Chester City: The Truth Of The Debt Revealed

Chester City: The Truth Of The Debt Revealed

By on Feb 10, 2010 in Finance, Latest | 34 comments

The story of the winding down of Chester City has been gathering pace all day. The club’s expulsion from the Football Conference now seems close to inevitable after it was confirmed that their match against Wrexham this Sunday was cancelled after a prohibition notice was served on the club by Chester Trading Standards office. The local council had been informed that there would be no policing in and around The Deva Stadium for the match, and they have issued a warning to travelling Wrexham supporters that they will not be admitted into the stadium should they turn up there. Unbelievably (or, if you look at it that way, very much believably), the club’s managing director, Bob Gray, turned up on the local news this evening, saying that the club would be starting next season even if expelled from the Blue Square Premier tomorrow. No supporters, no income, no league, but they will keep playing, according to Gray. Unbelievable. Providing, of course, that they can pay off their creditors.

And the issue of the creditors of Chester City Football Club is a very interesting one. As long-time readers will be aware, Chester City (2004) Ltd is the company that owns the club, and the name is a misleading one. The company only took the ownership of the club in the summer last year, with the blessing of the Football Conference, the Football League and the Football Association. It has only been trading since last summer, after the old company that owned the club had its CVA thrown out by a court following a challenge from HMRC. On the BBC’s North-West Tonight news programme this, it was confirmed that the club’s current total debt – an extraordinary figure and one that has caused bafflement and amusement amongst Chester supporters – currently stands at £703,000. The BBC didn’t have the time to go into the details of how this was made up, but the good news is that we have also got a copy of what we presume to be the same document and, well, we’ve got all evening.

So, here we go, then. The two pages list the clubs creditors and debtors. The debtors, we can discuss pretty briefly. They list the Football League as a debtor (£127,000 for a parachute payment) and the Football Conference (£10,000 for central funding). It would be interesting to see the contract that promises Chester City this money. If the organisations concerned withhold that money, the only legal recourse that CCFC 2004 Ltd would have would be to take them to court but, if they attempted to that, they would be expelled from all football. To list that money as a debt owed to them (and, therefore, an asset of the company) is misleading, to say the least.

The list of creditors, however, is what should interest us the most. How does a non-league that has effectively been trading for a few months run up debts of over £700,000? They owe just over £53,000 to HMRC – the £26,000 that they face a winding up petition over, plus just over the same again for having continued to not pay their tax bill. They owe just over £33,500 to the local council for rental and business rates owed for use of The Deva Stadium. Their utility bills make up just shy of £10,000, for the gas, electric and the telephone. Their trading losses amount to just under £10,000 as well, including the coach company, rates on their training ground, an insurance company (for an operation on a player) and programme printing, among other things. Their football debts (which couldn’t be included in any CVA) total just over £78,000 and include just over £50,000 in unpaid wages and almost £14,000 for contract terminations. The staff – the people that have stood behind the Vaughans throughout this time – are owed almost £33,000. The stand-out figure, the figure that almost takes one’s breath away with its sheer audacity, though, is near the bottom of the page. It reads as follows:

Vaughan Family – Payments/Loans IN to Chester City 2004 Ltd: £485,911.xx

Let’s just take a moment to clarify that. The Vaughan Family is claiming to have put £485,911 into Chester City 2004 Ltd. A company that has only effectively been trading since last summer. This statement almost raises more questions than it answers. Where has this money gone? Because it seems, from the list of other creditors, that precious few of the club’s other financial obligations have been being met over the same period of time – especially if we consider that other revenue such as season ticket sales, gate money and so on will have been coming into the club over much of this period. This is such a staggeringly large amount of money that it seems scarcely credible. CCFC 2004 was incorporated in 2004, but was effectively non-trading until its Football Conference place was transferred into its name during the summer. It is, to be blunt, pissing in the wind to even ask the question, never mind expect an answer, but the club should at least answer the question of when this money was put into the club and what it might have been spent upon. We’ll probably have a long wait.

