Tom Davies describes the financial predicaments of Dundee, Mansfield Town and Kidderminster Harriers
A glimmer of light is flickering at the end of a dark tunnel at Dundee, whose supporters’ trust, Dee4Life, has co-ordinated a Company Voluntary Arrangement (CVA) to pull the Scottish First Division club out of administration – though a 25-point penalty still threatens their footballing status.
Dundee went into administration in October owing £420,000 in tax and around £2 million in debt, a consequence again of a sustained period of living beyond their means. Former director Calum Melville, who quit in November, had bankrolled a number of signings but his failure to pay a £365,000 tax bill on time, which his fellow directors believed he had pledged to meet, left the club somewhat exposed. Although he offered to pay £200,000 towards that bill in instalments, it was not enough to prevent the club falling into administration for the second time in seven years.
In the meantime the supporters’ trust moved quickly, raising around £200,000 and working on a CVA, which was being put to creditors at the time of going to press. Further investment is expected from a group of business people fronted by Peter Marr, the Dark Blue Business Trust. Marr’s track record is hardly exemplary – he was in charge during the club’s previous period in administration – but he is expected to secure a six-figure sum this time. Given that around three-quarters of the club’s debts are in the form of soft loans to former directors, expected to be broadly sympathetic, there is cause to believe that the CVA will be accepted.
If so, it is possible that the trust, which owns 27 per cent of the club’s shares, could become the majority owner, which would move them closer to meeting Dee4Life’s stated ambition of “taking the club into community ownership”. The club’s plight has been complicated, however, by the upholding of a 25-point deduction, though an appeal is planned. This has diverted fan anger towards the Scottish Football League. “The SFL is more interested in punishment than prevention,” said Dee4Life trust spokesman Fraser MacDonald.
One of the great pantomime villains of lower-division ownership in recent times has been the former Mansfield Town chairman Keith Haslam, who as owner of their Field Mill ground briefly locked the club out last month following a dispute over rent. Haslam stood down as chairman in 2008, but not before he had paid himself a final dividend of £2.36m, which he used to buy the ground. During his tenure he also loaned his company, Stags Limited, £580,000 to build a football academy that has still never come to fruition, and issued a £380,000 loan to himself. Since buying Field Mill he has charged the club around £140,000 annual rent.
It was these rent levels that forced the club’s new owner, John Radford, into conflict with Haslam. Radford is pursuing legal action against the former chairman over the legality of the dividend, citing the 1985 Companies Act, which forbids directors from taking out loans from their companies of more than £40,000, and the 2006 Act, which stipulates that dividends should only be paid to directors “from profits available”. Mansfield claim “the distributable reserves pursuant to the 2008 accounts was a maximum of £743,780” so are at a loss to see from where Haslam plucked a figure of well over £2m.
As a result, Radford refused to pay rent while pursuing this, offering to put the rent money into a third-party account until the issue was resolved. Haslam’s response was to lock the club out, forcing them to explore groundshares at nearby Alfreton or Ilkeston Town (themselves liquidated in September, though it is hoped a new club will be up and running next season), before a resolution of sorts was struck in time for the Boxing Day match against Grimsby, and a more acceptable rent level agreed, described by Radford as “at least 40 per cent better”.
But a broader fight is over the ground’s ownership. The club say that they will continue the action against Haslam over his past misdeeds, particularly the manner of his acquisition of Field Mill. This could ultimately give the Stags a chance of getting their ground back.
Another leading Conference club in peril are Kidderminster Harriers, whose reported annual losses of £350,000, plus debts of more than £250,000, left them scrambling to find cash to meet payments of £150,000 at the end of December and another £50,000 by the end of January. Local businessman Chris Swann had expressed an interest in the club, on condition that it be a 100 per cent takeover, but negotiations with the club hit the buffers just before Christmas.
Administration looms if a settlement is not reached. The club also face a possible fine from the Football Conference for failing to meet the League’s financial reporting requirements throughout the 2009-10 season. The 500-strong supporters’ trust has embarked on a fundraising initiative but time is not on their side.
From WSC 288 February 2011