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SALFORD CITY REDS RECEIVED LOAN AND COSTS FROM OWN REDS CHARITY
 

Star date: 23rd October 2012

A Salford Star Exclusive

SALFORD REDS GOT LOAN AND OVER £200,000 COSTS FROM ITS OWN REDS FOUNDATION

Salford City Reds, currently awaiting a winding up petition hearing, has been receiving `costs' and a loan from its own related charity, the Salford City Reds Foundation, which was set up "for the benefit of the public generally".

The club has recharged the charity over £200,000 for "use of facilities, promotional activities, and coaches and players", and has also received a loan from the Foundation of almost £60,000. Salford City Council has funded the Foundation with over £250,000 for its charitable activities.

Full story here…


The Salford City Reds Foundation states that the charity's objectives are "for the benefit of the public generally, and, in particular the inhabitants of Salford, Greater Manchester and Cheshire and surrounding areas".

The objectives include "to promote community participation in healthy recreation by providing facilities for the playing of rugby and other sports""to provide…facilities for…such persons who have need for such facilities by reason of their youth, age, infirmity or disablement, poverty or social and economic circumstances" and "to advance the education of children and young people…"

To help the Foundation do all this it has received donations from the public and the Royal Air Force of over £10,000 during the two years of its last recorded accounts (year ending 2010 and 2011).

During 2010 the Foundation also received "unrestricted" grants (no fixed spending) of £20,000 from the Primary Care Trust (PCT) and £18,750 from the University of Salford (retired Vice Pro Chancellor, Prof James Powell is a Foundation Trustee).

In the same year, the charity was owed £59,502 for a loan to the Salford City Reds rugby club, which had increased from £49,909 owed the year before. In the latest set of the Foundation's accounts (2011), it is still owed £7,896 by the club.

The Salford Star asked the Charities Commission if it was legal for a charity to give a loan to a private company which is assumed to support it. We were told that the loan arrangement may be acceptable as long as the trustees can demonstrate that they acted lawfully, that it is in furtherance of the charity's objectives and that they have a policy in place to manage any conflict of interest and to safeguard the charity's assets.

Meanwhile, the rugby club - Salford Football Club Company (1914) Ltd - also re-charged the Foundation over £200,000 for "use of facilities, promotional activities, and coaches and players utilised in the charity's activities" - £114,364 in 2010 and £100,800 in 2011 (despite the Foundation's income being over one third less than in 2010).

During the two year period of the accounts available, Salford City Council gave contracts to the charity totalling £261,179 - £238,179 in 2010 and £23,000 in 2011.

The amount included £144,019 from the Council's Learning Zone budget to `develop pitch side learning', £60,000 from the Economic Development budget `to provide training for local residents on employment courses', £18,160 from the Council's Community Foundation and ABG funding for community programmes in Eccles, Winton and Little Hulton, and £33,000 for a Development Officer.

Apart from Salford Council, the Foundation has also received grants and contracts from the Big Lottery, European Social Fund Lottery, BBC Children In Need, the Rugby Football League and various schools.

The Salford Star is in no way criticising the Foundation's acclaimed community work (further details of the work can be found on the Salford Reds website). And there is no suggestion that the Trustees of the Foundation have acted illegally. But Salford Reds fans, Salford council tax payers and indeed the Charity Commission itself, might find it incredibly strange that a charity has been giving out loans to a privately run business, while claiming costs from the charity for players and coaches time when they make appearance for the Foundation.

In light of the club's current financial problems it appears that the charity has possibly been keeping the club afloat through the back door.

The relationship between the Salford City Reds Foundation and the club is never properly explained in the Foundations' accounts, only stating that "The charity is supported by Salford Football Club Company (1914) Limited, in that it has the facility to utilise the Salford City Reds brand and make use of its administrative functions".

• Since the summer, the Salford Star has been trying to speak to Foundation Trustees and Salford City Reds directors to get explanations of the payments – Prof James Powell put the phone down on us, Dave Tarry had already resigned and Paul Snape promised to send the latest set of accounts which never arrived. John Wilkinson refused to be interviewed, and Iain Watson never responded.


