Newcastle To Fold? Well, Kind Of.

By on May 15, 2009 in Finance, Non-League | 4 comments

It never rains but it pours in the north-east. This morning, we are back in Tyneside with the news that Unibond League Division One North side Newcastle Blue Star could be set to collapse over the next few days or so. This, however, is a story of a sudden financial collapse which leaves a slightly sour taste in the mouth, as it seems to involve a rugby club benefiting from a grant from the Football Foundation and then leaving the – considerably smaller and poorer – football club to pick up the bill.

Blue Star made minor headlines last season when they offered to resign from the Unibond League and take up a place a division below in the Northern League due to spiralling travelling costs. That resignation was later withdrawn but, one year on, the club now finds itself with a bill for £65,000 that it doesn’t have the means to pay. The story starts with a change of stadium. In 2007 they moved from their Druid Park home to share the lavish Kingston Park home of Newcastle Falcons RFC, a club which their chairman Dave Thompson also owns.

The club’s secretary explains that the club was invited to join the then newly-formed Unibond League Division One North because there were no other clubs from the Newcastle area competing in it and that, because Druid Park didn’t come up to scratch, they had to move to Kingston Park. The cost of travelling was high (which explains their near resignation at the end of last season), but the club seems to have coped with things reasonably well this season, finishing third in the table and then winning promotion to the Unibond League Premier Division via the play-offs.

Off the pitch, however, there was clearly a problem. The club continued to struggle for crowds, with an average of just 153 people turning up for league matches at Kingston Park. One might expect that the club would have been relatively secure, considering that their chairman is the owner of a Premiership rugby club, but Dave Thompson confirmed almost as soon as the season ended that he was withdrawing further funding from Blue Star, somewhat predictably blaming those twin stool pigeons of the credit crunch and local apathy for his decision. “We are in the middle of the worst credit crunch the world has ever seen, and 80 people were turning up. Why on earth would you want to keep putting money into something which is bringing that level of enjoyment to the people of Newcastle?”.

Thompson is right to say that that the “credit crunch” is a severe situation (though he’s probably wrong to say that it is “the worst… the world has ever seen”. He’s also probably right to say that there has been a degree of apathy towards Blue Star from the Newcastle public. The devil in the detail, however, is what he doesn’t say in his statement. He neglects to add that ultimately, as the chairman of the football club, he is responsible for increasing the profile of the club in the local community. More importantly, however, he also denies what is becoming reasonably common knowledge, that the biggest single reason for Blue Star’s sudden and serious difficulties is the sudden calling in of a £65,000 grant to the Football Stadia Improvement Foundation.

This is the point at which the story starts to turn murky. The FSIF is part of the Football Foundation, a charity funded by the Premier League, the FA and the government. It gives grants to football clubs of all shapes and sizes to be able carry out much needed improvements to their facilities. The FSIF gave a grant of £65,000 to Blue Star so that a fourth generation artificial pitch could be laid at Druid Park in 2007, but Blue Star themselves have never actually played there since then. It is used by several football teams – Blue Star’s veterans team and their women’s team, for example – but the primary occupiers are another rugby club, Gosforth RFC, as well as being used by Newcastle Falcons as their training ground.

The freehold for Druid Park is owned by Spirit UK, part of the Punch Taverns pub conglomerate, and the leasehold is owned by Dave Thompson. Thompson has a twenty-five year leasehold on Druid Park, which he has sublet to Gosforth RFC, but Spirit UK have put the freehold up for sale through a London auctioneer. Thompson insists that “All the sale means is that we will have a different name at the top of the contract”, but it seems pretty clear that the FSIF have got cold feet over this. There’s no other reason for a charity to suddenly demand the repayment of a grant. Ultimately, why should they be funding improvements for a facility for a community stadium, the ownership of which is having less and less to do with football as time goes on?

The other question that remains is also a pretty simple one: why should Newcastle Blue Star be paying £65,000 for a pitch that they don’t use, that one company holds the freehold for, someone else holds the leasehold for, and someone else yet again uses as their pitch? The answer may be that Blue Star don’t get the use of Kingston Park for nothing, but this overlooks the bare fact that Newcastle Falcons (or, to put it another way, Dave Thompson) could (and, arguably, morally should) pay the £65,000 owed to FSIF for facilities that they see the biggest benefit from. If they were to do this, the majority of the £100,000 that Blue Star were said to need within forty-eight hours in order so survive would be paid up, and the club would have fighting chance of survival.

The deadline given by the FSIF passes today, but something about Blue Star’s explanation of events doesn’t hang together correctly. The club website, for example, states that “administration would result in a demotion of two divisions (to Northern League Division One)”, but this isn’t true. A two division demotion only comes when a club folds and a new one seeks to take over its place (as happened, for example, last year at Nuneaton Borough and Halifax Town). If they entered into administration after the Unibond League’s AGM, the chances are that they would be docked ten points, and that would be that. Is the club trying a little gamesmanship to extend the time pay back the FSIF? Are they trying to panic a passing potential investor into giving them a big cheque to save their club? Heaven only knows.

What we can take an educated guess at is that Newcastle Blue Star almost certainly spent money on wages last season that were above and beyond their means, and that the FSIF has given a grant, the financial benefits of which are most likely to be realised by a Public Limited Company and a rugby football club. Until someone can adequately explain why a charity funded by the FA, the Premier League and the government should be doing this, there are legitimate causes for concern over what exactly has been going on at Druid Park, and if, as Dave Thompson claims, the calling in of the £65,000 grant isn’t the reason why Newcastle Blue Star needed £100,000 within forty-eight hours earlier this week, then did they?

Answers on a postcard, please.

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    4 Comments

  1. Why do the football clubs need bailing out to start with though?

    Martin

    May 15, 2009

  2. ” It seems to involve a rugby club benefitting from a grant from the football Foundation and then leaving the football club to pick up the bill..”……..more or less what happened in Halifax. the RL squatters sold their Thrum Hall ground for about £6 million, pocketing a profit of £2 million which was supposed to go into The Shay development, guess what ? they paid their tax bill with it, leaving a half built stadium with no corporate facilities, which more than contributed to the demise of Halifax Town AFC… To this day the squatters have still (alledgedly) failed to make a financial contribution to the develpoment

    Andy ...Halifax Town

    May 16, 2009

  3. Good article, definitely something `fishiy` going on! It was pretty obvious the club was going to get promoted but then the plug pulled as soon as this was achieved! Now Druid Park up for sale! Everyones been conned especially the Players & Fans of Blue Star. The club was actually on the up but they didn`t want to know. They didn`t want the club saved in the end if the truth be known.
    Still Burb Murtun curn retire in the Surn!

    Ex Star Fan

    May 20, 2009

Trackbacks/Pingbacks

  1. One more, apparently two « Football Management - [...] At Kingston Park, capacity 10,200, gates have averaged 153 (5). [...]
  2. Whitley Bay Go For Promotion « Twohundredpercent - [...] Star’s plight was much worse, though less well-publicised. This site has covered some of the murky politics behind it …

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