Still, at least one aspect of the conditions of the sale of the club becomes apparent now. Anybody wanting to purchase Chester City for £1 had to satisfy four criteria that had been dictated to solicitors Brabner-Schaffer-Street by the current owners, and number one on the list was this:

1. Proof of funding of a minimum of £500,000 cash, to both satisfy club creditors and to fund the club going forward.

Half a million pounds, hmm? Just enough to make the Vaughans a tidy little pay-off in return for finally ceding control of the club. No wonder it was number one on the list of conditions – unless, of course, they were going to use this money to pay off their other creditors and then themselves, of course. Which, you know, they might have done. This would be the right thing to do, after all. The Vaughan Family, therefore, makes up just over two-thirds of the new company’s current debt. Of course, these amounts are somewhat academic now. The club has such a paucity of liquidity at present that it cannot travel to away matches or afford to police its home matches. The end is surely nigh.

There are, however, vultures already circling. Key to the development of a new club for the supporters is what happens to The Deva Stadium, and Mike Harris of the Welsh Premier League side The New Saints already seems to be preparing his move. The club’s official website stated this afternoon that TNS are “”We are exploring all options at the moment, of which ground-sharing with Chester is one”. Harris was behind the merger of TNS with Oswestry Town in 2003, a move that was blocked at first by UEFA on the grounds that the two clubs are from different countries before they reconsidered on the grounds that Oswestry’s history was tied up with the history of Welsh football. One wonders whether they will take the same viewpoint should TNS try to muscle in on The Deva Stadium, and would hope that similar rules should apply. Approximately two-thirds of The Deva Stadium lies geographically in Wales, but the existence of the stadium is intrinsically linked to Chester City and the supporters of that club. It is likely that the final decision will rest with the council. Can they be trusted to do the right thing? We shall see.

The Football Conference is expected to make its final decision over the future of the club tomorrow, and it would be an absolute dereliction of duty were they not to expel them. It is action that they should have taken last summer, and the quicker it is finalised, the quicker Chester Fans United can get on with picking up the pieces and getting back to what they, like all Chester City supporters, want – to be able to start to forget about this whole sorry mess and get back on with the football, which, ultimately, this is supposed to all be about. They can wash their hands of the Vaughans and the disaster that has been wreaked upon their club. It won’t be easy, but there will be plenty of support for them and the long fight back to the Blue Square Premier will be an adventure. All they have to do is keep one eye on the sky, and not let the vultures snatch it away from them.

Edit: In the interests of probity, I have removed the link to the images in the original article. I don’t believe that there is anything in them that you can’t get from the article as printed here, and obviously the most important thing that we can do is protect our sources.

Share Button

    34 Comments

  1. You could just not make this up. A truely staggering story.

    Jason

    February 10, 2010

  2. As a Chester City (probably soon to be Chester FC or AFC Chester) supporter, I can’t speak highly enough of these articles. Please apply for a job with Chester Chronical or Evening Leader!

    Thanks again for your support and brutally accurate reporting

    XWWB

    February 10, 2010

  3. The football authorities should hang their heads in shame!

    Once again they have made a laughing stock of this great game

    Once again their pathetic attempts to address the issue has only hurt the fans

    Have they learnt nothing from the recent past?!

    Yes vaughan has, possibly, destroyed the club but the football authorities have allowed him to do so!

    My best wishes go to every CCFC fan

    ltfc4ever

    February 10, 2010

  4. from a Luton fan,im so sorry for you,disgraceful,and the worst part of it is it will barely get a mention in the press and media

    mike

    February 10, 2010

  5. If you do finally go under it will be a sad day for all football not just CCFC. If I remember correctly your club is the same age as my club, Luton. CCFC is a proper, old football club. The sort of team we all grew up with being on the football results on a Saturday evening. I wish your fans all the best.

