Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

King’s Lynn down a key player as they face HMRC

Posted by John Beech on November 23, 2009

King’s Lynn, who face a winding-up order in court this Wednesday from HMRC over a debt of £65,000, have just seen the resignation of their recently appointed Financial Director David Handley (1).  This is clearly a cause of deep concern to Linnets fans, but it might the bigger picture behind this might just pick up some resonances for fans at many another club higher up in the pyramid.

The nearest Football League clubs are Peterborough (roughly 30 miles away), Norwich (roughly 40 miles away) and Lincoln (roughly 50 miles away).  To see a Premier League game you would have to travel just over a hundred miles to watch Spurs or Arsenal, or almost 110 miles to Hull. So with a population of 135,000 in the town alone, it would not be unreasonable to have aspirations of being at least in the Conference or even League 2.  Carlisle, for example, is in a similar position in terms of local competition, and has a smaller population.

The Linnets have however spent most of their life in the various divisions of the Southern League, but were promoted to the Conference North in 2008.  The beginnings of fulfilling their not unreasonable ambition?  Sadly not.

The first of a number of problems arose with their stadium, which is owned by the local council. The Conference decided at the end of last season that the Walks Stadium did not come up to their standards, and announced that the Linnets would be demoted. This, in spite of the fact that King’s Lynn Borough Council had given their unconditional undertaking that all required alterations would be completed by the start of this season (2) and West Norfolk Council had earmarked £250,000 towards the cost of new changing rooms and floodlights (3).  The Conference was given written undertakings that the work would be completed by the start of the season, but chose to take an uncompromising line and the appeal against demotion was rejected (4).  The milk of human kindness was not to flow as it was for Chester City but a few months later – one attitude to those coming down the pyramid and a different one to those trying to climb it, it would seem.

One immediate outcome was that the manager and his assistant resigned (5), followed by their Director of Football (6) on the day that the HMRC winding-up petition was announced (7).  In September the new Assistant Manger resigned (8) saying that the club owed him ‘a considerable sum of money’ and that the club had “been taking advantage of me“.

Clearly financial matters in the club were, let’s say, suboptimal.  David Handley arrived in October.  At the time he told the Lynn NewsThis is a massive and dream job for me, but I’ve got big plans for the future and on the financial side of things the buck will still stop with me.I want the fans to judge me at the end of the season, but I’m determined to get the club in a good financial position and move forward from there. When I took the job on I had two aims. The first was to get an adjournment with the Revenue, which we’ve done, and the second is to repair and fix the financial position of the club. You have to remember that the outstanding debt with the Revenue goes back a number of years and because players have been overpaid in the past. There’s no reason whatsoever why I can’t get the club where I want it to be financially when you look at the fan base and if we can achieve success on the pitch with a good, young side.

Handley is a realist, saying on 22 October: “I don’t think we can expect to get any outside investment within that sort of timeframe. Added to that we haven’t got many home games within this period either so I guess the burden will fall on me and the other directors. I’ve already put some money in initially to get a place on the board and I managed to get us an adjournment result in the High Court, and let me tell you that was by no means a guaranteed outcome. This situation is solely down to unpaid tax on high wage-earning players but I’m pretty confident we can clear the debt and stabilise the club so it can move forward.” (9)

A month later, and his views are rather different: “I feel I have been brought to the club under false pretences. I have put in £23,000 and I feel I am going to be made a scapegoat for all the problems. I had a pact with the other directors but it seems I was paying for everything and there was a hell of a lot coming out of the woodwork.

To be fair, the facts are disputed by 40% shareholder, director and ‘benefactor’ Michael Chinn, who now says of Handley “We’ve wasted six weeks because of him. He came in making all sorts of promises and basically he hasn’t been able to deliver” (10) and disputes Handley’s claim of £23,000 investment.  As the club prepares for the High Court hearing Chinn says “I have got a Plan A and a Plan B and I’m confident we’ll be okay. I’ll be talking with a number of friends and I’m hopeful they will lend me the money I need to pay off the tax bill” Ah, an almost seamless switch from benefaction to borrowing.  At least he has two plans, which is two more than some Chairmen, but let’s hope neither involve disappearing from the dugout at this vital time – in January he resigned from the board (11) only to reappear by June (12) promssing to take the demotion issue to the Court of Appeal (which he decided eight days later not to [13]).  Borrowing may get HMRC off the club’s back but it’s hardly the way to be going forward – borrowing from Peter to pay Paul is not a sustainable business model.

