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SALFORD CITY REDS IN HOCK UNTIL 2017
 

Star date: 7th September 2012

A Salford Star Exclusive

CONTRACT REVEALS SALFORD COUNCIL HAS REDS IN HOCK

Salford City Reds play the last game of the rugby league season on Saturday night against Wakefield at Leigh, having been forced out of the `Salford City Stadium' by new shared tenants Sale Sharks. While this has angered supporters, it is the least of the problems that face the club, according to the terms of the £1million loan contract with Salford City Council.

Full story here…


The Willows Demolition 2012 The Willows Demolition 2012 Salford Reds Club Shop 2012
Salford Reds Willows Final Game Salford Reds Willows Final Game Salford Reds Contract with Salford Council
click image to enlarge

It's now no secret that Salford City Reds is in dire financial straits. While chairman John Wilkinson and fellow directors refuse to speak to the Salford Star, Wilkinson is quoted in the Manchester Evening News today explaining that the club is seeking new investment as "commercial pressures are ever increasing and that investment is needed to push us up over the crest of a hill…It is fair to say that this season has been something of a trial…"

This season was supposed to be the Reds re-birth, following the move from The Willows to Barton, and the purpose built Salford City Stadium (`Community' removed from the title).

The stadium, a joint venture between Salford City Council and Peel Holdings was built with a £22million loan from the Council, together with a £4million grant from NWDA and Council land worth £6.7million. Salford Reds was the sole tenant, paying, according to League Express, a whopping £750,000 a year, before this was halved to £375,000 when Sale Sharks came on board.

On top of the rent, Salford Reds has to pay back its £1million loan to Salford Council at a rate of £50,000 every three months until March 2017. The first payment began on 30th June this year, and another £50,000 is due to be paid to Salford Council on 30th September, plus £50,000 on 31st December and £50,000 on 31st March 2013. Accrued interest is also being charged at 1% above Bank of England base rate.

The sale of star scrum half, Matty Smith, to Wigan Warriors mystified Reds supporters but happened days after the first payment to Salford Council was due.

The £1million loan is secured on property owned by Godliman Watson Homes and a personal guarantee from directors, plus six Harold Riley paintings, including one with the ironic title Rugby League Ground Leigh 1966, given that the Reds have been kicked out of the stadium for their last home game of the season and have to play at that ground.

The terms of the loan make it incredibly hard for the club to move financially. Under the terms of the contract seen by Salford Star, the Reds will "not create, or agree to create or permit to subsist any mortgage, charge or other encumbrance on or over all or any part of its present or future assets…" And cannot "effect or enter into any amalgamation, merger, demerger or reconstruction".

Salford Council also has the right to have a representative on the board, or an observer at board meetings, while the club has to provide quarterly accounts to the Council. Indeed, Salford Council is now almost running the club via its Economic Futures officer Rob Pickering, alongside Tim Isherwood of Steuer Gregsson.

The Salford Star asked the Council if this was a good use of its officer's time and Councillor David Lancaster replied "We have a natural relationship with Salford City Reds as they are tenants of the stadium we jointly own.

"It is therefore in our interests to see the business succeed, as this will ultimately benefit the stadium" he added "It is for this reason that we are providing the club with some short term business support and advice."

During the summer former Council Leader John Merry, who signed off the stadium deal and loan, posted on the Salford Star website…

"We need to work with the Club to keep them in being and protect not just this investment but the supporters' interests… there are many thousands of Salfordians who support them and want to see it survive…"

Update: 8th September 2012 - Sale Sharks to name Salford City Stadium - click here

Coming soon: How Salford Council has bent over backwards to help the Reds…

Brian f kirkham wrote
at 3:38:35 PM on Thursday, October 18, 2012
There's a common denominator running through this sorry tale - and it comes in two parts, Firstly we've got Salford Reds themselves, who (despite being my home team) seem to be running as a bit of a cowboy outfit at the moment - both on the field and off it - its chairman making moves on public buildings (that should have been repaired years ago) in his dream for a "Country Estate" in Salford - in a public park (Mad!). Its directors buying pockets of land around the ground for other projects...Then we have Peel. Now people will know i have a bit of a love/hate thing going on with Peel - but I do know one thing, i've never seen a project of there's where they've shelled out and not made a profit..usually at residents expense...I know, they own the land - but if that's the case they can build it out of their own money - not the council's - This season will be a make or break one for the Rugby Team - As if they end up in the Bottom Half of the Table (expected) - I can see the other team using that stadium taking over - does that explain the blue seats?
 
Colin Robinson wrote
at 3:56:50 AM on Wednesday, September 12, 2012
A very informative article that appears to have opened a real can of worms.It will be very interesting to see how Mr Wilkinson and his board can dig themselves out of this hole.It looks like the days of robbing Peter to pay Paul have finally caught up with Salford and they are on the verge of administration.
 
Dave. wrote
at 11:18:10 AM on Monday, September 10, 2012
You will not like me for saying this, but this all looks too familiar - even the refusal to be transparent. I sincerely hope I'm wrong. A Bulls fan
 
mary ferrer wrote
at 5:25:50 AM on Monday, September 10, 2012
They could not pay their way at the Willows, the council had to give them loans of over £1m to keep them afloat, how the hell did this council think,first they could pay the loans back and second how they would be able to pay the rent. From the start this has been one big white elephant or has it been a very expense ego trip of a few, at a great cost to the rest of the city. I understood repayments on the loan would come when the houses were built on the former Willows site. I thought the council were giving the former car park that we own to Watson, then he would build and some how we would get our money back. I now take it all that has changed. We should be used to all the changes,first its a Community Stadium and now we could lose the Salford part of this white elephant,so what do we, the citizens of Salford end up with a bloody bill for £22m plus.Thanks Salford council, another fine mess you have got us into. Hate to say it "but I told you so"
 
THomas James wrote
at 12:18:58 PM on Saturday, September 08, 2012
If you treat the stadium as separate, which they are, you have to wonder what the Board of Salford Reds are upto. Was it not Salford Reds who promoted the idea of a new stadium, did they want to play there having got built for 20 odd million for nothing.
 
Adar Molyneux wrote
at 4:11:38 AM on Saturday, September 08, 2012
Totally disgusted and gutted why the club, especially John Wilkinson has taken supporters for granted and LITTLE communication given!! So, now it appears it truly is all rosy for Sale RUFC?
 
Alan Marshall wrote
at 1:28:48 AM on Saturday, September 08, 2012
There is no joy in seeing a rugby league club suffering financially. However some 25 years ago where was Salford council in financially assisting the other professional club in the city Swinton Lions.? Indeed moving forward what are the council doing to assist them with the building of a stadium in Agecroft. Salford receive in excess of a million pounds each season from Sky and yet they find themselves in a mess,where has their money gone.?
 
Mark wrote
at 1:28:40 AM on Saturday, September 08, 2012
Informative article but I will correct you on one thing. Sale did not force us out, Sky did. They want to broadcast our last game against Wakefield, which should have been played on Friday 7 September. However, Sky had already agreed to show the Wigan v St Helens game on the Friday night so told us we had to move our game to the Saturday 8 September. But we couldn't as Sale had arranged to play on the Saturday as we should have been playing on Friday. So, Sale have not forced us out, as much as I hate thand would like to pin the blame on them, this is all the doing of Sky. Maybe it is payback for us refusing to be called Manchester when superleague started in the 90's.
 
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