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

Close shave for Forest Green

Posted by John Beech on March 29, 2010

According to a statement on their club website (1) “Forest Green Rovers Football Club Limited has reached an agreement with the Inland Revenue [sic] over an historic tax liability amounting to £45k“.

On 8th March the club issued a statement indicating that a financial crisis was imminent (2).  It warned “Everyone needs to recognise that the stadium complex, which opened in 2006, required additional funds to complete its construction and fitting out. These had in part to be financed from commercial loans, and the Board had ensured that these  were serviced. One plus side of the fall in interest rates was that the capital on those loans has reduced much quicker than anticipated. However, other activities in the company have had to be supported by the directors through personal loans. This could not carry on indefinitely and now the company needs to search for new investment.”  The immediate situation of a cancelled Chester City game and multiple postponements because of bad weather was hardly helping.

Much of Forest Green’s history had been one of obscurity.  The club had emerged from the Gloucestershire County League, reaching the Conference in 1998.  Comparisons with Histon are tempting – Forest Green being a small village just outside Stroud (so small that it is not even listed on the AA’s route finder).  Stroud however has no ‘United’ or ‘City’, but both Cheltenham and Gloucester are roughly ten miles away.

Their rise up the pyramid had two direct consequences.  First of these was the building of the New Lawn stadium.  This had been a subject of controversy as the land used included portions of the playing field of a local school (3).  Planning permission was finally granted in August 2004 (4), as was outline planning permission for 66 homes on the site of the old stadium.

The stadium, with a capacity of just over 5,000, opened in the summer of 2006.  The best gate to date has been one of 4,836, but current average is 869 (5).  Revenues from the stadium were boosted in 2007/08 by a ground-sharing agreement with Gloucester City (6).

At the start of the current season, the club decided to switch from being a limited company by guarantees of its members to a limited company guaranteed by its shareholders (the second consequence) (7).   The declared intention of this change was to seek a further £100,000 investment by the issue of new shares. Early this month it was announced that this figure had nearly been reached, but further investment was needed (8).  It quickly emerged that he need for further investment was because of a pressing tax bill of £42,000 (9).  As Chairman Trevor Horsely put it, “We are in dire straits – we’ve had one or two hiccups over the last couple of years and things have come to a head now. We’re struggling to meet the debts we’ve incurred on the new stadium and we need to put an appeal out to the local community. The Inland Revenue want answers by Monday. It’s a historical debt – we’ve made some mistakes on players’ expenses and managerial expenses and didn’t pay VAT on the gym when it first opened because we didn’t think we had to. We’ve got it down to £42,000, having lost three (home) fixtures. The best option for me is to sell the club to a majority shareholder.”

He added “The problem with Administration is that we’ve got four key directors who’ve put in loans of over £80,000 and I don’t think it’s fair on them. It’s always a possibility but it’s not the shareholders’ wishes.

In another report he said “We’ve had two of these orders [from HMRC] in the past three months but have managed to fight them off.  We need to find £200,000 to £300,000.  We need about £100,000 immediately for the Revenue and wages and the other £200,000 by the middle of the summer for the other creditors.” (10)

Hmmm.  A rather large problem then, and one that could not have crept up quite as suddenly as information fed to the press would lead you to believe.

The statement on the club website which I began by quoting continues “Though this removes the immediate threat of any legal winding up action, their Chairman – Trevor Horsley states “the club is a long way from being safe” although it is “business as usual” .” I wouldn’t dispute that the club is a long way from being safe, but can ‘business as usual’ really be a way out of the impending crisis? At least the Supporters Trust seem to be taking a more realistic view – see their statement here.

What I see is a club led by benefactors with the best of intentions who have inadvertently led the club into an unsustainable position, with pockets insufficiently deep to see their dreams come true.  Sadly this is an all too common scenario.

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