Northampton Borough Council is set to agree a further £1.5million loan to Northampton Saints so that it can finance improvements to Franklin’s Gardens.
The rugby club already has an existing £5million loan from the council which was drawn down in January 2014. It paid for the cost of redeveloping the Barwell Stand, which was completed in 2016.
Capital is repaid twice a year in January and July on the first loan, and the club has already paid back £1.21million of the original loan.
But now Saints have requested an 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.
If granted by cabinet next Wednesday (February 6) it means the rugby club will have been loaned £7million overall by the borough council.
The council’s chief finance officer Stuart McGregor writes in papers that will be seen by the cabinet: “This loan would be to provide economic support to a major community and business within the borough and funded from capital funds, and seen as a commercial income generator for the council of circa £90,000 per annum.”
Although there have been no problems with the 2014 loan to the Saints, a £10.25million loan to the Cobblers from the council has yet to be repaid. An ongoing criminal investigation is looking into the missing money, while the council was successful last week in a civil court case against the football club’s former owners.
Anthony Cardoza was ordered to pay back £2.1million of the loan money, although the council admits it is unlikely to recoup the full sum.
The thought of facilitating further loans to the town’s sports clubs may have the alarm bells of some critics ringing, but the council insists it won’t be repeating its mistakes.
Mr McGregor adds: “The council has had a bad experience in respect of a previous loan to a sports club. Lessons have been learned and the delegation will be made to officers to take any foreclosure action to enforce the security without reference back to cabinet or councillors.
“The latest accounts of the rugby club show they have made a loss, this is primarily due to issues around player salaries, which are now in a four-year cap regime. The club has previously been profitable and has been recognised by peers as being more financially stable than most. The intention is to maximise income from the grounds and facilities themselves so as to alleviate the short-term financial challenges.
“Should the club fail to make payments on the existing loan or the new loan, officers can take immediate action to recover the council’s funds. The club has a very healthy balance sheet with £17million of net assets and has provided a revised land valuation by Savills to demonstrate that should the council have to recover funds through realising assets, it would not need to sell the stadium itself. Other parcels of land assets exist to cover the club’s outstanding loan liability.”
The borough council cabinet has been recommended to approve the request for the £1.5million loan, and to delegate to the chief executive George Candler and chief finance officer Mr McGregor authority and powers 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 if it is granted.