There is one small glimmer of good news – the Blue and Gold Supporters Trust was launched earlier this month (14 and 15).

There is a cautionary tale here for any club that has aspirations to climb the pyramid, has become dependent on a benefactor model, or has not kept up payments to HMRC.

That doesn’t really cut it down much though, does it?

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8 Responses to “King’s Lynn down a key player as they face HMRC”

  1. TonyM said

    Thanks for the 30 minutes of fame John, shows where we have got to when losing a director is the least of our worries

  2. John Beech said

    UPDATE

    Ex-Finance Director David Handley says that he might be prepared to bail the club out, but only if the current board resigns (1). He also says that he has receipts for the £23,000 he says he has invested.

    Meanwhile, with the court appearance looming tomorrow, the current board is said to be considering Administration as an option. Agreeing a CVA as the following stage would be problematic because of “the club’s lengthy list of creditors“.

  3. John Beech said

    FURTHER UPDATE

    Things are looking grim, and, in my opinion, the stress is beginning to show in some of the possibilities being considered (1).

    Director and erstwhile benefactor Michael Chinn has said “We’ve been doing everything in our power to try to find the money to pay the bill, but at the moment we’ve hit a brick wall. We’ve still got another 24 hours to try for a solution. We have spoken to the council about guaranteeing us the money for two months, but it looks more than likely that we will use a top barrister to try to win us another 60 day reprieve to pay it. The club is financially sound, but the main bugbear has been this outstanding tax bill, which stems from a number of years ago.

    How on earth can he describe the club as ‘financially sound’ in these circumstances? Clearly he must believe it even if the evidence against is overwhelming. He revealed ‘that the club is set to hire a top barrister in a last-ditch attempt to save them from being wound-up in the High Court on Wednesday morning’. Threatening to hire a top barrister is a favourite strategy of Chinn’s, as I noted in the main posting – fortunately he thought better of it last time, and let’s hope he does so again. And how exactly would that top barrister be paid anyway? It’s surely time to stop throwing good money which you haven’t got after bad, and wake up to reality.

    AFC King’s Lynn two divisions down looks an increasingly likely possibility.

  4. John Beech said

    LATEST SPECULATION

    EDP24 is running with a story that King’s Lynn will opt to be wound up today in the High Court rather than go down the road of Administration (1).

  5. John Beech said

    LATEST

    The club is now reported as having been wound up (1). This is the ‘end of the beginning’ for the Trust (2) – good luck!

  6. TonyM said

    Much outpouring of emotions on the Lynn forum, just hope this is a lesson to fans of clubs with ‘benefactors’ across the lower leagues. Take an interest, look at the accounts, ask questions (awkward ones if necessary) but whatever you do dont sleepwalk to the High Court with the cheery ‘well at least we will be put into administration’ cop out, it could be you next (btw I dont want sympathy there were not enough of us banging the drum).

    The HMRC wanted blood and now through the inaction of Lynn’s directors they have got it, lets hope for football they dont get a liking for the taste because I am sure there are plenty of others out there if they start looking

  7. TonyM said

    If this is ‘the end of the begining’ its taking a bloody long time, Lynn have been given a further 7 days from the Court yesterday as per article in todays press, is it any wonder football takes liberties with HMRC given the original hearing was 22nd July?
    http://www.edp24.co.uk/content/edp24/sport/football/kings-lynn/story.aspx?brand=EDPOnline&category=SportKingsLynnFC&tBrand=EDPOnline&tCategory=xDefault&itemid=NOED02%20Dec%202009%2022%3A58%3A47%3A063

    Not overly promising comments from Mr Chinn “We’re planning to meet on Thursday and I just have to decide if we can stick in there and take it forward again. Right now I don’t feel like doing that.”

  8. […] the club was already facing, including enforced demotion (see postings passim and in particular King’s Lynn down a key player as they face HMRC).  This proved the straw that broke the camel’s back, the club […]

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