At an Extraordinary General Meeting of the club’s
shareholders held on 29th November 2004, a decision was taken, with
69.7% of the votes being in favour and only 9.3% against, to sell Cambridge
United’s Abbey Stadium for £1.9million
to Bideawhile, a company owned by one of the club’s directors, John
Howard. The reason given for this drastic decision was that the club would
otherwise have faced going into administration and possible receivership on 1st
December. The club was understood to be losing £10,000 per week, and things
were so bad that United chairman Gary Harwood had informed staff in a
memorandum, which was subsequently leaked to the press, that he would be unable
to pay the usual monthly wages until after the EGM. The club’s bankers, he
said, had been unwilling to agree to any increase in the club’s overdraft until
after the EGM.
The plan now is for the club to lease back the ground from Bideawhile at an initial
annual rent of £200,000 for the next 50 years. However, there are some
alternatives. The club would retain control of the Abbey for the next four years
and could buy back the Newmarket Road end of the ground for £1.35 million
within the next 2½ years. Whether in fact they are in a position to do this
will very much depend on the success of the intended £5.5 million
“leisure-oriented” redevelopment of the site (which includes plans for an
86-bedroom hotel), but if they manage to go ahead with the repurchase, the
annual rent would then fall to £100,000 p.a. They would then need to pay
another £1.2 million within the final 18 months in order to buy back the rest
of the ground. If they are unable to achieve this, the idea is that the lease
would continue, and the club would be given first refusal should Bideawhile
decide to sell. The “first refusal” option is apparently dependent on the
club exercising its opportunity to repurchase the Newmarket Road end within the
2½ years; should it fail to do so, the “first refusal” option would pass,
although the remaining 47½ years on the lease would remain. In this context, it
is worth noting that Howard has admitted that he does not see the Abbey Stadium
as a long-term investment, which rather suggests that his plan may be to sell
the ground, whatever happens, as soon as he is able. Another controversial point
regarding the club’s sale of the ground was that its value had been stated in
club accounts as being around £4 million, but Howard sought to justify the £1.9
million price-tag by pointing out that the valuation was based on vacant
possession and not as a site with a sitting tenant. Many fans are extremely
unhappy about the buy-back being at a premium when they feel that the lease of
the ground is so high, but Harwood’s explanation is that Howard has invested
£1 million of his own money into the deal, and is therefore entitled to see a
suitable return on his investment.
The
proceeds from the sale were allocated as follows: £200,000 to go towards paying
off an overdraft at Barclays Bank, £135,000 to repay a commercial loan, £420,000
to a commercial mortgage, and £660,000 to repay a bridging loan due on 24th
December 2004. £500,000 would thus have remained as a working capital, but even
so, shortly after the EGM, job losses at the club were announced.
Commenting
on the sale of the Abbey, Dave Matthew-Jones, of the Supporters’ Trust
“Cambridge Fans United”, expressed his disappointment that the Trust had not
been able to put forward an alternative solution in time for the EGM. The Trust
would, however, continue to keep an eye on things in order to ensure that the
club was being run properly. Many fans were furious that the failure of the CUFC
board to go public about the extent of the club’s precarious financial
position had made it extremely difficult for the Trust to come up with an
alternative proposal, having been given less than four weeks’ notice. One fan,
indeed, was so incensed that he promptly advertised Gary Harwood as being “for
sale” on e-Bay! Nick Pomery explained at the EGM that one of the main reasons
for the failure of the Trust’s community-based plan was a lack of working
capital: £400,000 was needed before the end of the season to cover running
losses, plus £1.5 million of refinance to cover existing club debts. The Trust
had £200,000 of investment commitments, but needed £400,000, and funds were
therefore insufficient for them to proceed. Despite his analysis, when all
things are considered, the feeling remains that the time the Trust was allowed
to formulate its own rescue plan was woefully inadequate.
John
Howard, who has spent his entire career in estate agency and property
development, has been on the board of Cambridge United for the past 17 years. He
is said to have abstained when the votes were cast at the EGM. He blames the
crisis on the way the way in which the game has changed financially. Speaking on
the club’s Official Website, he remarked: “In the early days we used to
budget to lose between £50,000 to £100,000 a year and make up for the
shortfall by selling players, but Trevor Benjamin was the last big fee we
received.” (Benjamin was sold to Leicester City on 12th July 2000).
“When you consider that Benjamin was £1.6 million, then Kitson would have
gone for well in excess of £1 million had the transfer market not crashed.”
On Boxing Day 2003 Cambridge had been obliged to sell striker Dave Kitson to
Reading for a fee variously estimated to be £150,000 and £250,000 in order to
raise some working capital.
Those
Cambridge fans angry at the club’s sale of the Abbey Stadium must now be
hoping anxiously that the team escapes relegation to the Conference at the end
of this season. This could prove disastrous not only on the field, but also off
it. Chairman Gary Harwood was at pains to point out that if this happened, the
club would lose £150,000 Football League income, £70,000 from Youth Team
funding, an estimated £185,000 to £200,000 in lost income at the gate, a
possible 50% loss in commercial income -- down from around £300,000 to an
estimated £150,000, and the loss of the parachute payment if an immediate
return to the Football League is not achieved.
http://pressrelief.org/repository/news/pictures/5178.jpg
Property
developer and Cambridge director John Howard (photo: Cambridge Evening News)
http://pressrelief.org/repository/news/pictures/5154.jpg
Cambridge
United chairman Gary Harwood (photo: Cambridge Evening News
http://pressrelief.org/repository/news/pictures/4829.jpg
The
Abbey Stadium, Cambridge (photo: Cambridge Evening News). The Newmarket Road end
of the ground can be seen in the bottom left-hand corner of the picture.
CJ. 09-12-2004
|
