Wednesday 1 May 2013

The Scarlets, The Reds, and the Council

A couple of weeks ago the Llanelli Reds, the town's troubled 114 year old football club was wound up by the high court over tax debts of £21,000. The club and fans are trying to find a way forward and save the club. According to the Chief Executive of Carmarthenshire Council on Radio Carmarthenshire last Friday they hadn't been 'approached' for help and didn't know about the winding-up order until after it happened.

He also reminded listeners that the council had given the club £40,000 some years ago towards a new stand and anyway, the town council owned the ground, not the county council. But he did say their door was 'always open'.

Kevin Madge, Council Leader features in an article in today's Llanelli Star under the slightly misleading headline 'Carmarthenshire Council held meetings to try to save Llanelli AFC from winding up order', you might think this involved the club, but reading on, Cllr Madge makes it clear that these meetings were actually just between himself and the Chief Executive. He said they "weren't in a position to find a huge amount of money to bail them out." and that  "people will learn lessons from this about living within their means". Thanks for that Kev, now on £47,500 per year plus expenses.

Of course, this all sits in stark contrast to the situation a few miles away with the Parc Y Scarlets rugby stadium. Back in 2007, despite warnings from the accountants that it was a risky venture, the council embarked on the highly controversial stadium development when the club was £9m in the red. The actual figure are in dispute as it was a contorted process, somewhere between £18m and £40m, partly depending on the value of the land, which, according to the council was 'worthless', others put it at around £14m.

It's a long story which has been well covered over the years and the council's controversial ongoing financial commitment has attracted criticism. Taxpayers' concerns over the massive investment have always been rubbished by the council, only last year when further concerns arose over the clubs accounts, the council Chief Executive accused critics of wishing 'the club and the council harm'.

And bail outs were not a problem either, the interest on a £2.4m council loan was slashed a couple of years ago, costing the council £216,000 over a three year period and the maintenance fund 'waived' for a few years. The council continue to pump money into the venture all ways it can. It is one of the jewels in the council 'masterplan', or, to put it another way, an expensive white elephant which will not be allowed to fail. Another £20,000 was granted to the club last year to fund a new staff attract funding...

The club's latest accounts have just been published and things don't look any better. As last year, the auditors warn that with the net loss of almost £1.3m, liabilities of £3.6m (£1.9m in 2011) and the need for further funding (which, incidentally, must be approved by the council) there is yet again an 'existence of material uncertainty which may cast significant doubt about the company's ability to continue as a going concern'.

The value of the stadium, for the purpose of the accounts has been put at £10.2m but the auditors warn that the material uncertainty referred to may cast doubt on this 'carrying value', and a requirement to adjust this to 'realisable value' would raise the figure for the club's liabilities significantly.

Early last year the club and the council commissioned a report which detailed the many millions that the stadium was bringing to Llanelli. Critics cast doubt over the figures, £16m per year, leaping to £32m by 2016 and branded the exercise as a PR move to back up the council's shaky investment. The figures would appear to be at odds with the clubs accounts, surely such a level of inward investment, if accurate, would at least reflect somewhere in the club's own bank balance.

The council continues to own the land which is leased to the club and part of this was sold to the Marstons pub chain last year. The club, in a letter supporting the brewer's planning application referred to it being owned by the club. An article earlier this year states that the land (part of the car park deemed superfluous to requirements) was bought from the Council. It would be interesting to know who did eventually get the money, the council or the club?

Before I attract the usual hostile comments about being anti-rugby, I'm not. I'm sure no one, including myself, wishes the Scarlets (or the Reds) anything but success, and the club's directors continue to invest heavily to keep it afloat.
It is the council's commitment which gives concern especially given the reassurance by the Chief Executive back in 2007 that “the council will have no ongoing liability for the running of the club in the stadium.”

As for 'bail outs', the poor Reds must be wondering where they went wrong....

Another question on last week's Radio Carmarthenshire 'interview' was whether the council felt confident with their investment in the Scarlets, the Chief Executive hurriedly changed his reply from 'fairly' to 'very' confident. I think he was right first time.


Anonymous said...

You need to do a little bit more research before commenting on Llanelli issues.

Llanelli reds ground is publicly owned, it's no different to the scarlets. The llanelli town council owns stebo and the town council have subsidised the footaball club for years, probably more actively than ccc.

Finally it was the taxman that chased the club. Which will probably mean that the reds will reform under a new name and renegotiate a lease with the town council. Many football clubs have been in this situation and lost their grounds, at least they don't own theirs!

Tessa said...

Well - Scarlets needn't worry about the taxman chasing them - not with their massive cumulative loss! Every cloud an' all that, eh Chief?

Matthew said...

I find the idea that the council didn't know about the winding up order hard to believe, the team had been facing that threat all season!

Anonymous said...

Unbelievable how Carmarthenshire County Council and The Llanelli Star have not blinked an eye with The Reds' predicament. If it had been The Scarlets they both would have moved Heaven and Earth to make sure enough was done to save them.
It's disgusting how my hard earned money is spent on The Scarlets and Llanelli RFC but NOT helping The Reds!
Discrimination I think it's called!

Anonymous said...

'An article earlier this year states that the land (part of the car park deemed superfluous to requirements) was bought from the Council. It would be interesting to know who did eventually get the money, the council or the club?'
To answer your question, they both did, it was a 'joint venture'. I shall search for the email I had off the county council when I asked that very question.

Anonymous said...

The radio interview states the Chief knew nothing until it became public news...... Good old Kev then gives us a press release to say the council knew all along!!!

Economical with the truth during the radio interview or what!!!???

I'm sure the Reds will rebrand and revive themselves and that council will support them this time, they may even be offered to become co habitats in the white elephant we call Scarlets!