More Detail on Chester's Problems

This article comes from the Altrincham website which covered the story from the 200% site. Some of the detail was covered by BN on Wednesday.

The story of the winding down of Chester City has been gathering pace all day. The club’s expulsion from the Football Conference now seems close to inevitable... The club’s managing director, Bob Gray, turned up on the local news, saying that the club would be starting next season even if expelled from the Blue Square Premier tomorrow. No supporters, no income, no league, but they will keep playing, according to Gray...

As long-time readers will be aware, Chester City (2004) Ltd is the company that owns the club, and the name is a misleading one. The company only took the ownership of the club in the summer last year, with the blessing of the Football Conference, the Football League and the Football Association. It has only been trading since last summer, after the old company that owned the club had its CVA thrown out by a court following a challenge from HMRC. On the BBC’s North-West Tonight news programme it was confirmed that the club’s current total debt... stands at £703,000. The BBC didn’t have the time to go into the details of how this was made up, but the good news is that we have also got a copy of what we presume to be the same document...

The two pages list the club's creditors and debtors. The debtors, we can discuss pretty briefly. They list the Football League as a debtor (£127,000 for a parachute payment) and the Football Conference (£10,000 for central funding). It would be interesting to see the contract that promises Chester City this money. If the organisations concerned withhold that money, the only legal recourse that CCFC 2004 Ltd would have would be to take them to court but, if they attempted to that, they would be expelled from all football. To list that money as a debt owed to them (and, therefore, an asset of the company) is misleading, to say the least.

The list of creditors, however, is what should interest us the most. How does a non-league [club] that has effectively been trading for a few months run up debts of over £700,000? They owe just over £53,000 to HMRC – the £26,000 that they face a winding up petition over, plus just over the same again for having continued to not pay their tax bill. They owe just over £33,500 to the local council for rental and business rates owed for use of The Deva Stadium. Their utility bills make up just shy of £10,000, for the gas, electric and the telephone. Their trading losses amount to just under £10,000 as well, including the coach company, rates on their training ground, an insurance company (for an operation on a player) and programme printing, among other things. Their football debts (which couldn’t be included in any CVA) total just over £78,000 and include just over £50,000 in unpaid wages and almost £14,000 for contract terminations. The staff – the people that have stood behind the Vaughans throughout this time – are owed almost £33,000. The stand-out figure, the figure that almost takes one’s breath away with its sheer audacity, though, is near the bottom of the page. It reads as follows:

Vaughan Family – Payments/Loans IN to Chester City 2004 Ltd: £485,911... The Vaughan Family is claiming to have put £485,911 into Chester City 2004 Ltd. A company that has only effectively been trading since last summer. This statement almost raises more questions than it answers. Where has this money gone? Because it seems, from the list of other creditors, that precious few of the club’s other financial obligations have been being met over the same period of time – especially if we consider that other revenue such as season ticket sales, gate money and so on will have been coming into the club over much of this period...

Anybody wanting to purchase Chester City for £1 had to satisfy four criteria that had been dictated to solicitors Brabner-Schaffer-Street by the current owners, and number one on the list was "Proof of funding of a minimum of £500,000 cash, to both satisfy club creditors and to fund the club going forward".

Key to the development of a new club for the supporters is what happens to The Deva Stadium, and Mike Harris of the Welsh Premier League side The New Saints already seems to be preparing his move. The club’s official website stated this afternoon that TNS are 'exploring all options at the moment, of which ground-sharing with Chester is one'... Approximately two-thirds of The Deva Stadium lies geographically in Wales".

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