    Rob

    February 10, 2010

  6. Another excellent article. Some of the wages in those papers are staggering, let alone the £400,000 claimed by the Vaughans.

    Rob C

    February 10, 2010

  7. Echoing Mike in many ways, yes what’s going on with Portsmouth is farcical but you can well imagine that a combination of that, tonight’s results, and the latest news on John Terry will mean that Chester will be lucky to get a couple of paragraphs in most papers in the morning.

    The reasons for the Vaughan family’s continued involvement are surely impossible to fathom. There can surely be no realistic prospect of them recovering their “loans”; even if it’s about ensuring they have the casting vote if the club goes into Admin yet again, it is clear that they have no support base and would effectively be acting as spoilers for a newly-formed team by denying them the Deva should the club continue beyond that with any involvement from them – and surely the Unibond (and maybe even NW Counties?) wouldn’t want to touch them with a bargepole if there is any hint of their hands still controlling the club. What can they possibly stand to gain?

    Albert Ross

    February 10, 2010

  8. Vaughan is the biggest villain in this sorry saga but the football so-called “authorities” run a close second. The Conference had to accept Chester this season, against their own rules on insolvent clubs, or the Football League would have withdrawn the automatic promotion/relegation places. The FA – supposedly the supreme governing body – then fined the Conference for said breach. No sanction against the FL. Incredible.

    Hate to see any club go bust (bar one though they’re not a proper club!) but for the sake of Chester’s fans, I hope the Conference do the decent thing tomorrow and put them out of their misery. Viva the phoenix Chester and good luck with the new club keeping the lease on the Deva.

    Sympathetic Womble

    February 10, 2010

  9. “reasons for the Vaughan family’s continued involvement are surely impossible to fathom”

    I think some people might be prepared to hazard a guess ….

    Dermot O'Dreary

    February 11, 2010

  10. He TRIED TO CLAIM THIS AMOUNT AT BARROW AND ENDED UP WITH £25k

    Lenny Henry

    February 11, 2010

  11. What a complete shambles this has become, i hope that the chester fans start afresh with a AFC Chester or Chester City 2 etc, As like many of us dons fans went through when the FA (sic) did similar things to us and allowed our league place to be bought by another part of the country.The Vaughan’s should just f**k off out of the game all together, spineless money hungry wank*rs.
    Atleast you would not have to many promotions to get back to where you are now should you start again :)
    Good luck for now and the future to all Chester fans

    AFC Wimbledon Fans

    AFC Wimbledon R US

    February 11, 2010

  12. As a Wimbledon fan I feel for the Chester supporters but if Chester was my team I would want the Conference to point the gun and kill us off so we could start again.
    Shocking state of affairs that it even got this far.

    Jertzee

    February 11, 2010

  13. As usual, I come to this site (200%) to get the low-down (and I Mean low) on this sorry affair. It looks like the saga has finally run it’s inevitable course and i wait to hear the verdict of the Conference on all this.
    Surely Tuesday nights shenanigans with FGR was the ultimate insult as they have been very badly done by by the Conference and must be out of pocket by a pretty penny thanks to their (and the FA’s) lack of action till this point. I hope someone compensates them in due course!
    Good luck to all the Chester Fans! DIY!

    Lol

    February 11, 2010

  14. I am sure i speak for Scarborough fans all over the UK when i say how sorry we are to see another club being shafted yet again. It is such a shame that these things have to happen.

    The fans now run a club called Scarborough Athletic and i have to say, it was a relief when the old girl was put to sleep. A VERY sad day but we then had the chance to get back to actually supporting a team and not worrying about wages not being paid, being locked out of the ground, and constant rumours about it being our last game.

    If they have not done so already, i am very sure our board would love to help your fans set up a trust and get back to playing footie and enjoying it. Chester and Boro have a long history of playing each other and having these hassles……now maybe we can help each other once again. Get in touch with the club and supporters direct!!

