Earlier this week a lot of information about Hereford United and its dealings with Herefordshire Council was released.
In those details was an e-mail from Hereford United to Geoff Hughes at the Council dated January 14th 2014. The e-mail probably written by David Keyte, chairman at the time, contains a summary of the clubs financial position at that time and pleads for some help from the Council.
Dear Geoff
Thank you for your time yesterday when we met to bring you up to date with the current financial position at the football club. It is a very difficult time for the football club and we have little by way of a Plan B at this moment.
We agreed to give you an idea of some figures before your meeting on Wednesday when you were going to test the political will for any form of financial assistance, in particular we held up the revised leases as of most value to all parties and explored whether it may be possible to borrow against the future value of the proposed developments at Edgar Street.
The discussions about land value conservatively puts a figure for each end of the ground at between £500K and £750K, with the Merton Meadow end earmarked for residential development likely to be the top end of this range of valuation.
We discussed at some length the cash flow as we see it for the period of today through to May 31st 2014, the end of the season and our financial year. Our target is to set a break even budget from June 1st 2014 whatever the consequences but we have an immediate difficulty in order to reach May 31st.
In total we are seeking a cash injection and/or further cash savings of £300K. Because a number of items have stacked up, most notably debts to HMRC, we have suggested the largest element is required upfront in order both to complete January and satify most of those costs that have accumulated to date.
For example, we are under threat of a Winding Up Order due to be heard on January 27th for the sum of £36K for unpaid PAYE for October and November. December PAYE is due and soon January will be also, so the true debt to HMRC is now £80K. This together with a range of other trade creditors and unpaid wages, 15K, requires us to split the cash requirement between £175K immediately and a further £125K to enable us to trade through February 1st to May 31st 2014.
The second figure could be by way of a monthly contribution if that helps at all.
Obviously we have to accept that it may be that the Council can not help at all of does not have the political support to such a move.
I know you can present the case for a football club in a city the size of Hereford as well as I can Geoff. No help from the Council will mean our decision will have to be administration, possibly liquidation for the Club. Such is the severity of our position.
I would merely repeat my comment yesterday of our indirect 'help' in clearing out the Richardson Capital headache that the Council and the football club had had through the 2000/2010 period when you were trying to progress the Edgar Street Grid project whilst keeping any Richardson retail development out of the city. We paid £452K to Richardson Capital in November 2010 which stretched our cash reserves and I never though three years later we would still be discussing new leases and hence failing to see a return on that first decision to clear the club's debts.
I would also add the infamous bond scenario that David Powell worked hard to resolve but had to leave it still inconclusive. This may be an avenue to 'settle' the bond back to the club in lieu of us taking on the refurbishment of the Supporters Club for which the money was earmarked. My understanding is that out of the original £100K the club may have drawn down £17K for office and toilets and then David P found transactions (£16K x 2) for floodlight improvements in around 2006. So we have an unaccounted balance of £50K.
There may be a hugh political win for you to have this resolved at long last!!
We are grateful for your personal support Geoff and in need of any help the Council can consider at this time.
Yours sincerely
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Hereford United Football Club