See also previous Salford Star articles…

Salford Reds in Hock until 2017 – click here
Salford Reds Face Winding Up Petition – click here
Salford Reds Fans Launch Petition – click here

Update: 24th October 2012

We received this e-mail from the Salford Reds Foundation today...

The Trustees of the SCR Foundation welcome the chance to respond to the Salford Star article of the 23 October 2012.


"The Foundation is a registered charity that operates totally independently of the Club.  For the Foundation to work effectively in the community, it has to work very closely with its local professional sports club, the local authority, neighbouring local authorities and a host of other local and regional stakeholders. Through its association with the professional sports club, the Foundation is able to reach people and causes that would not normally be possible. The use of Club players, coaches, staff, facilities and other resources to help deliver projects is essential.

The Foundation delivers wide ranging community activities for the benefit of local people - in schools, helping the unemployed, delivering healthy lifestyles, cancer awareness and much more. The Foundation in the last year alone worked with more than 50,000 people in Salford and beyond. A large proportion of the Foundation’s total funding is brought in externally from outside the City for the benefit of Salford residents.  The Foundation is highly regarded in the rugby league world and beyond for the extent and quality of its community work. The Salford Star was invited to directly witness the Foundation’s work and meet the team but unfortunately declined the offer. The offer remains, as indeed the Foundation’s offices are always open to all visitors.

The Foundation directly employs eight staff to deliver its projects. During 2010 and 2011 the Foundation was based at the Willows and relocated to Barton in February this year where it has its own dedicated offices and community space within the stadium. A separate lease is currently in the process of being concluded with the stadium management company. In 2008, the Club donated £32,000 to help set up the Foundation. Since this time the Foundation has been financially sound and has worked closely with the Club and its accountants to agree an equitable way of sharing expenses that the Club has incurred in helping the Foundation deliver its programmes and commitments. The Club’s recharge of expenses in the delivery of projects is a relatively small proportion of the Club’s total costs.

Inevitably in two organisations with allied goals which work closely together and sometimes share or cross charge for each other’s resource, there will be balances payable one way or another from time to time. As things currently stand, the sum owed by the Club to the Foundation is nil (and the Foundation does not owe the Club any money). Information on the recharge position is contained in the Foundation’s annual accounts which are lodged with both Companies House and the Charities Commission, and which are prepared in accordance with accounting standards.

Certain of the former balances described in the Article arose at times when the Club’s finances were stronger, and the Trustees could see that the Club could discharge them, which it has done. Accordingly, this is ‘old news.’ The points made in the article referring to charities law are absolutely right, and the Trustees know and are mindful of the position. Following David Tarry’s resignation, all three remaining Trustees were totally independent of the Club. Subsequently 2 new trustees have agreed to join the Foundation. In addition to these further independent trustees, Iain Watson is a Club Director and Foundation Trustee who is a key link between the two organisations. This is normal practice to ensure good working relationships between a sports club and associated Foundation. Any conflict of interest is noted, and Iain (and any other Trustee with a potential conflict of interest) does not participate in Foundation decisions which could give rise to or are affected by a conflict of interest.

The Foundation is in good shape financially going forward with a significant level of important projects to deliver in 2013 and beyond, and welcomes the support of the local community and other interested stakeholders."

The Salford Star responds...

Directors and Trustees of the club and Foundation were offered interviews by the Star way back in the summer, as the article states. The chance to see the work of the Foundation wasn't taken up because the story isn't about the work of the Foundation... We actually state "The Salford Star is in no way criticising the Foundation's acclaimed community work".

As far as the loans being old news, we have to dispute this as the Foundation's accounts were only published for the public a matter of weeks ago.

The Star is pleased that the club has finally responded to one of our articles after six years of nothing. Shame it wasn't before it was published. Like we state in the article, we did try and make contact in the summer - but didn't take kindly to a Foundation Trustee slamming the phone down on us, while others ignored our requests for interviews.

