Cash Only As Southend's Problems Deepen

Last Saturday York supporters visiting Southend were told they could only pay for their admission by cash.

The following article written by Ian King first appeared on the Football365.com last week.

National League club Southend United are in serious financial difficulty, with severe cashflow issues and yet another winding up petition to have to defend.

The irony is that their next opponents have seen all of this before. Southend United take on York City in the National League on Saturday. Exactly 20 years ago, York were in a period of administration which ended when the club’s supporters’ trust took ownership. And for those Minstermen old enough to remember this traumatic period in their history, a few painful memories may well be stirred by their trip to the Essex coast.

York fans have already been advised that the turnstiles at Roots Hall will be ‘cash only’ for this match, and when clubs make this sort of announcement it may be considered extremely bad news indeed. The implication is that any money paid by credit or debit card will be swallowed up by chipping away at an already fully-extended extensive overdraft instead of attending to more pressing matters such as, say, paying the wages of players or staff. This is not the first time this season that admission to Roots Hall has been ‘cash only’.

Not that Southend United have actually been paying their players or staff these last couple of months. All concerned were paid a day late at the end of November, but local newspaper the Southend Echo confirmed earlier this week that office staff still haven’t been paid in full for the end of December or the end of January either, which would clearly be unacceptable under any circumstances, never mind in the middle of a winter during which the entire country is gripped in a cost of living crisis. The club’s youth team is understood to have decided not to play again for the club until they’re paid, having again missed January’s wage.

And when bad news of this nature starts to build, it can snowball very quickly. This was confirmed by CEO Tom Lawrence saying that the club has fallen behind on a payment plan to St John’s Ambulance. Lawrence stated that “we have fallen behind on a payment plan, but we are communicating with them on this and hope to be able to get things back on track,” and that “St John’s will be providing cover for the next match”. But for how much longer will this be the case if the club is in this sort of financial position?

Set against this litany of mismanagement in the here and now, March 1 feels like a long way away, but it’s now less than a month until the club finds itself back in the High Court over a winding up petition served by HMRC in the middle of October. The case has already been deferred twice, once in November and once in January. At the time of the first deferral, a lawyer for the club stated that the issues were Covid-related and that there was a “real prospect” of money coming in. The presiding judge said that he accepted the club was a “valuable asset” for the local community, but also warned that the outstanding sum had to be paid.

The obvious question to ask at such a point is how realistic this might be, considering the issues that the club has had in paying its staff for a considerable period of time. Following the latest adjournment, club owner Ron Martin issued a statement which confirmed that, with regard to bridging funding to pay the amount owed to HMRC: “I am not currently able to outline precise timings”. It will have done precious little to allay the concerns of supporters, that this time attempting to defer matters at the court again may not be enough to save the club.

Southend United are certainly no strangers to the High Court. They’ve been there repeatedly in recent years after having been served with  winding up petitions, but none of them have – yet – been solidified into a winding up order. Martin is a property developer who has been involved at Roots Hall since the late 1990s, and his aim since the outset has long been to build a new stadium. But this has been rumbling on for more than two decades now as Roots Hall has crumbled around him, with supporters complaining openly about its state of disrepair.

It would be understandable were investment in the old ground to be wound down a little because a new stadium was about to open. But Martin’s quest for a new stadium – and, of course, attendant housing development and the like – has been ongoing for almost a quarter of a century now and still doesn’t seem to be much closer to coming to fruition, despite planning permission having been granted for it by the local council in October 2021. Offers to buy the club have reportedly been bounced straight back, with the contention being that Martin seems happy to push Southend to the brink of non-existence to ensure that he gets his money back.

A last-minute application to go into administration – the standard get-out clause for a club in a position such as Southend’s, since to do so stops any legal recovery action in its tracks – is always possible, but HMRC will not be applying for it and there seems little indication that Martin would. With a huge tax bill outstanding – no details of the full amount owed emerged at the last hearing but barrister Oberon Kwok, who represented HMRC, described the amount as “large” – and no sign of the bridging loan which Martin has promised since the winding up petition was served, this does feel of a different order to those previously issued against the club. A transfer embargo has been in place since the end of September.