    UP the boro….

    Sunderland Seadog

    February 11, 2010

  15. The trouble is, you just know that footballs ‘Fit and Proper’ test (there’s a sick joke if ever there was one!) means that Vaughan could VERY EASILY turn up at yet another club, and do this for the third time!

    RichardG

    February 11, 2010

  16. “Vaughan could VERY EASILY turn up at yet another club, and do this for the third time!”

    If he does, let’s hope it’s at the club who – despite being based in a “city” in the unrelenting grip of a football frenzy – managed to find less than 500 followers prepared to make the somewhat less than arduous trip to Southampton for a cup semi-final the other night ….

    Dermot O'Dreary

    February 11, 2010

  17. “Vaughan could VERY EASILY turn up at yet another club, and do this for the third time!”

    Apparently he turned up at a Northwich Vics game last week – they have just announced that they are releasing all their contracted players.

    Surely not………..

    Dave S

    February 11, 2010

  18. So So sorry to see Chester City in this mess.
    Lots of sympathy for the fans of course but my feelings go out to the players and staff at the club along with people like caterers, printers etc who have gainfully carried on without pay for so long.
    As a long standing Rochdale fan I have enjoyed many encounters with Chester both at Spotland, Sealand Rd and the Deva.
    We are so lucky to have had Directors with leadership and club loyalty who really take care of the finances for our (the fans) benefit. Why can’t every club be run like ours?

    I hope it works out eventually the the benefit of the fans. Good luck.

    John Kirby

    February 11, 2010

  19. Dont forget that while the football authorities allowed this charade to continue the club has amassed “real” debts which it wont be paying.

    As well as the supporters of this club suffering, it’s you and I losing some tax revenues, it’s real local businesses not being paid for services provided in good faith, it’s the long suffering staff of the club not feeding/clothing their kids because they haven’t been paid and so on.

    I dont want to labour the point any more than that but it’s actually criminal that it’s been allowed to carry on. Everyone has something to be angry about here. The authorities surely have a duty to step in and prevent situations escalating to this crisis point.
    http://www.timesonline.co.uk/tol/comment/letters/article6417740.ece

    Plastic Pitch Advantage

    February 11, 2010

  20. Dermot – if only! That’s the one “club” which deserves to be well and truly shafted.

    Perhaps someone could steer the Vaughans in that direction.

    curranhung

    February 11, 2010

  21. Feel sorry for you guys wish had the money to buy it because even though I am an Everton fan CCFC is a proper football club and the fans do not deserve this.

    Dave C

    February 11, 2010

  22. As a Luton fan I am sure that administration/liquidation etc may be painful and horrible to contemplate again, but it would finally rid Chester of the cancerous prescence of the vaughan family.

    If and when they reform it will be with the goodwill and support of all true football fans.

    Aldershot, Maidstone, Wimbledon and your fellow Welshmen Newport have all proven that liquidation is not the end. Don’t give up.

    jim de la grand testes

    February 11, 2010

  23. As a supporter of a stricken club, Grimsby Town, I can only wish you supporters the very best for the future. I can fully understand why your attendances are down to 400 or so.

    Your club is gone. Set up a new club and you can be rid of that scumbag Vaughan. He has hardly bothered to hide his agenda so any money you put into the club will end up with him by the sounds of things.

    Doesn’t look like our clubs will meet next season. Hope to see you sooner rather than later.

    All the best.

    Jason Paget

    February 11, 2010

  24. I would concur, and would like to commiserate with all Chester City fans, who have been seriously screwed by Vaughan and his cronies, and ALL the administrators who has let this happen.

    Even now, the Conference still cannot put them out of their misery, by delaying their decision by 7 days, despite Vaughan putting two fingers up to the Conference all season.

    The sooner Chester City (and their fans) are put out of their misery, the better.

    Best wishes from all at Swindon.

