Chester City: The Truth Of The Debt Revealed
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.