The Manchester Evening News reports today that Salford City Council is to loan the city’s rugby club, Salford City Reds, £750,000 as part of a bail-out alongside Peel Holdings who will be matching the Council’s contribution. Salford City Reds, which has been facing a financial crisis since before it’s move from The Willows, already owes Salford’s council £1.5m from a previous loan.
Salford’s elected Mayor, former Eccles MP Ian Stewart, admitted during his mayoral election campaign that he was an avid supporter and season ticket holder of Salford City Reds (something that is to be commended), but I question his impartiality in this matter.
It’s my understanding that at Salford Council’s Cabinet meeting next week the additional £1.5m loan/rescue deal will be proposed – on the basis that the Mayor will insist the existing Salford City Reds board members stand down with two council members and two from Peel Holdings replacing them. John “Mr Salford” Wilkinson himself will be asked to stand aside as Chief Executive and Chairman.
In a seperate article today on the Manchester Evening News website it is reported that Salford council faces a £4m overspend on this year’s budget and is trying to find £25m in new savings for next year.
At the same time as the council is looking at the town hall’s reserves and speeding up possible future savings in a bid to tackle the deficit, it proposes to lend £750,000 to a rugby club that faces a winding-up petition in January 2013. Salford Councillor Bill Hinds, assistant mayor for finance, said the town hall is facing the worst cuts in its history – and expects budgeting to get even harder in the future. So how can it justify risking the council’s financial future on another “gamble”?
Salford Reds has to pay back its existing £1million loan to Salford Council at a rate of £50,000 every three months until March 2017. Accrued interest is also being charged at 1% above Bank of England base rate. Additional payments for the £1.5m joint loan being offered by the council/Peel are not available at the time of writing, but if the Reds cannot increase their gate receipts soon, it is hard to see how they will be able to pay back what they owe to the council.
The excellent Salford Online website reports today that it understands Salford council have received NO money back from Salford City Reds from the original £1.5m loan.
Conservative leader Karen Garrido is quoted in the same Salford Online article saying “We’ve been trying to find out about this – where the money is coming from, are we borrowing the money, what’s the business case for this loan. The opposition have had nothing to do with this and we’ve never been a party to it. If it is true, it’s a shocker.”
As a Salford City Council resident and taxpayer, I plead with the council’s cabinet members – don’t do this. Frontline services are more important than the kudos of having a city rugby club. We have already sunk far too much money into this failed venture, it would be wrong to lend it any more. Please don’t.