For weeks there has been speculation about just how much financial support Salford Council has provided, and is about to provide, for Salford City Reds rugby club.
The Salford Star, in possession of a loan contract for £1million, plus a quote from former Council Leader John Merry admitting to a further £350,000 loan, has reported the total loan figure as £1.35million. Karen Garrido, Conservative opposition leader has publicly stated that the loans totalled £2.2million. We now believe the figure is £2million.
With a media leak informing that the Council is about to provide a further £750,000 loan to be ratified in secret on Tuesday, the Salford Star understands that, with other payments, this would take support for the Reds from public money to over £3million. At a time when more cuts to public services and jobs are about to be announced.
With the controversial decision on the £750,000 Council loan about to be made - with no `call-in' scrutiny allowed - the Salford Star was wondering how the City Mayor, Ian Stewart, could agree this without even a set of accounts from Salford City Reds being lodged at Companies House.
Yesterday, we revealed that Companies House itself was proposing to dissolve the Salford Reds company, Salford Football Club Company (1914) Ltd, if it didn't produce accounts (see here). A few hours after the article appeared, Companies House had received those accounts which were accessible this morning.
The accounts were prepared by James Barden, Senior Statutory Auditor at Barlow Andrews LLP in April 2012, were due to be lodged with Companies House in August, and yet were only produced yesterday. Questions must be asked whether the Reds board were trying to hide them from the public before Tuesday's decision.
The `abbreviated accounts' (as opposed to `full accounts') are a snapshot of the rugby club's financial health for the year to November 2011 – and show that it had `current liabilities' and `creditors' totalling £4,594,604*
The accounts also show creditors `amounts falling due after more than one year' of almost £1.9million, which we believe could be the `hidden' loans from Salford City Council.
The Salford Star is not full of accountants - and if we've got this wrong we'll hold our hands up – but the Salford Reds accounts show `creditors: amounts falling due after more than one year' as £872,654 in 2010, leaping to £1,878,497 by 2011.
Although it's not stated anywhere in the accounts, we believe that these are the Salford Council loans. The hunch is further underlined at the end of the accounts where it states `the aggregate amount of creditors for which security has been given amounted to £1,013,497', with an amount for 2010 of £872,654.
Add them up and, given added interest and some payments back, the figures more or less match up. Almost £1.9million.
Now, looking at Salford City Council's accounts for the year 2010/11 the picture becomes incredibly complicated, or just full of creative accounting. The accounts state that in April 2009 the loan to Salford Reds was £240,000 – but the `long term loan' in March 2010 was £500,000 and, in March 2011 £1million.
While the accounts show this £1million loan in March 2011, the contract that Salford Star has showing a loan of £1million wasn't signed until April 2011.
Meanwhile this year's accounts for Salford Council show a long term loan of £1million for March 2011 and long term loan for March 2012 at £800,000 with £200,000 `current'. While the figures look like they are all the same £1million loan, we now believe that they are two separate loans totalling £2million from Salford Council to Salford City Reds. And, cross referencing with the new Salford Reds accounts, this would appear to be the case. We challenge Salford Council to prove otherwise.
On top of these £2million loans, there was also a bizarre payment of £250,000 from Salford Council to Salford Reds for the Willows car park lease; funding and grants to the Salford City Reds Foundation of over £350,000, of which over £200,000 found its way back to the rugby club; plus £5000 direct sponsorship to the Reds (see full details here).
If the further £750,000 loan goes ahead on Tuesday, payments and loans from Salford Council to Salford Reds will total over £3million, if our figures are correct…
…And if the figures are correct, so many questions remain unanswered, such as…
• Why Salford Council hasn't come clean as to how much public money it's actually handed to Salford Reds and if there is any more that the public doesn't know about
* If there were two loans of £1million - what was the security on the first loan?
• Why Salford Reds didn't show its accounts until yesterday, with a decision due on another public money loan on Tuesday
• Why John Merry, the then Leader of Salford Council only admitted to a loan of £350,000.
• Why City Mayor Ian Stewart has shrouded negotiations and funding for Salford Reds in secrecy
If anything should be subject to Scrutiny at Salford Council, it is its dealings with Salford City Reds and the advancement of another £750,000 loan. Yet the Chair of Salford Council's own Finance Scrutiny Select Committee, Councillor Dave Jolley, has signed off a request by the Council that "an Urgent Key Decision be made without being published in the Forward Plan, and/or that the Key Decision be exempt from Call-In for Scrutiny".
Even Salford City Reds supporters on the fans forum, some of whom delight in slagging off the Salford Star, now believe that the ongoing, unaccountable support for the club is kind of immoral in a climate where jobs and public services are being cut.
See Scarlett Turkey Fans Forum for further details…
See previous Salford Star article - Salford Council To Bail Out Salford Reds - click here
• The Salford Star is not interested in the day to day running or finances of Salford Reds, being a private company – only the accountability of public money that has been poured into the club.
* The `abbreviated accounts produced until November don't reveal much detail, like turnover, dealings with related companies etc but do give a snapshot of a company's financial health. And they show that in November 2011 the club had to stump up almost £3million over the next twelve months, with `current assets' of only £221,209, including £185 cash in the bank, and `fixed assets' of only £15,724.
Minus those assets, Salford Reds had `Net Current Liabilities' (amounts due in one year) of £2,716,107, and Creditors (amounts due after more than one year) of £1,878,497 – making a total of £4,594,604.
The accounts state that "the company has received loans from subsidiaries of The Wilkinson Corporation Limited and pension schemes…Without these loans, the company would be unable to meet its working capital requirements."
The statement, which makes no reference to Salford Council loans, adds that the directors won't push for repayment "unless other sources of funding become available", and hoped that, with the move to the new stadium, "revenue streams should increase to a sustainable level"…