Chester City: Anatomy of a £700,000 Debt

The total debt stands at £703,000. For a club that has, in its current form, only been trading since last summer, it is an extraordinary figure. As Chester City’s expulsion from the Football Conference looms, the details of how the club has collapsed into such a state are becoming clearer.

Events have moved quickly. Sunday’s match against Wrexham at The Deva Stadium was cancelled after Chester Trading Standards served a prohibition notice on the club. The local council had been informed there would be no policing for the fixture and warned travelling supporters not to turn up. Despite this, managing director Bob Gray appeared on local television news claiming the club would start next season, even if expelled from the Blue Square Premier. It was a bizarre statement from a man whose club has no supporters through the gates, no income, and very possibly, no league to play in.

Providing, of course, that they can pay off their creditors. A document seen by the BBC’s North-West Tonight, and also obtained separately, sheds a remarkable light on the club’s finances.

The Creditors' List

How does a non-league club run up debts of over £700,000 in a matter of months? The list of creditors is long and varied. The club owes just over £53,000 to HMRC, the very body whose challenge to an earlier CVA led to the current ownership structure under the company Chester City (2004) Ltd. The local council is owed more than £33,500 for rent and business rates on The Deva Stadium. Utility bills for gas, electricity and the telephone come to almost £10,000. Football debts, which cannot be included in any CVA, total over £78,000, a figure that includes more than £50,000 in unpaid wages and nearly £14,000 for contract terminations. The staff who have remained loyal are owed almost £33,000.

But one figure on the list stands out for its sheer audacity. It reads: Vaughan Family - Payments/Loans IN to Chester City 2004 Ltd: £485,911.xx.

That is correct. The Vaughan family, the owners of the club, are listed as creditors for a sum approaching half a million pounds. This single entry accounts for just over two-thirds of the new company’s entire debt. It raises more questions than it answers. Where has this money gone? Given the array of other unpaid bills, from tax to wages, it seems precious little of it has been used to meet the club’s financial obligations. It is a staggeringly large sum to have been loaned to a company that has only been actively trading since the summer of 2009.

A Question of Assets

The document also lists debtors to the club, supposedly assets that could be realised. These are noted as £127,000 from the Football League for a parachute payment and £10,000 from the Football Conference for central funding. To list this money as a guaranteed asset is misleading at best. The club’s only recourse, should these football bodies withhold payment, would be to take them to court. Such an action would trigger an automatic expulsion from all football.

This context makes the owners’ conditions for any potential sale of the club seem particularly cynical. Anyone wishing to buy Chester City for the nominal fee of £1 had to satisfy four criteria. First on that list was: “Proof of funding of a minimum of £500,000 cash, to both satisfy club creditors and to fund the club going forward.” A figure, coincidentally or not, just large enough to ensure the Vaughans would receive a tidy pay-off for finally relinquishing control.

Vultures Circling the Deva

As the end appears nigh for the club in its current guise, others are already eyeing up the pieces. Key to any supporter-led revival will be the fate of The Deva Stadium. Mike Harris of Welsh Premier League side The New Saints appears to be making a move. A statement on the TNS website confirmed they are “exploring all options at the moment, of which ground-sharing with Chester is one”. Harris previously engineered the controversial merger of TNS with Oswestry Town, a move initially blocked by UEFA because the clubs were from different countries. The decision was later reversed on the grounds of Oswestry’s historical ties to Welsh football.

The Deva Stadium’s existence is intrinsically linked to Chester City, even if two-thirds of it technically sits on Welsh soil.

The Football Conference is expected to make its decision on Chester’s future tomorrow. It feels like a formality. Expulsion is not just likely; it is a duty the league should have performed last summer. Only then can Chester Fans United begin the long process of picking up the pieces and starting over. The long fight back can be an adventure, but only if they can keep the vultures from snatching the ground from under them.