Prior to recording our interview with Councillor John Clark for episode #172 of the Gloverscast, he shared the below detail with us regarding SSDC’s purchase and leaseback of Huish Park and the surrounding land.
Below you will find a summary of the situation and answers to questions put to SSDC by The Glovers Trust.
The purchase and leaseback by South Somerset District Council of the ground at Yeovil Town FC – summary and questions answered
- In late 2020, after serious financial losses due to Covid, YTFC approached South Somerset District Council (SSDC) for help. At this point, the owners had made substantial borrowings to survive, but danger of liquidation was threatening continued operation
- As SSDC considers the football club to be of great economic and community value, it agreed to look for ways it could help
- SSDC considered the request alongside other constraints such as
- A solution of maximum benefit to the club in the short term, with good prospects of emerging from any obligation in the medium term.
- A fair return on taxpayers’ money, in line with the Council’s Commercial Strategy.
- Risk to taxpayers’ money adequately protected. In particular, if the football club were to fail completely, then the leases would become null and void and the Council would assume vacant possession.
- SSDC did not wish to take any part in the operational running of the football club.
- SSDC therefore made a purchase and leaseback offer to release funds to the club. This offer followed the transparent route of approval in a public District Executive meeting, and was scrutinised by the Scrutiny Committee (also a public meeting). Features of this offer were: –
- Separate leases for the core footballing area and the ‘non-core area’
- Annual rental to be paid for the footballing area, but with no payment in the first year
- A financial allowance to buy out restrictive covenants
- A route for the club to take back the freehold as soon as possible, by development on the non-core land with the assistance of SSDC (within planning policy constraints)
- The property titles that passed to SSDC must be free from any charges related to lending (thus some of the loans would have to be redeemed).
- Many months followed during which attempts were made to seek other buyers for the club. According to the Chairman, one such offer was accepted but the money was not forthcoming. During this period, the SSDC offer remained on the table
- Earlier this month legal agreements were completed to finalise acceptance of the SSDC offer and the titles of the land and assets passed to SSDC
Answers to questions
- What is the name of the leaseholder?
Both leases are in the name of the Yeovil Football & Athletic Club Limited (YFAC).
- How much money from the deal will be used to cover debts that have been taken on to purchase and run the football club?
The money to purchase the club is from the Capital Budget of SSDC, approved in a public meeting of the Council. How much of the money is used to cover debts that were taken to keep the club afloat is a matter for the owner, although as mentioned, any debts that have a charge on the land have to be paid off under the terms of the purchase and leaseback deal.
- After the first rent free year, what are the annual rental payments? What percentage of the annual budget will this represent? What is the long term plan for making these payments sustainable?
These are matters for the owner to respond if he wishes. As stated above, if developments on the non-core land successfully raise sufficient capital to repay the SSDC investment, then the rent is cancelled and the core area freehold returns to YFAC.
- What safeguards or guarantees (if any) are there within this agreement to ensure the club benefits from this deal, both in the immediacy and the long term?
The agreement releases capital to the owner to help with financial viability, but as SSDC has been clear from the start that it does not wish to play any part in the operational running of the football club, the agreement does not control how the owner runs the club. However one may observe that it would not be in the interest of the present owner or any successor to default unnecessarily on the deal as any chance of upside on the developments would be lost.
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