The latest published accounts for Northampton Town FC, up to 30 June 2020, shows the football club £6 million in debt to its owners.
As we understand it, the current position is around the same, with the financial difficulties resulting from Covid balanced out by increased commercial revenues, reduced operating costs and the sale of Charlie Goode to Brentford.
Following last week’s East Stand plans reveal, it was stated that the club would finance the cost of the stand completion – up to £3 million – but that this would increase the overall debt owed by the football club.
So it is entirely possible that if West Northamptonshire Council (WNC) do conclude a deal with the football club over the club’s wider leasehold land at Sixfields in the months and years ahead, the club itself may be around £10 million in debt to its owners.
To date, the owners have not converted any debt to equity, suggesting that they expect repayment of loan funds in full and having the legal right to do so on demand and without prior notice.
It is our understanding that the proposal before WNC is the same as that which went before Northampton Borough Council (NBC) – this included a term that the first £3 million received from land sales would be paid back to the club before any division of profits between the club and WNC.
If this term is not agreed by WNC, will the stand be completed unconditionally from our owners’ own funds?
We do not have greater detail about the deal in progress but, in this scenario, what guarantees can, and will, be put in place to ensure the club has a sustainable future beyond the present ownership?
Robust scrutiny of the deal is vital and we will be meeting political leaders at WNC shortly to ask that any deal provides clear value and benefit to all parties – the club’s owners, the football club and the West Northamptonshire Council taxpayer – and is beyond subsequent public reproach.
The lack of transparency around governance and finance at the football club is not helpful to the scrutiny and due diligence process, given that the club is now reliant on an offshore British Virgin Islands company, Belle de Jour Ltd, for its funding.
In the document ‘East Stand & Development Overview’, published on 25 June 2021, our owners state “any excess in funds generated from the development land, or any land surrounding the stadium, will be generated for the benefit of the football club.”
But lines can be blurred between the interests of the football club and those of its owners, to whom the club is heavily indebted, unless there is complete clarity of intent.
Will profits from the land deal earmarked for the club simply repay the owners’ outlay on the stand and other debts? Will it leave the club with a basic East Stand with limited revenue benefit potential for the club? The completed stand will add 202 seats to the existing capacity bring it to 8,000, excluding the occupants of the executive boxes. No breakdown of the estimated costs of completing the East Stand have been made available or published.
Will any land deal take away half of the club’s former athletics track land, leaving the East Stand pretty much hemmed in on its eastern boundary by one of many logistics sheds earmarked for the 22-acre site?
When they took over the club in November 2015, David Bower (DB) and Kelvin Thomas (KT) proved that they were backed by £11 million and the council agreed the takeover on the clear understanding, though not legally binding, that £4 million of their own funds was earmarked for finishing the East Stand and providing working capital.
Many Cobblers fans have been asking the Trust what information we have about the club’s period of Chinese ownership and its aftermath. Here is what we know:-
· June 2017
Northampton Town FC Ltd’s holding company was Northampton Town Ventures Ltd – 65% of the shares in Ventures were held by Fantastical Ltd (owned jointly by DB and KT), the other 35% split jointly between DB and KT.
Chinese company 5U Sports purchased 60% of Ventures’ shares, announced by KT as an “investment” and “partnership”. The announcement received extensive national and local media coverage.
No announcement was made of the share sale price but investigations subsequently revealed that £4,008,000 was paid on 23 June and that the seller of the shares was not the majority shareholder as recorded at Companies House, Fantastical Ltd, but Belle de Jour Ltd, an offshore tax haven company registered in the British Virgin Islands.
· September 2017
On 21 September, DB resigned as a director of Ventures, the same date as the remaining 40% of shares in Ventures were sold to 5U Sports.
Ventures was now 100% owned and controlled by 5U Sports with a majority of directors, meaning that the Chinese company had outright control of the football club. No announcement of the second part of the sale was ever made. Supporters were kept completely in the dark.
Amounts paid for the remaining shares were as follows:- £334,000 to Belle De Jour Ltd and £1,169,000 apiece to DB and KT.
The total amount paid for the two-stage purchase of Ventures’ shares was £6,680,000.
· January 2018
On 16 January, a legal charge (mortgage) was registered at Companies House against Ventures showing that its shares in NTFC had been charged in favour of Belle De Jour Ltd, DB and KT as security for the repayment of a loan to the football club of £1,151,747, to be repaid on January 31.
Also on 16 January a Confirmation Statement (a statement which has to be filed with the Registrar of Companies) , signed by KT on behalf of Ventures, was filed at Companies House stating that Ventures’ shareholders were unchanged from the previously filed statement, meaning that there had been no changes in the shareholdings in the 12 months period ended 4 November 2017, whereas 5USports had become the 100% owner of Ventures.
Further, no change of control filing was made at Companies House within the required period of 14 days to record 5USports as the Person with Significant Control. Therefore, any person looking at the public record of Ventures, which by law has to be maintained at Companies House, would have concluded that the company was unchanged other than for the appointment of two new directors (Yat An Yeung and Gui Dong Zheng) and the departure of DB as a director.
· March 2018
KT announced that 5USports had departed Ventures and NTFC as directors and that the shares had been “reacquired”, owing to the failure of 5USports to come up with working capital for the football club. Unannounced, ultimate control and ownership of NTFC was transferred to Belle de Jour Ltd.
It is not known whether a payment was made, and if so the amount paid, for reacquiring the shares.
· June 2018
NBC made it clear there was nothing stopping the football owners completing the East Stand. The boundary issue which KT had said was the only thing holding up works for the completion of the East Stand was seemingly resolved by a decision of NBC’s Cabinet. The Trust learned from the results of a Freedom of Information Act request that the legal documentation sent out by NBC very shortly after the Cabinet meeting was not agreed or signed by our owners. The reason provided by NBC to the Trust was that the owners’ intentions were to acquire from NBC the freehold titles to the land held by the lessee, County Developments (Northampton) Ltd. The situation was one of stalemate.
· June 2018
Accounts of Fantastical Ltd filed at Companies House show that for the year ended 31 October 2017, the period covering the share sale transactions in June and September 2017, there was no activity. The accounts filed are “dormant company” accounts meaning no trading and no money in or out.
· June 2018
The abridged club accounts of 2017/18 contain no indication that the football club had received any investment benefit from the acquisition of its holding company by 5USports. From this time onwards to the present date the indebtedness of the football club has increased year by year.
· June 2021
The Club holds an Open House at Sixfields to present the ‘East Stand & Development Overview’. A number of WNC councillors and the local MP attend the event. The club makes a presentation that includes previously unseen graphics of the exterior of a completed East Stand and plans showing the proposed floor layouts. The plans, drawn up by AFL Architects, Manchester, identify Buckingham Group as the client, and are known by the Trust to have been in existence for over two years but until now not made public.