Northwich Victoria: A cautionary tale
Posted by John Beech on November 8, 2009
To apply the term ‘troubled’ to transfer-embargoed and ‘in Administration but without a CVA yet’ Northwich Victoria would be something of an understatement. Even today’s televised win against Charlton in the first round of the FA Cup (1) will do little to help their present predicament (see postings passim).
Briefly in Football League Division 2 over a century ago, much of their subsequent life has been at the level of the Cheshire County League, before climbing back to what is now the Conference in 1979. Financially things have regularly be tough even at this level – Customs & Excise sought a winding-up order in 1983, and the Inland Revenue (who with Customs & Excise formed HMRC) sought one in 1993.
In 2003 construction began of the new Victoria Stadium, and the Vics said farewell to the Drill Field after 125 years (at that time the Drill Field was the oldest-continuously used football ground in the world). Before construction was complete, however, the club was forced into Administration in 2004 (2) following the serving of a winding-up order by stadium building contractors Tarmac over a debt of £17,000. The Drill Field had been sold for £2.3m, and the cost of the new stadium had been projected as £1.8m, so a winding-up order over £17,000 was not a scenario that fans or shareholders might have expected (Liverpool Daily Post, 16 September 2004). A grant of £500,000 towards the new stadium was made by the Football Foundation (3). A rental of £1,000 to groundshare with Witton Albion in the interim was said to be to blame for the financial embarrassment.
Swiftly a consortium led by local businessman, and father of the Vic’s goalkeeper, Mike Connett bought the club from the Administrator (This is Cheshire, 29 September 2009). Completion of the new stadium was promised by Connett, and plans would now include bars, restaurants and all-weather facilities. Connett ran a company called Beaconet, and has been described as owning a document-shredding business (4). He was reported as having put £2 million into the club.
The new stadium opened in August 2005, and included an entire terrace transported form the Drill Field (5). By then the club had just been demoted for failing to transfer their Conference membership from the old company to the new company by the deadline of 31 May (6). An appeal was unsuccessful.
By March 2007 rumours had begun to circulate that the Vics were in financial difficulty and Connett was looking for a new owner (7). These rumours were denied by Connett. In October 2007 he announced that he was indeed looking for a new owner (8), on the day that HMRC sought a winding-up order for unpaid taxes of over £350,000 (9).
In December it was announced that a new consortium headed by Jim Rushe had completed a deal with former owner Mike Connett and agreed terms with creditors, including HMRC (10), the deal including a 25-year lease on the new ground (11). Rushe offered “a sustainable future going forward“. Debt level, however, was reported as being at the £500,000 level, and to be paid off over an unspecified number of years (12).
At the end of July 2008 a winding-up order was sought by Belgrove Services (13), but this appears to have been settled.
Over the summer Rushe agreed a deal to buy the Victoria Ground from Connett for £3.2m (Connett had bought it in 2004 for £225, 000, and had subsequently borrowed money from three lenders using the land as surety) but had failed to find backers to fund the deal (14). Unfortunately, one of these lenders, the Clydesdale Bank (through its subsidiary the Yorkshire Bank), was now seeking recovery of their loan of £1.25m from Connett. To add to the complicated situation that was unfolding for the Vics, HMRC was becoming restless over the remaining tax debt of £300,ooo (15), this notwithstanding the fact that Rushe and former director Nick Bone had pumped half a million pounds into the club. Money was flowing out of the club at a worrying rate – over the summer the now full-time players had been paid £70,000.
January this year saw a rapid escalation of the problems – crisis meetings with the Conference (18), a transfer embargo (19), a lock-out from the stadium, which had been dependent on a generator for electricity after the mains supply was cut off, by landlord Connett (20), and a winding-up petition from HMRC (21). Meanwhile Connett’s company Beaconet was also facing a winding-up order (22) (his insolvency problems had led to the lock-out and hence pressure to get the club to pay its rental arrears).
Connett proceeded to start gutting the stadium, and the club had real problems be able to play fixtures, moving home games to other grounds. Things turned to low farce; witness the following:
“On a day of acrimony in Wincham, Connett:
- Banned Rushe and club secretary Derek Nuttall from the ground
- Fired groundsman Joe Biddle after accusing him of talking to outsiders on the phone about his plans to strip the stadium of it’s fixtures and fittings
- Demanded £2,000 off the club in cash to pick up the first team strip, currently locked in a cupboard inside
- Allowed workmen to play a makeshift match on the pitch, joined by his pet dog
- Boxed up every item of safety equipment needed to host a game, from fire extinguishers and handheld radios to luminous stewards’ jackets
- Issued a list to Cheshire Trading Standards of everything he intended to take away from the Marston’s [Victoria] Arena, including the goalposts.”
On 28 January, Connett’s Beaconet was struck off (23). Almost a month later the club got the keys to the stadium from Beaconet’s Receiver (24) under a temporary Licence to Occupy. No such good news with staff unfortunately; within a month manager and six players had left (25). Connett meanwhile was declared bankrupt on 26 February (26). For the club, there was another HMRC winding-up order on 25 March (27).
On 29 April at last came some good news – agreement was reached between Rushe and Deloittes (the Beaconet Receiver) over the purchase of the stadium (28), but on 18 May the club entered Administration again (29).
The Conference’s response? To expel Northwich for going into Administration too late (30) – the Vics had breached that well-known regulation, Appendix E, not quite showing the support they were to show Chester City shortly! This decision was overthrown upon appeal to the FA (31), and the Vics were allowed to start this season in the Conference North with a ten point deduction (32). Football creditors will still need to be paid before the transfer embargo is lifted and the club can enter a CVA.
The transfer embargo was lifted in July (33), only to be reapplied on 25 October (34). Rushe meanwhile is still optimistic over the purchase of the stadium (35), but the CVA remains problematic, with HMRC unwilling to agree to the offers being made. Ironically today’s FA Cup fixture, and the games which led up to it should facilitate a better offer. But there is a Catch 22 – the club will not be paid the roughly £100,000 rewards until the club exits Administration (36). The same will apply to their 2nd Round tie at home to Lincoln City on 28 November.
So, this is a club which in five years has gone from a sure-fire way to profit from a new stadium, through two Administrations, to a situation of tragi-farce. Plenty to reflect on there, including the weaknesses of the benefactor model, and some lessons to be drawn.
Perhaps even by a certain other club in the news with continuing plans for a new stadium in spite of insolvency issues?