Date:Friday July 25 2008
The Football League have today published a letter that they have sent to Rotherham United
The Football League has written the following letter to Rotherham United Football Club (RUFC) Limited regarding its application for membership of The Football League.
I write further to our meeting of Monday 14th July 2008, when we had the first opportunity to discuss with you New Co's application to become a member of The Football League in place of Rotherham United Football Club Limited (Old Co). It was clear at that meeting that there were a number of points which needed to be addressed more fully before we would be in a position to present your application to the Football League's Board of Directors.
We subsequently received, on the afternoon of Friday 18th July, additional information relating to the business plans of New Co. Further substantial documentation was received on the morning of Monday 21st July relating to various other aspects of that application.
Football League Finance Director, Tad Detko, provided an initial response, raising several queries, on the financial forecasts on Tuesday afternoon whilst I provided some initial observations on the other documentation the following day.
Tad and I have now had the opportunity to update The League's Chairman, Lord Mawhinney, on the progress of this application. As you will recall from our meeting, we are keen to ensure that your application is progressed as quickly as possible, with a view to ensuring that the Board can, if possible, make a determination in advance of the start of the coming season. This is imperative because, if New Co cannot satisfy the Board in respect of its application in advance of the start of the Season, only Old Co may start the 2008/9 Season and that scenario presents its own complications as regards ensuring the administrator is in a position to fulfil fixtures at Millmoor.
Having considered some of the issues raised by the documentation received the Chairman has asked me to outline the key areas on which he believes the Board are likely to require further information from you when they come to consider the fundamental principles arising out of your application.
I should stress that your letter of Monday 21st July 2008, addressed to Andy Williamson, appears to be based on the premise that there is 'a strong possibility' that New Co's application will be accepted subject to conditions. You should not make that assumption. It is incumbent on New Co to provide the Board with evidence to justify why that should be the case.
Satisfaction of Unsecured Creditors
Since the 27th June, we have been awaiting a formal report on the position of the proposed CVA and the outcome of the creditors' meeting. However, nothing was received until Monday (21st July) and it would appear we still have not received any report direct from the administrator in the normal way. Nevertheless, we now have formal confirmation that the CVA was formally proposed but rejected by creditors.
The outcome of the CVA meeting raises another issue which the Board will wish to consider, namely the lack of positive support from unsecured creditors for the proposed CVA. Based on information we have available, principally the Administrator's Paragraph 49 Report and the subsequent report of the creditors meeting, only 8% of creditors in number, and 5.6% in value agreed to accept the terms of the proposed CVA. This analysis excludes HMRC. Even excluding both HMRC and the Booth interests from the list of creditors, the percentage of creditors in value agreeing to the proposals increases to just 7.7%. A significant number of creditors have therefore failed to show their support for the club's continuance based on the submitted proposals.
Bearing this in mind, your letter of 21st July does not set out why New Co believes that, notwithstanding the failure of Old Co's creditors to support the Club, New Co should be admitted under the so-called 'exceptional circumstances' provision.
The Ground in Which the Club Will Play
It is now apparent the Club no longer has the ability to play matches at Millmoor - which could cause a problem for the Administrator.
A proposed licence agreement has been lodged in respect of Don Valley by NewCo. Some issues arise from that and we await your response.
In respect of NewCo's application to relocate, we still await (i) formal proposals with regards to the settlement of the debt due to the Football Foundation/Football Stadia Improvement Fund (given that they rank as a football creditor the Board are obliged to require this debt to be paid in full), and (ii) commitments from New Co with regards to its ability to return the Club to Rotherham within a stipulated timeframe. As you know, the Board's preliminary view is that this timeframe should be four years, as you requested. Further, you have not yet responded to the Board's stated position regarding a £750,000 security bond. No provision has been made for either of these matters in the business plans submitted.The League's position remains clear and you should not allow any alleged tardiness on the Football Stadia Improvement Fund's part to frustrate you in meeting our requirements. Following on from our conversation yesterday, I e-mailed Bob Booker at the Football Stadia Improvement Fund requesting that they update both you and the Football League as a matter of urgency.
The Chairman has endorsed my comments delivered to Julie Hunt on 23rd July 2008 in respect of the term and termination provisions of the proposed licence agreement. It is his view that the Board would require any provision for an extension beyond 4 years to be limited, and you may wish to reconsider that aspect of the agreement.
Tad Detko has already made a request for further information in respect of the proposed business plans you submitted last Friday. Of key concern to him is the non provision for the repayment of the Football Stadia Improvement Fund debt, a matter he has already raised. Furthermore, no provision has been made within the plans for any costs associated with the proposed delivery of a new Community Stadium in Rotherham. How will these costs be met to deliver such a vital aspect of your proposal?
We remain concerned at the lack of headroom within your plans. Two years ago when the club last exited administration, and in the full knowledge of agreements entered into with the Booth family, there was limited investment available to the club. That lack of investment has again caused the club to enter into administration. Clearly we do not want to be facing a similar scenario in another two or three years, so the Board will need to see a demonstrable commitment to the club going forward.
You should know that it is our intention to publicise this letter. We wish to clarify issues relating to the club for the benefit of the wider public and the fans of Rotherham United in particular. This letter sets out the areas New Co will have to address before the Board is in a position to consider an application for transfer of membership. We feel it necessary to take this step because there have been a number of inaccurate reportings of the state of New Co's application, what the Board are doing, and when. For example, I learned that the Board were supposed to be meeting on 23rd July from the BBC Website, which of course has never been the case.
In conclusion, time is short. It is imperative that NewCo's application is presented to the Board prior to the start of the season and it is in the best possible shape. We want to reduce the risk that the Board may raise further points which might then prevent the issuing of a final decision before the start of the new season. This letter is intended to assist in that process. I look forward to receiving your submissions in respect of the highlighted areas for the Board to consider as soon as possible.
Date:Friday July 25 2008
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