we can reach a settlement with the players and then sit down and do the same with our sponsor. If we can get the money, then brilliant. If not, then we’ll just have to move onto Plan B.”
However, the secretary stressed that there was a limit to how much the club was willing to pay.
“Tai Po doesn’t have the financial means to pay all of the remaining salaries,” he continued. “If we have to be on the hook for all of it, then it’s better to go through a bankruptcy proceeding. We shouldn’t be trying so hard to get the players their salaries for March and April if that’s the case because if the club has to resolve all of the arrears, then we’re absolving our sponsor of their responsibility in the matter.”
When asked to about Chan’s claims, Luk stated that it was the club who were inflexible in their demands.
“The players understand fully what the situation of the club is,” he said. “We’d hoped that both sides would go into mediation in good faith, but the club refused to give definitive answers, which is why we haven’t come to an agreement.”
Although Luk agreed that HONGDA should bear the brunt of the blame, he believed that if the matter were to go before the courts, no matter who wins or loses, the players will suffer the most.
“If we don’t accept the club’s proposal, they seem to be indifferent about declaring bankruptcy,” he continued. “Even if Tai Po win, does that necessarily mean that we will receive our back pay?”
Chan said that he plans to meet with several players privately this week and that he remains optimistic that the club can avoid bankruptcy.
“I believe that upper management will not allow this club to go bankrupt,” he confided. “I truly believe that in the end, there will be a white knight.”
Players and management will enter another round of mediation next week.