All day, Salford Council has remained tight lipped on its proposed £750,000 rescue plan for Salford City Reds rugby club, after a Mayoral Team meeting which began at 10am this morning. Now the Council has issued a press notice that the planned £750,000 rescue bid, via way of a loan facility, has been rejected by councillors.
The press notice states "Councillors today rejected a rescue plan for the troubled Salford City Reds. They refused to agree a £750,000 lifeline for the club as part of a proposed new joint venture between Salford City Council and Peel, which would have taken-over the running of the club."
"…now the joint venture deal is off the table after councillors expressed concern about the financial viability of the rescue plan, the level of risk of such a loan, and embarking on such a joint venture in the current economic climate" the notice adds "The council has already invested £1.5million into the Reds."
Over recent months the Salford Star has documented how the £750,000 loan facility would have come on top of previous recent support for the Salford Reds, including loans of either £1.5million or £2million (no-one knows for sure); a hidden payment of £250,000 for the Willows car park which only came to light when there was an information leak; over £350,000 in grants and funding to the Salford Reds Foundation, of which over £200,000 found its way back to the rugby club in `re-charges'…
…Salford Council has also provided direct sponsorship of over £6000; Salford Council officers being seconded to help the club, and the Salford City Stadium `home' for Salford Reds built with over £32million of public funding, including a £22million loan, land worth £6.7million and a £4million grant from NWDA…
The press notice adds that, together with the postponed winding up notice, Salford City Reds "has already had their bank account frozen".
Salford Mayor Ian Stewart, and his deputy Councillor David Lancaster did not attend the meeting which rejected further finance and "took no part in the debate and did not vote, on legal advice".
"Times are tough and in many ways, the Reds are yet another victim of the recession" said Ian Stewart "We would have loved to try and help them out, but given the spending cuts the city council is already facing, that proved impossible. The Reds have had a long and proud history in Salford over the last 116 years, but they are now victims of cash flow problems and the current economic climate.
"The city council's ability to support the club financially is now at an end, and it is for the club's existing Board to decide the future of the Reds" he added "Whilst we can no longer help financially, we will do everything in our power to support the club and would urge any single investor or group of investors who are interested in a take-over to act extremely quickly before the Club Board of Directors make a final decision on the future of Salford City Reds."
The future of the club is now uncertain...
UPDATE 13th December...
Salford Reds Chairman, John Wilkinson, has issued the following statement...
"The board and myself were obviously very disappointed to learn the outcome of the vote taken by the City Council’s cabinet yesterday, but we respect and understand the difficult position they were in, given the backdrop of budget cutbacks.
During negotiations the Club has been unable to speak freely and has had to respect the process, and it has been frustrating having to sit back and leave incorrect and at times scurrilous speculation unanswered.
If these negotiations could have been brought to a successful conclusion, as we all expected they would be, it would have secured the future of the Club, however this now opens the door to other opportunities.
The position as it stands is that the Club has a short-term cash flow problem that it needs to overcome, however once that is done the club’s business plan remains solid, viable and independently verified by leading accounting firms such as KPMG.
Salford City Reds remains a great investment opportunity for new blood with an appetite for top level sport and we would urge anyone with an interest to make contact immediately.
The Club has always received exceptional levels of support from the local business community and this spirit remains, with the Club still attracting new sponsors even while recently surrounded by an air of uncertainty.
This gives us great confidence that there is someone out there who can help us take this great club forward and on to successes within Super League.
As a board we were fully committed to the deal on the table as everything had led us to believe that it would be concluded positively. As a result of yesterday’s decision we are forced to reopen investigations into other avenues, and remain confident that with everyone pulling together in the same direction – board members, supporters, players, coaches and staff – that a positive conclusion can still be reached within the required timeframe.
Discussions continue with other interested parties, including Peel, and we are grateful to the RFL for their on-going support in these matters. We will update stakeholders on any progress as soon as we are able.
In addition we are considering a meeting with supporters at a convenient time and location one evening. If you would be interested in attending such a meeting please send an email to admin@reds.co.uk and we will ensure you receive full details in time to attend.”
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