AFC Bournemouth – Football Club Pays Taxes Shock!!!

AFC Bournemouth – Football Club Pays Taxes Shock!!!

By on Apr 7, 2010 in English League Football, Finance, Latest | 4 comments

The more mischievous sub-editors at the Bournemouth Daily Echo must have been tempted to produce the above headline when chairman Eddie Mitchell recently announced that AFC Bournemouth had indeed paid their taxes prior to the latest High Court winding-up hearing involving a football club. It seemed the ultimate good news story at a club which, in unfeasibly young manager Eddie Howe, has provided the best good news story of the last two seasons. Promotion is still an option after the Easter weekend fixtures for a side that has had to be, almost literally at times, patched together, as a result of the stringent transfer embargo placed upon the club for past financial misdemeanours.

And while the taxes have been paid, Mitchell has maintained a superficially sensible stance on the club’s financial situation, namely, “We’re not out of the woods yet.” The “legacy debt” which has kept them in the High Court loop wasn’t just tax. In fact, all kinds of everything was owed to all kinds of people after Sport-6’s disastrous year in charge. Ground rent arrears, directors’ loans, the milkman (I made that last one up, albeit without any conviction that I’m wrong) were among a list of creditors published by Mitchell a month ago. Work still needs to be done. Supporters and others attached to the club seem capable of completing that work. The debts up to now have been dealt with without Mitchell himself making the sort of significant financial contribution expected of him by many fans.

Bigger crowds and a willingness to support whatever fund-raising scheme is thrown their way have covered the day-to-day running of the club and eaten, nibble-by-nibble, into debts estimated at £1.5m, to the point of all but halving them. It didn’t prevent HMRC’s winding-up petition in February over unpaid tax amounting to £314,000. While legacy taxes were being paid, current ones weren’t. And with funds raised by early season-ticket purchases already at least partly-spent, it was hard to see where this £314,000 was going to come from. After it arrived, however, we still didn’t know where it came from, because Mitchell, who has recently made greater play than ever of financial transparency, simply wouldn’t say. “I’ve raised the investment that was needed,” he told the Echo. “I don’t really want to confirm any more than that.”

Many fans seemed happy enough that the tax had been paid and were unconcerned about how and where from. Given that a casual glance at Bournemouth’s League Two position would bring “Notts County” into view, this seemed a surprising and dangerously complacent attitude. But supporters who openly expressed concerns were quickly filed in the “moaners” and “never satisfied” columns, even though there were other genuine frustrations, not least that the investment was raised just too late to lift the Football League’s transfer embargo in time for Bournemouth to make any use of their newly-restored freedom to bring in loan players.

Curiouser still has been the board’s reaction upon being “made aware” that certain Bournemouth fans, backed by the hitherto quiet and pliant Supporters Trust, were making contingency plans in the event that Bournemouth were laid low by the remaining legacy debts – an eminently sensible project, given Mitchell’s afore-mentioned warnings. The “Cherries Forever” initiative, which had apparently been lurking in the background for a couple of years, had three specific objectives: “Purchase of the stadium,” funding a club purchase should it go into administration again in the future and a “phoenix start-up club if the club ever went bust.” An “AFC AFC Bournemouth”, if you like.

Over time, “acquiring the future ownership and direction of the club” has been added to the first objective. And, in the complete absence of other explanations, it is perhaps this that inspired the Bournemouth board’s hysterical reaction to the initiative at the end of last month. To be more precise, director Steve Sly reacted hysterically on the board’s behalf. “It is not in the club’s interests to give details or promote the name of this site,” read his/the board’s statement, which alerted more people to the initiative’s existence than any of its own publicity had hitherto managed. “Working as a splinter group,” the statement continued, “certainly will not (bring success to your club). This unofficial venture is counter-productive and potentially damaging to your club’s stability, both on and off the pitch.”

Towards the end of the statement, Sly was too angry to make grammatical sense: “Why these so-called supporters of this club choose to fundraise for another possible future entity is beyond belief.” But the conclusion was damning:

“If you wish to fundraise or rally support for other future pipe dreams then you will not be made welcome by this board or, indeed, the vast majority of AFC Bournemouth supporters.”

