Football club facing winding up order over unpaid debts

0
729
Football club facing winding up order due to unpaid debts

Football Club Southend United is expected to to receive a winding up order due to unpaid debts. Founded in a pub 116 years ago, Southend United was admitted into the Football League in 1920.

The club was bought nearly 25 years ago by property developer Ron Martin for £4m.

He bought the club from the former chairman Vic Johnson via a company called South Eastern Leisure, which was a joint venture between Martin’s own development firm, Martin Dawn, and Delancey Estates.

Currently sixth in the National League, things are superficially going fairly well for the Shrimpers, whose Roots Hall ground draws in nearly 6,000 fans for home games.

However, the club owes £1.4m to His Majesty’s Revenue and Customs, which has lodged a winding up petition asking the High Court to have the club closed down.

The winding-up hearing at the High Court is expected to be heard on 1 March, though the club’s chairman Ron Martin is understood to be seeking bridging funding of about £5m to cover the debt.

Mr Martin previously said: “The money owed to HMRC is a legacy debt accrued during the period of the pandemic.

“Those bridging funds will, in part, be applied against the HMRC debt with a view to withdrawing the petition.”

The latest winding-up petition is far from the club’s first dalliance with the High Court.

In July 2000, a debt to the Inland Revenue was paid off just couple of days before a winding-up petition was due to be heard.

And 10 years later, the Professional Footballers’ Association became involved when players were not paid amid further winding up petitions served by HMRC which were finally settled in August 2010.

Unpaid debts

Although the club’s accounts are long overdue, the most recent set give some insight into where the club’s cash comes from.

The figures show in 2019 it made:

  • £2.65m in advertising
  • £1m from operations
  • £584,000 from trading players
  • £728,000 in season ticket sales
  • £413,000 in bar and catering income
  • £90,000 in television rights
  • £1.47m in league income

Overall, the accounts show a £7.4m turnover and an operating loss of £2.36m in 2019, down from almost £3m in 2018.

About £6.2m was spent on staff costs in 2019.

The club’s chief executive Tom Lawrence has described their ageing stadium, Roots Hall, as “a money pit” and estimates the club’s funding gap at around £2m per season.

The BBC understands some members of staff have yet to receive their wages for January.

Mr Lawrence has apologised to staff for late payment of wages and wrote on the club’s website: “We have had to navigate tricky waters in recent times.”

Glenn Speller, BBC Essex’s sports editor, said: “Staff have had to accept for sometime now their end of month wages are not guaranteed to be there on time, if at all.

“There have been a number of missed payments, with some still awaiting payment from the end of last year.

“Previously, it has been the players who have had to wait for their money but, up until January this year, they had been receiving regular payments. It has led to many staff taking time away pending receiving their overdue wages.

“Youth players and coaches went on strike following non-payment, which led to games being postponed. The English Football League (EFL), which still helps fund Southend’s academy, have been in contact with the club to remind them of where that funding needs to be used.”

It has also emerged how the club has not paid St John Ambulance, which provides first aid provision at matches as stipulated under FA rules, for a number of recent home matches including the 2-0 win over York City on 4 February.

A St John Ambulance spokesman said: “The charity has worked closely with the football club to come to an agreement regarding payment but, to date, despite many attempts, that has not been possible.”

Roots hall – Southend United’s home

Central to Southend United’s future is the chairman’s long-standing ambition to develop Roots Hall, a project expected to yield a multi-million pound return.

The current Roots Hall ground will be turned into 502 new homes for rent once the football club has relocated.

Plans for a 21,000-seat ground at Fossetts Farm were first submitted in 2017.

The plan was approved by Southend-on-Sea Borough Council last year but legal agreements were needed because of the size of the application.

Mr Lawrence has previously told the BBC: “There is currently a funding gap of around £2m per year that needs to be plugged.

“The medium-term solution to plug this gap is [a new ground at] Fossetts Farm, the short-term answer is bridging finance.”

He described Roots Hall, the club’s home for the past 68 years, as a “money pit with inadequate facilities to service our fans and to generate income”.

Southend want to press on with plans for a new stadium at Fossetts Farm and hope building work can begin “before the second quarter” of 2023.

Mr Lawrence said staff had been “patient, loyal and understanding” and would be “rewarded” as the club’s plans move forward.

The club is also desperate to win promotion.

Mr Lawrence says returning to the English Football League was the goal for the second half of the season.

“Promotion to League Two alone would swing the turnover in our favour by at least £1.4m, reducing the current loss to a manageable number,” he continued.

Afterlife – A Phoenix football club?

The club has faced the prospect of winding up hearings on a number of previous occasions. Money has been found and the club has survived.

But some of the supporters’ groups fear this time might be different.

But the fans’ groups involved say they would rather be able to continue to support the existing club.

Mr Speller said: “The supporters have grown tired of the continued financial issues.

“There have been 10 winding-up petitions in just under eight years.

“The majority are calling for the owner, Ron Martin, to either leave or accept outside investment.

“This will not happen while the plans are going through for the new stadium and training ground along with the planned housing development on the Roots Hall site.

“There are divisions among the various supporters groups over how best to proceed. Some have called for the boycotting of games or demonstrations during matches. There have been marches through the city.

“Other groups do not want to do anything which could affect Kevin Maher and his side while they push for promotion back into the EFL.

“Plans for a phoenix club are at a tentative stage should Southend United disappear but a new club cannot be registered unless the current one has already been liquidated.

“The fact this is even being talked about shows how serious this situation has got.”

Anna Firth, MP for Southend West, said 1 March was going to be the club’s “D-Day”.

“It is a final hearing and it would be very unusual for there to be any further extensions. I do know that the chairman is working extremely hard to get the money together.

“It is my sincere hope that we can all work together to not just ensure the survival of Southend United in the short term, but to guarantee its safety and stability in the long term.”

Former Shrimpers player Glenn Pennyfather, who now presents the Fans’ Phone In at BBC Essex, said the club’s fans were very worried about the current predicament.

“It is the worst situation I’ve ever known and I’ve been involved with Southend United for a very long time.

“Everybody has got a story at the moment,” he said. “People are talking about boycotting the club and there’s talk of the phoenix club as well because they need to have a contingency plan in place.

“It is a mess to be honest. This is the worst it has ever been.”

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.