Cobblers in financial mess
Kindly reproduced with gratitude to Development Finance Today – an article that highlights the pitfalls that can unfold in sports developmental projects when capital-build is the name of the game. Over the years, we’ve witnessed several horror stories or simply buildings not fit for purpose for the sports for which they were intended. Also, we ‘County’ fans no the impact of loans rather than equity and how they can lead to demise of a club:
“Buckingham Group has stopped work on the redevelopment of Northampton Town’s East Stand because the contractor has claimed it is owed £3m from its client County Developments Northampton Ltd (CDNL). CDNL, which is jointly owned by Northampton Town Football Club Chairman David Cardoza and his father Anthony Cardoza, has not paid the Buckingham Group.
Northampton Town has recently been issued with a warning from Northampton Borough Council over the repayment of a £10m loan as well as being issued with a petition by HM Revenue and Customs (HMRC). Buckingham Group has so far been paid a total of £442,000, net of VAT, by its initial client 1st Land Limited which received a significant proportion of the public loan through its client, Northampton Town FC.
This contract stalled after a dispute between 1st Land and the football club where Buckingham was owed £1.85m. But at the end of March, the contractor had reached an agreement with David Cardoza to return to work and complete work on the new stand. “This agreement was based on assurances that there were adequate, additional, public loan monies that remained available to fund the completion of the East Stand works,” said Buckingham Group.
A new contract was signed by CDNL and Buckingham returned to work, but a repayment due under the contract was not paid on time in May, leading to another suspension. Buckingham has claimed that to date, no money has been paid by CDNL and it currently owes £3m, inclusive of an element of VAT, to Buckingham for works completed and for the debt that CDNL took over from 1st Land. This has resulted in the contractor engaging in legal action against CDNL. “This regrettable situation has arisen through what we can only conclude is the gross mismanagement and/or the misappropriation of a very significant public loan by those in receipt of that loan,” said Buckingham Group.
“The loan sum advanced to 1st Land Ltd via Northampton Town Football Club was approximately double the value of the original construction contract for the East Stand work.” On the 22nd October, Northampton Borough Council confirmed CNDL had been wound up, resulting in the Council to look at a wider range of ways to get its £10m loan paid back. “Our priority is to protect the public purse and ensure that the loan is repaid in full, while also offering support to safeguard the future of the football club,” said the Council. “With that in mind, we have made proposals to David Cardoza and offered to work with the club to avoid being liquidated by the HMRC petition, and we await a decision from David Cardoza on that.”
Last week, David Cardoza said he was working night and day to secure a resolution to all the issues that the club is currently facing. “There are plenty of headlines surrounding the club at the moment, that’s understandable, but all efforts are being dedicated to resolve this situation as soon as possible,” said David.
“I understand and accept the urgency, I understand the importance, and I am doing everything possible to remove the uncertainty surrounding the club as soon as possible.””