Perhaps wisely, the last sentence was toned down for official web-site readers’ consumption, with the words “not be made welcome by” re-emerging as “not have the backing of.” But Sly’s anger was clear – as clear as the fact that he’d either not read any “Cherries Forever” statements on its objectives, or chose to wilfully misunderstand and misrepresent them.

Sly has history, of course. In February 2007, which many have pinpointed as the start date for the current crises at the club, Sly and fellow board member Jeff Mostyn, local businessmen both, declared they were going to invest £750,000 in new club shares, in return for which the Supporters Trust would give up their “golden share” which carried with it 51% of the voting rights at the club and which they had held since 2000. Less than a year later, the Trust exposed Sly and Mostyn’s £750,000 as mere loans. And a year later, with £4m owed to various creditors, including nearly £750,000 in unpaid tax and VAT, Bournemouth went into the administration spell which so helpfully brought Sport-6 into their lives. Sly, it seems, has not forgiven the Trust, hence his strenuous efforts to blacken the Trust-driven “Cherries Forever” (CF) initiative, regardless of the facts about it.

Far from being a “splinter group”, CF has stressed that it is only a “back-up plan if the Club gets into serious financial difficulties and not a plan to oust any AFC Bournemouth board.” And CF will raise funds from 10% of existing Supporters Trust subscriptions in order to meet the specific Trust objective of keeping “professional football in the local area.” The “possible future entity” would therefore be neither a “counter-productive” competitor to AFC Bournemouth nor a “damaging” diversion of funds from it, issues with which CF’s public statements have dealt clearly and specifically. Indeed, CF has gone out of its way to stress, up-front, the need for supporters to support the club and its finances. And it is a contingency rather than a “pipedream.” It isn’t any sort of dream at all, of course, given that it is a back-up if the main club goes bust, which, given Mitchell’s warnings about the club’s continuing financial struggles, is surely pure common sense.

There are Bournemouth fans who are critical of the initiative because of the Supporters Trust involvement in it, fans who would rather see a “proper” supporters club as a fund-raising machine for the parent club and who have never been for the concept of a Trust. But these are legitimately held views, however unwise they may seem to some. The Sly/board statement was an ill-informed, ill-judged rant, which did little to enhance Sly’s/the board’s reputation, or inspire confidence in that board’s ability to render “Cherries Forever” un-necessary. Most importantly, though, the work that needs to be done can only accurately be quantified once it is clear where the money came from to pay the taxes and what, if any, strings – financial or otherwise – are attached.

It is not enough to say, as Mitchell has, that “It’s really come from the support I’ve been shown since I’ve been at the club because if I hadn’t been shown that, I wouldn’t have been able to raise it.” There was a world of difference in 2007 between “investing £750,000 in new club shares” and lending £750,000 before calling in the administrators. And there were any number of emergency loans among Bournemouth’s more recent creditors, loans which were generous and helpful at the time but soon became attached to High Court winding-up petitions. Yet… the money could just be the cause for celebration and relief that many fans feel it to be. Mitchell may have genuine issues of commercial or personal sensitivities which explain his unwillingness to “confirm any more than that.” And maybe, just maybe, the money is a donation with no strings, legacy, or return ticket to the high court attached. Cynics won’t be holding their breath over whether AFC Bournemouth’s money troubles are £314,000 less than they were a few weeks ago. But this time, they can at least hold out some hope.

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    4 Comments

  1. Fantastic response Mark, really hits the nail on the head.

    paul w

    April 8, 2010

  2. Mostyn and Sly were also involved heavily with Sport 6, they were both Directors at the club during the Sport 6 era. Jeff said he brought them in to bring us financial longevity!!

    As for the “investment” us “cynics, moaners, never satisfied” are waiting to see if other bills are paid to prove extra money has come in rather than the robbing HMRC to pay HMRC that your article exposes over the previous settling of the tax bill back in October 2009. Mr Mitchell has history of promising “investment” at his previous club Dorchester that turned out to be either business loans or maybe even non existent.

    Time will tell.

    Darren Parr

    April 8, 2010

  3. ahh the beautiful game. Where would we be with out it. Nice blog will check back again to see if you have any updates

    Arnoldo Susi

    April 9, 2010

  4. ahh the beautiful game. Where would we be with out it. Nice blog will check back again to see if you have any updates

    Jake Abaloz

    April 9, 2010

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