Bulls’ Chairman talks bullish
Posted by John Beech on May 5, 2009
Perhaps there is some mileage in a TV series called ‘Chairmen say the Funniest Things!’. The first programme might feature Hereford United’s Graham Turner.
Talking to BBC Hereford and Worcester, he is reported today as condemning ‘the ruling that has allowed Stockport County to stay in League One, despite going into administration’. He is quoted as saying “Clearly the people who run the club couldn’t afford to sustain the expenditure…. Clubs that go into administration should be automatically relegated” (1). He concluded “We had ours [financial problems] 14 years ago and you learn from that lesson that you have to live within your means.” Certainly Hereford had its problems in 1997/98, and its recent record of five years ‘in the black’ suggests strongly that they have learned to live within their means. All credit to Graham Turner for this.
But perhaps some detail might put Turner’s, and Hereford United’s, moral high-ground into perspective. In May 1997 Hereford, then about to drop back to the Conference, had built up debts of approximately £1,000,000. The club’s cummulative loss for the period 1995 to 1999 were £1,148,890 (2) – a significantly worse situation than the one Stockport County currently find themselves in, and that is without any adjustment for ten year’s inflation.
In October 1997 it was revealed that players and administrative staff at Hereford United had not been paid for a month (3). Turner at that time was the club’s Director of Football and took a voluntary pay cut of 30% (Times, 2 Jan 1998). Later that month he became majority share-holder and took on the role of Chairman (Belfast News Letter, 23 Jan 1998). Three months later and the club was facing a winding-up order from two creditors.
New debt of £5000,000 was taken on and a Company Voluntary Agreement was entered into with the club’s creditors. These included the Inland Revenue (£140,000) and Customs and Excise (£120,000) as well as a number of others (£47,000). In case you need reminding, Stockport have been forced into Administration over a debt of £300,000.
In September 2004 the Hereford Times was able to report that the CVA had been settled. The last two paragraphs of their report are:
The club initially agreed to repay the entire debt and made a first payment of 40p in the pound. But, this week, creditors accepted a further, smaller, dividend to bring the CVA to a close.
While the end of the CVA is a significant landmark for the club, a long-standing debt of £1 million, plus interest, remains outstanding to developers Formsole. (4)
Two points are clear – the debts which caused the entry into a CVA, which were mainly due to the Exchequer, were not settled in full, and five years on the club was still dependent on debt. Today, incidentally, a club would not be allowed to stay in a CVA for so long.
The last five years ‘in the black’ began with a wiped slate, at the taxpayers’ expense, rather simply a clean one.
Personally I am against the second penalty of points deduction or automatic relegation.
A case can be made for it I concede. The Chairman of Hereford United doesn’t strike me as the person to make that case however.