Challenge to Turner's view on Stockport's Problems

Graham Turner's view that Stockport should be penalised harder for going into administration has been challenged by Dr John Beech from footballmanagement.wordpress.com

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 £500,000 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.

Interestingly Beech takes some of his material for his article from several sources including the (3) Independent and (2) www.hu-fc.co.uk.

For interest the article from the Independent is republished below. It was written by Rupert Metcalf and posted on October 17th 1997.

When Hereford United were relegated from the Football League in May, they were hoping to follow in the bootsteps of Lincoln City and Colchester United, who both won promotion from the GM Vauxhall Conference at the first attempt.

Instead, to their fans' horror, they are in danger of emulating Newport County, who suffered a financial collapse following the drop out of the League in 1988 and were unable to complete their first season in the "fifth division."

A fans' forum this week was shocked to be told that players and administrative staff had not been paid for a month. Last night the supporters were given the chance to help United, when another public meeting was held to try to secure financial support for the beleaguered Edgar Street club. Peter Hill, the Hereford chairman, has blamed a number of factors for his club's plight. "At the end of last season we knew we needed to find between pounds 750,000 and pounds 900,000," he said yesterday. "Then we discovered that were getting only 50 per cent of the Football League's television money - we were expecting 100 per cent in our first season outside the League. Then a transfer tribunal priced Dean Smith at pounds 42,500 - we were expecting at least pounds 150,000 from Leyton Orient. Then the bank reduced our overdraft limit." It got worse. Hereford need an average gate of 5,000 to break even - and crowds are down to 2,000. "There are no Al Fayeds here," Hill said. "I'm just a normal football director." Hereford hope to move to a new stadium by the end of the century, but they will not net all the proceeds of the sale of Edgar Street because the ground is council-owned. They have, however, had a loan of pounds 500,000 to keep them going from the property developers Bristol Stadium Group, from whom they are now seeking a further loan. Their bank has also agreed to pay the wage bill this week. Hereford still intend to maintain a full-time playing staff this term, and Smith is hoping to bring up to five new directors on board soon. "There is some light at the end of the tunnel," he said.

For the record Dr John Beech is head of sport and tourism applied research at Coventry University.

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