Faced with such myriad existential threats, it’s no surprise that the atmosphere around Roots Hall has soured this season, even though the actual team itself – which is ninth in the National League table at the time of writing – has been performing reasonably well on the pitch. There is a striking irony to the fact that on the day the Premier League were completing a transfer window in which one of its members spent more than every other league in Europe combined, the Save Our Southend group issued a statement confirming that an online meeting had been held the night before at which the possibility of forming a ‘phoenix’ club had arisen.

 

 

That this should have happened this early is a reflection on the timespans concerned should the worst happen and the club fold. It’s too late for next season already. Applications for a place in the National League System have to be in by the end of December of the previous season – there’s a *lot* of reorganisation to do – and were the worst to come to the worst then the clock would be ticking to start a new club for the start of the 2024/25 season. The statement notes that “in the absence of any evidence-based messages of reassurance from the club, now is the time to stop treating the subject of a phoenix club as taboo”.

These are wise words. Phoenix clubs come in different shapes and sizes, and they come about for different reasons. Most commonly, they’re formed as a successor to a club that has folded, as happened at Darlington, Halifax, Aldershot and numerous others. But they can also come about after supporters become so disillusioned with the running of their club that they consider the only tolerable way to continue is to break away and form a new team, as happened at Enfield, Wimbledon, FC United of Manchester and Northwich Victoria and many more.

It is also understandable that Save Our Southend should have worded their statement very carefully, because phoenix clubs can be contentious. The split between Bury FC and Bury AFC has been most dispiriting to witness from a distance, a schism between former supporters of the same club which may now never be repaired. The same happened to a lesser extent at both Enfield Town – who were the canary in the coalmine for breakaway clubs when they split from Enfield FC in 2001 – and Northwich.

Of course, in stressful times such as these tempers are likely to fray quickly, and there is usually a wide range of views among supporters on the subject of a ‘new’ club at a point such as this. Some may be happy to just break away now, find a ground to share somewhere, and put the version of Southend United owned by Martin behind them. Others may define their football support as backing this iteration of Southend United only and may wander away from the game altogether should they go to the wall. Many sit somewhere near the middle. They will support this Southend United for as long as it’s possible, but would switch to a new club if there was no alternative.

There is no doubt whatsoever that the period of the pandemic was tough for Southend United. Having finished the 2019/20 season separated from relegation from League One by goal difference only, they were relegated in front of the empty stands that characterised the closing stages of the following campaign. In 2021 they were suffered a second successive relegation, this time into the National League; their first spell as a non-league club in 101 years.

And life in the National League didn’t initially bring around much of a turnaround in fortunes, losing 10 of their first 15 games to leave them in that relegation zone too. But since then, fortunes have at least changed on the pitch. Southend recovered last season to finish 13th, and after a slightly slow start they managed to lift themselves towards the National League play-off places. With six available in this division, their current position of ninth gives them a chance of reclaiming a place in the EFL come the end of this season.

At the time of writing, Southend are just one point off a play-off place and a win against York may well push them back into the top seven. But the team’s form has suffered since these latest financial issues reasserted themselves, with just one win from their last seven games going back to the middle of November. And regardless, it can be difficult for supporters to get enervated about the possibility of end of season play-offs when there remains a chance that their club might not even exist by the time they have to be played. But even so, they’ve been turning out. Southend’s average home attendance this season has been almost 5,800, and it says something for the state of football finance at this level of the game that a club posting such numbers could be in so much trouble.

But the bottom line is the bottom line, and for Southend United the bottom line is that they have to settle their liability to HMRC. They absolutely should not be gambling everything – their very existence – on getting another deferral at the start of March. If this bridging loan is to be forthcoming – and it should be remembered that this is a loan and will have to be repaid, presumably by the club itself – then Martin should issue concrete proof of this. If it isn’t, he should hand its running over to someone who can mirror the team’s improvement on the pitch with equally competent financial management.

The stakes couldn’t be much higher for Southend United. The club’s very future is on the line.

As supporters of other teams such as Bury, Hereford, Darlington, Halifax and so many others can confirm, sometimes the last vestiges of goodwill run out and the next morning when you wake up, the club is just… gone. They can be rebuilt. This is why Save Our Southend are tentatively starting the conversation about a phoenix club now. But this is an eventuality that no supporters want to see coming to pass. If Southend United can be saved in their current form then they should be, and preferably under people who care more about the football club than the potential land deals that can come with owning one.