Darlington FC: Saved, But At A Price

By on May 4, 2012 in Finance, Latest, Non-League | 2 comments

As has happened before in the recent history of the club, the battle to save Darlington FC went to the wire. Another deadline was hanging over the club this week with the a threat of liquidation waiting on the other side of it, but yesterday afternoon it was confirmed that the Darlington 1883 group, which has been battling to keep the club alive in this incarnation since the beginning to the year. The announcement also confirms that the club will be leaving The  Arena, the wholly unsuitable venue that is charged by many as being the single biggest reason behind the cycle of despair in which the club has found itself for much of the last ten years, but with a solid plan to move back to the town in just one year.

Last weekend, Darlington waved goodbye to the Blue Square Premier with a win against the similarly stricken Kettering Town. Relegation had been confirmed long before this match took place, so there was no particular unpleasant surprise in this particular curtain call. Dropping from the Blue Square Premier had long been considered inevitable, and this was confirmed several weeks ago. The question of which division the club start next season in, however, is not yet known because of the nature of the agreement reached between the rescue group and the administrators. Darlington FC will be exiting administration without a CVA in place, meaning that the club should – theoretically at least – face expulsion from  the Football Conference under the rules of the league.

The FA’s leagues committee will decide in which division the club will play next season. What opinion they will form over the explicit decision of a club to exit administration without a CVA in place is not, at the time of writing, known, though even a place in one of the divisions of the Northern Premier League’s divisions may be optimistic. Darlington may have a long journey back to the status which they held as recently as last week, but a surprising story appeared in the Northern Echo this morning which claimed that the aim of Darlington 1883 was to get the club back into the Football League in three years.

How such a prediction can be made (and it is not even clear whether such a statement has specifically been made at all) when it is not even known in which division the club will be starting next season (and, in view of their circumstances, it would not be particularly surprising to see the club start next season as low down the non-league pyramid as the Northern League), however, is not yet known. Whilst it is encouraging to see optimism coming from the club after months – if not years – of gloom, the new owners should be wary of making public statements which jump the gun or allow room for misinterpretation.

There are other reasons to ask questions of the deal that has been agreed with the administrators. Under the proposal, the assets of the company in administration have been purchased by Darlington 1883. This company – which didn’t incur the debts that the “club” has run up – has no legal obligations to pay creditors, which is the reason why the club is exiting administration without a CVA being in place. Darlington 1883 has pledged to do all it can in order to help local businesses who lost out when the club was placed in administration, but this is in contravention of a fundamental rule of dealing with any sort of debt, which is unwritten but enshrined in insolvency law, that once creditors have been divided up into priority and non-priority creditors, they should be treated equally.

There is no question that the way that Raj Singh, who stands to lose out the most as a result of the agreement reached, has left supporters of the club with nothing but emnity towards him, but leaving one creditor out – especially the biggest one – may have ramifications for football and insolvency that go far beyond the future of Darlington FC. What has become increasingly apparent in recent years has been that the FA rules, as well as the independent rules of individual leagues themselves – regarding what happens to football clubs that find themselves in this position have been inadequate for a variety of different reasons. It may end up that the FA and representatives of all leagues have to rip up their exiting rule-books and rewrite the rules from scratch. This, however, is a decision for another day.

The matter of the club leaving The Northern Echo Arena is one that makes considerable sense. It had been reported that the club would have faced a jaw-dropping bill of £270,000 in order to stay there, and this would be an amount of money that would effectively have been money down the drain for any non-league football club, regardless of which division this one ends up playing in next season. It has been suggested that Darlington will end up playing its year in exile at Bishop Auckland or Shildon next season. Neither are ideal, of course. No venue outside of the town of Darlington itself would be. However, if it is only for a year and with a  clear plan to return to the town – it is currently understood that the club will be seeking to renovate the current home of Darlington RFC, although no official announcement has been made – then this should be a tolerable state of affairs for all concerned. A clearly defined timetable for a return to the town would siginficantly allay fears that Darlington could yet end up a football club perpetually in exile, though.

For now, though, Darlington FC survives. Wherever it ends up playing next season and beyond, and whatever agreements are reached to alleviate the pain repeatedly felt by creditors as a result of years of financial mismanagement, it is this simple fact that will  be all that matters to the supporters of the club today. The events of the last few months, however, tell an important story that bears repeating. This time last year, Darlington FC was preparng for a trip to Wembley to play in the FA Trophy final. At the time of writing, the club will be ground-sharing at what is likely to be a significantly lower level of the game than it has ever experienced before.

The biggest single lesson to be taken from this story is that amongst the false Gods of victory that the game of football throws up, the only victory that really matters is the continuing existence of the clubs that actually play the game. Providing that these lessons have been learnt and Darlington FC can return as a community run club, democratically owned by its supporters for the benefit of its town rather than those that would seek to their line their own pockets from its operations then the supporters of the club will have won a far greater victory than the players that represent them could ever manage on the pitch.

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    2 Comments

  1. Shorten your sentences. This will aid communication

    Jeff

    May 4, 2012

  2. I’d just like to raise one point about the term ‘creditors’, and the fact that it appears these creditors have been royally dumped upon yet again.

    The ‘creditors’ are actually the players – who will be paid back over three years – and local firms – who will be ‘looked after’ by the new shareholders – effectively, the population of the town and exiled fans investing in the club.

    The reason a formal CVA could not be agreed is that the major creditor is, unfortunately for him, the person who authorised the spending of the money in the first place, and who it is simply not possible to pay back.

    We effectively have an ‘informal CVA’ in place, and it’s to be hoped that the FA – and football fans in general – will appreciate this.

    Richard

    May 4, 2012

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