We do have another article about to be written on Salford Reds, although not about the Foundation. The offer is open to any Directors of the club to meet with us before it is published, rather than sending us missives after the event. Just get in touch info@salfordstar.com  

Money man wrote
at 09:19:51 on 26 October 2012
I want to see the documents assessing the financial risk to the council when this loan was made, if this doc says their was any risk then that shows incompetance on behalf of the descision makers, if it shows no risk then incompetance on behalf of the finance department that assessed it which i belive is headed by Cllr Hinds. So which way are you going on this one Salford clowncil because either way someones head must role. Even if the winding up petition is dismissed the Reds are financilly unstable and are not a sound investment and have not been for years.
 
mary ferrer wrote
at 11:35:59 on 25 October 2012
Couple of questions. Have the Reds been given a LOAN from the Foundation or not.If yes when and with what conditions? Where in the Mission statement/Constitution of the Foundation does it say they may give loans? I now feel a lot of questions need to be answered by both the Reds and the city council. The loan of over £1.1/4M from the council was secured by the directors of the club.Do we know if the club should folder are the Directors in a position to repay the loan.The city will be way down the line of people owed money and people like Inland revenue will be at the top of the food chain.If this is how our Council handle our money then we now know why the city is in a mess. Why in gods name did we enter into a project of building a stadium in today's climate, with a club that have huge debts and were finding it hard to get gates at the Willows. I think Mr Mayor,Councillor Lancaster and Ms Spicer now need to start speaking to the residents of this city and give us the full picture, because the amount I have quoted of £1.1/4,I and others don't feel this is the true figure.
 
Salford Star wrote
at 17:59:38 on 24 October 2012
See Salford Foundation comment below.. This response from the Foundation has been published in full with a reply from the Salford Star
 
SALFORD CITY REDS FOUNDATION wrote
at 17:41:04 on 24 October 2012
All connected with the Foundation were keen to provide a clear response to the above article. A statement has been prepared and will be sent to Stephen Kingston, which we hope under our 'right to reply' will be aired. Salford Star unfortunately couldnt take up the opportunity to visit the Foundation, meet staff, meet participating local people and find out more. This offer still remains, as indeed the Foundation welcomes visitors to see the community facilities and get involved in what we do. Please contact us on 0161 820 3739 or foundation@reds.co.uk for more information. Thanks
 
mary ferrer wrote
at 02:41:09 on 24 October 2012
Well it gets better and better. Is this the same foundation that got thousands from the former Labour Goverment to setup X amount of apprenticeship a couple of years ago,do we know if they did setup the scheme and how many young people from Salford were on the scheme and where they are now. So, not only have WE been giving the club loans,(£1.1/4 MILLION +) buying back leases,(£250.000)WE have been giving them £261.000 to do god knows what.Where within the city's spending does this show up. This city is on its knees, services are going to the wall,people within the council are on a knife edge regarding their jobs and their wages and this bloody council are allowing this to happen. Did they not ask for ALL the finances of the Reds before giving the loans. Then we have the COMMUNITY stadium, now there is a joke, the COMMUNITY bit has gone and WE have gone into debt for £22 MILLION + for WHAT. This LABOUR Council has a lot of questions to answer.Wonder what they will come up with.I would like to thank the Salford Star for doing this artical.
 
Council worker wrote
at 18:10:54 on 23 October 2012
Its about time Scary Spicer (£200k per year plus expenses) called in the District Auditor - she won't because she was along with Councillor Lancaster (£$% K per year plus expenses and Salford reds fan)was at the heart of the decision to fund Salford reds with pubic money. as a Salford resident I have never seen any community work by this charity so i would like to see the detail. Perhaps we could also look at how the reds support our twinning arrangement with Narbonne france and who funded that visit which Scary, her family members and Lancaster went on. Our Nero Like Mayor Ian Stweart when he is not on his meaningless bus tips continues to fiddle while Salford burns!
 
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