    Alan J

    February 11, 2010

  25. The sceptic in me thinks the reason for the ‘£500k loan’ is so that Vaughan is a 75% creditor, so his son can agree another CVA writing most of it off and paying 1% so the club can continue…..

    oftenscore6

    February 12, 2010

  26. Unbelievable reading!! It’s one thing to be “had over” by unscrupulous chairmen, but to have the knife twisted by a league committee that itself wouldn’t pass a “fit and proper persons” test!

    Best of luck in whatever the future holds for real fans of football in chester.

    simon mallinson

    February 12, 2010

  27. So yet another chance for the authorities to end this nonsense.

    The only question is whether they have been seen to have done everything they could possibly do to help to keep the Football League happy about the two promotion and relegation places.

    It will be Darlington next season.

    Martin

    February 12, 2010

  28. My own club Southend United are not without their problems at the moment, but this tale is truly gut-wrenching

    I’ve enjoyed many a trip to both Sealand Road and The Deva Stadium over the years and its always a top day out

    Best of luck to Chester fans everywhere

    Lee Southend

    February 12, 2010

  29. Such a sad situation. My heart goes out to all Chester City fans. Im a Walsall fan and I regard fans of smaller clubs as the true football family. When one of your family is hurt we all feel their pain!
    Best of luck with the new club

    Jonny

    February 13, 2010

  30. Keep going guys, feel so sorry for you, Christ I thought our situation was bad enough over the 3 last years.

    There is light at the end of the tunnel, look at who we are playing this Saturday AFC Wimbledon, they had there club stolen from them!

    The Authorities should hang there heads in shame.. still we all know that they are only interested in the Premiership, look how they are mounevering money to save the “image” of the league with the Portstmouth situation.

    Best of luck lads.

    Luton Kev

    February 15, 2010

  31. As a Leeds fan I can only commiserate, we may still be in existence but only because of the dubious practices of those reposnsible for the game, our current owner (whoever that may be now that we know it’s not Ken Bates) and so on. It’s time for strong legislation which ensures supporter involvement and takes the spivs out of our game. I sincerely hope football supporters in Chester come out of this with a will to continue with some sort of club. It can be done.

    Marching On Together!

    Betty Boocock

    February 15, 2010

  32. I have the deepest sympathies for all you CCFC supporters. A a Northwich victoria fan, I understand what it’s like to have your beloved club go to the ground because of an untrustworthy crook, but this is something else. The Vaughan family have happily destroyed a huge footballing history. However, hold your heads high, stick with AFC Chester or whatever is likely to appear next year, and continue that history by creating a new club, that you can all be proud of. It seems very difficult now but every football fan in the land hopes that this works out for you, and lets hope that in the coming years you make it back up to a high level of football.

    Best of luck,

    Northwich Vics Supporters

    JamieK

    February 24, 2010

  33. “CHESTER NEW SAINTS” playing in the Welsh Premier League would be preferable to nothing at all.

    Geoff Lawler

    February 26, 2010

  34. “Jertzee says:
    February 11, 2010 at 10:46 amAs a Wimbledon fan I feel for the Chester supporters but if Chester was my team I would want the Conference to point the gun and kill us off so we could start again.
    Shocking state of affairs that it even got this far”.

    That really sums it up..Forget about the creditors and just open a new club without a care in the world.

    A damn disgrace I say.

    Harry

    Harry

    March 14, 2010

Trackbacks/Pingbacks

  1. Chester City Football Club (multi-merge goodness VI) - Page 18 - RedPassion.co.uk - Wrexham - [...] Chester City Football Club (multi-merge goodness VI) Chester City: The Truth Of The Debt Revealed …
  2. The suspension of Chester City « Football Management - [...] been paid for three months, and the club, in the Conference remeber, has debts of £700,000 (see Ian King’s …
  3. Chester players go on strike - [...] [...]

Post a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>