LEEDS City Council is set to write off almost £1m in debt it is owed by Yorkshire County Cricket Club, in a move to help streamline the club’s finances and safeguard the long-term future of Test match cricket in Leeds.
The club borrowed £9m from the authority in 2005 to help buy Headingley stadium, and still owes £7.4m. However it has now made an offer to pay a £6.5m lump sum in full settlement of the loan, 10 years early but £900,000 less than the full amount owed.
A new report, which is expected to be approved by the council’s decision-making executive board next week, recommends that the authority accepts the offer.
And it stresses that despite the seemingly cut-price deal, the city’s taxpayers will not be left footing the bill.
“The club, as part of a major financial restructuring which is designed to improve the financial viability of the club, has approached the council offering a payment of £6.5m in full settlement of the council’s loan,” the document says.
“The repayment offer from the club provides an opportunity for the council to withdraw now from the current arrangement, 10 years earlier than otherwise.
“While the offer from the club is less than the current principal outstanding, taking account of the actual costs of interest that the council has incurred to date in servicing the debt...it can be shown that the cost to the council of the loan has been fully met”.
The report by the council’s Deputy Chief Executive Doug Meeson adds that “accepting the offer would also remove the risk of the loan not being repaid in the future” and it would help the club to be “more financially sustainable, which will be crucial if the club and indeed the city is to retain test and international cricket beyond 2019”.
The move comes two months after Headingley cricket bosses signed a new funding package to help pay for their £1.25m floodlight scheme, which are required in order to meet new international standards.
Previously, complex funding arrangements with the England and Wales Cricket Board (ECB) and Leeds City Council – with grants staggered in blocks – had meant that alternative means had to be found to pay for the major scheme.
But the new £700,000 deal with Test cricket sponsor Investec helped plug the temporary funding gaps, with the club leasing the equipment rather than borrow the money or use an overdraft.
The agreement effectively rubber-stamped the future of Test cricket at the venue and opened the door to evening Twenty20 matches.
The new report to the executive board - to be heard on Wednesday at Leeds Civic Hall, explains the loans agreement between the parties had been changed a number of times in response to “the club’s continuing cash flow difficulties”, adding that “it is clear from the various requests and consents that have been granted under the loan agreement that the club’s finances are not strong”. However it points out there has been an “improved trading performance”.
The report concludes: “The council, in making its loan to the club in December 2005, did so with the clear objective of enabling the club to purchase Headingley cricket ground, thus enabling them to meet one of the requirements of their staging agreement with the ECB which provides for test match cricket to be played at Headingley up to and including 2019, but also with the aim of ensuring that the loan did not result in a cost to council tax payers. The recommendation in this report is consistent with the council’s...duty to its council tax payers.”
Figures laid out in the report show that as of the start of 2015, Yorkshire County Cricket Club had debts of almost £22m.