Northampton Borough Council has agreed to a £1.5million loan request from the Saints so that the rugby club can make improvements to Franklin’s Gardens.
The council’s cabinet agreed to the loan at The Guildhall last night (February 6) and insisted that lessons have been learned following its previous loan to the Cobblers, where £10.25million of loan monies to redevelop Sixfields went missing.
The authority had also previously loaned the Saints £5million for its new Barwell Stand, for which the rugby club has paid back £1.2million.
Cabinet member for finance, Councillor Brandon Eldred, said: “We have learned our lessons from the past with regards to loans. We have never had any problem with the Saints, but if the impossible does happen we have some backup and security on some of the club assets. But I am fully confident that they will pay the money back.”
The Saints have requested the additional £1.5million so that it can build an indoor training building with artificial turf, upgrade its conferencing and catering facilities, resurface the supporter village, replace the marquee bar, and make changes to the car park entrance on Weedon Road. There would also be pitch and drainage replacements and upgrades for both training pitches and the main pitch.
Speaking to the cabinet last night, Saints chief executive Mark Darbon said the plans would help towards the club’s aim of becoming "the number one club in Europe" over the coming years.
He said: “We think we have a robust plan but we want to invest in our facilities to deliver on that plan, and that’s where the loan comes in. It will enable us to invest in capital projects which we believe will lead to a successful Saints. And a successful Saints is a good thing for Northampton.
“I hope we have been a good customer. We have paid back £1.2million on the loan for building the Barwell Stand, and I think we have created some headroom.”
The cabinet heard how the Saints had been one of 11 clubs in the Premiership to lose money in the last year, but that with the exception of the last two years they had posted profits for the last 18 years.
Councillor Eldred added: “It’s good business sense. It will bring extra revenue into the council. The leader has said that it’s time to move on so that we can move forward with people like those at the Saints, who are very good creditors with us.”
The council is still reeling from its loan to the football club, where £10.25million went missing. Earlier this week the sole director of the company which received the bulk of the loan money was banned from being a director for 10 years, while last month the former directors of the football club were ordered to pay compensation to the council. A criminal investigation into whether the money was ‘misappropriated’ is ongoing.
Labour leader Danielle Stone has been a big critic of how the Cobblers loan was handled, but publicly backed the cabinet’s decision to press ahead with the Saints loan.
She said: “The question at the last audit committee was whether lessons have been learned from previous loans. But the test of that is when we make another loan, so we can see if all the procedures are in place.
“One of the risks for me following the Cobblers debacle was actually becoming risk averse. So actually I’m really pleased that this has come forward. I do think the lessons have been learned and that due diligence has taken place and I’m really pleased this is being held in public, so that there’s no secret deals. I think it’s important that we have that relationship with the Saints, and I’m pleased that we will be making money from this.”
The council is also treating it as a commercial investment as at six per cent interest, it will provide an additional income stream of roughly £90,000 per annum.
The loan money is understood to be coming from the council’s own funding pool, and not the Public Works Loan Board.
Council leader Jonathan Nunn added: “We had hoped to bring this to an earlier meeting, but we wanted to do even more due diligence.”
NBC chief executive George Candler and chief finance officer Stuart McGregor were delegated authority to recover assets and funds to the appropriate value, should the Saints default by more than two payments on either the existing loan or the new loan.