Exeter City FC’s burden of debt

Exeter City’s somewhat shaky run of form has seen them drop five points off the playoff race. But if their 3-1 loss at relegation-threatened Weymouth caused fans to fret at the widening gap between City and 5th place, of just as much concern has been the news that Exeter are much more in debt than supporters had originally believed.

Following their FA Cup tie and replay against Manchester United in 2005, the club soon came out of their Creditors Voluntary Agreement leading to the general perception that Exeter were debt-free. But this week came the news that the club still owe around £300,000 in historic debts.

The revelation may have caused some fans to stop and re-check the balance books, but it’s to the current regime’s credit that not only have they reduced the post CVA debt from £1 million to the current figure, but, compared to previous boards, that they’ve also told the fans about the debt in the first place.

The dark days

In Exeter City’s recent history, the questions many fans had was not “are we in debt,” but rather “how much debt are we in?” In 1990, the future looked bright with the Grecians storming to the old Division 4 title. Four years later the title-winning squad had been long-since disbanded, St. James Park had been sold to Beazer Homes and the club was in administration.

City eventually came out of administration in 1996, while the city council brought back the ground meaning the short-term future for Exeter was secure, even if the club was still relatively impoverished.

The club’s chairman and local jeweller Ivor Doble kept the club moving along, but Doble was not that rich in comparison to many other league chairman and spent much of his time looking for a buyer, while fellow director Bernard Frowd locked the club into many long-term deals that were hard or impossible to get out of.

In 2002 Doble finally sold up to a consortium containing celebrity spoonbender Uri Gellar, ex-Scarborough chairman John Russell, and ex-Swansea managing director Mike Lewis. Russell had taken Scarborough out of the league in 2000 and, while up north, had managed to pick up a conviction for obtaining property by deception. Lewis, meanwhile, was reviled in Swansea for selling the club to Tony Petty, who sacked or sold many of the Swans key players during his brief and controversial spell as owner.

Nevertheless there was optimism that a new board meant a fresh start and, more importantly, there would be more money to spend, but a surreal flying visit from pop star Michael Jackson to St. James Park was about as entertaining as it got at City. Even that had a grim humour about it. It was billed as a fundraiser for club and charity, except the charities only got their money after the delays were highlighted in the local press, while the company who produced the programme for the event, like many other businesses, went unpaid.

Three managers in one season and mounting debts saw Exeter surrender their league status in 2003 when they finished 23rd in the old Division 3. Shortly after, Russell and Lewis were arrested for fraud.

Following their arrest, astonishing stories came out of Exeter, about how the pair either took home the matchday takings by car or left the cash in the club safe over the weekend before banking it on Monday. Meanwhile, one City fan who booked his wedding at St. James Park was asked to make out the cheque personally to Russell.

Last year Russell and Lewis both pleaded guilty to knowingly carrying on trading with intent to defraud creditors. Russell also pleaded guilty to obtaining pecuniary advantage by deception and is now behind bars.

But, following the pair’s arrest, there were more pressing matters at St. James’ Park. Ivor Doble, by now in his late seventies, was in no condition to tackle the £3.2 million pounds worth of debt and, with the club perilously close to folding, the Supporters’ Trust took over.

Fire Fighting

The 2003 close season saw a heroic effort from the Trust just to keep the club afloat. Uri Gellar by this stage had disappeared, despite at one point offering a significant sum of cash to anybody who could keep Exeter afloat. He only appeared at one game in their first Conference season, at Woking where a documentary team was filming.

The Grecians managed to make it to the start of the season and, after the Trust brought Doble’s shares, the club entered into a Creditors Voluntary Agreement that eventually saw creditors paid just 7.12p in the pound.

Despite a decent first season in the Conference that saw them finish 6th, one point off the playoffs, money was still incredibly tight and the club were only able to pay their tax bill in December due to an FA Cup Second Round win over Doncaster Rovers.

If that brought Exeter some breathing space, what happened next was beyond anybody’s wildest dreams. City were drawn away to Manchester United in the third round and an incredible performance saw them come away with a 0-0 draw and a further money-spinning replay at St. James’ Park.

Despite losing the replay 2-0, City had struck the footballing jackpot and with the money from the Manchester United games, the CVA was paid off. The Grecians, it appeared, were debt free.

Current debts

In the wake of the euphoria of the United game, the perception was the club was trading profitably. That wasn’t the case, and post-CVA Exeter City were still suffering heavy losses.

The Manchester United year saw City make a £376,973 operating profit. The following year, with no play-off place, nor any sustained cup run, bar reaching the semi-finals of the FA Trophy, there was a trading loss of £206,358.

Exeter’s finance director Steve Williams, who was appointed 15 months ago, appreciates some comments made when the club came out of the CVA may have unwittingly mislead fans. “Unfortunately, the messages that got into the press about finances over the years have stressed the commercial and financial successes that have been achieved and they have not shown the full picture,” he told Exeter’s newspaper, the Express and Echo.

Essentially, while the football creditors and debts up to the CVA cut-off date were paid off, the operating losses incurred between that date and today make up the current debt. The board have managed to cut down this debt, which was around £1 million when the club exited the CVA, to today’s figure of £300,000.

What is clear is just how much contributions from the Supporters’ Trust have helped steady the ship. Once the Trust puts in the £60,000 it is due to hand over this year, it will have contributed over £470,000 to Exeter City. It’s a far cry from the times when individual directors or companies put in loans, expecting to be paid back one day.

While the current level of debt may come as a shock to many Exeter fans, the board have moved to reassure fans. A five year plan has been put in place and the directors have promised that manager Paul Tisdale’s playing budget won’t be affected. A long statement on City’s website details how the club arrived in its current position, while directors and trustees have engaged on fans forums and mailing lists to answer many of the questions posed in light of the information.

The club is currently on track for this financial year, although the cloth is being cut a bit tighter than many City fans had realised. Cup runs, playoffs, promotions and player sales are still needed to bring the £300,000 down, but with nearly three-quarters of a million already cleared, Exeter are confident they are heading in the right direction, even if times continue to be tough off the field. As one of their current directors Paul Morrish has said: “We are paying our way and not many clubs can say that.”

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