Post by Macmoish on Nov 17, 2010 7:50:41 GMT
David Conn/The Guardian
Mansfield Town, Keith Haslam and that controversial dividend
The new owner of a club that fell on hard times is investigating the circumstances around a dividend which Field Mill devotees believe should not have been paid out
Alongside a corps of fellow former Football League stalwart clubs, Mansfield Town are labouring these days at the coalface of the Conference Premier, but down at Field Mill they have not forgotten the man who took them there, or how he got out with money – and the ground.
Earlier this month the club's new owner, John Radford, made the dramatic public announcement that he has "instructed lawyers and forensic accountants to investigate" the £2.44m dividend paid out by the club on 9 December 2008, the first struggling winter after relegation. The vast bulk of that dividend, £2.36m, went to Stags Limited, the company belonging to the club's former owner, Keith Haslam, which held most of the club's shares. Haslam immediately used £1.9m of the money to buy Field Mill, thereby separating the ground from the club which has paid rent to Haslam's company to play there ever since.
On that same day Haslam sold the club itself, without the ground, to three new directors led by the businessman and lifelong Mansfield fan, Andrew Saunders. On advice from the club's auditors they made it plain soon after taking over that they believed the club should never have declared that dividend, because, they said, it did not have the means to pay out such a large amount of money.
In the accounts for that year, to June 30 2009, Saunders and his co-directors, Steve Middleton and Andrew Perry, said: "A dividend was voted on 9 December 2008 of £2,442,488. In the directors' view, the dividend was illegal, as at the time the company had insufficient net assets. The directors are considering legal action to pursue this amount."
The Companies Act 2006 states that a company may only pay a cash dividend "out of profits available for the purpose", which is defined as "accumulated profits". In that difficult first Conference season Mansfield had a turnover of only £1.2m altogether, and recorded a loss of £600,000. The previous year, the last in the League, the club turned over £1.8m but still made a loss of £200,000. Field Mill, though, had been newly valued at £1.9m by Knight Frank, surveyors of Baker Street, London, and at June 2008, the club's profit and loss account was £743,780 in the black. Haslam maintains the payment of the £2.4m dividend by the club was legal and he is not expecting to have to pay it back.
Saunders never followed up on that bold statement in the accounts because, he said, Mansfield Town did not have the money to instruct lawyers to mount a legal action. Radford, though, bought the loss-making club from Saunders on 27 September this year. He had the 2008-09 accounts, the circumstances of the dividend and the ground transfer explained to him, and immediately declared he had instructed lawyers, Pinsent Masons in Leeds, to investigate.
"If the investigation supports the view of the former directors [that the dividend was illegal]," an official club statement said, "the club will take any necessary steps to recover any monies for the benefit of the club which should not have been paid out in the past."
The statement added that the investigation will also examine "certain other payments to various individuals and companies totalling over £600,000 [which] have also been brought to the attention of the club."
These payments are understood to be loans which Haslam, and Stags Limited, took out from the club over a number of years. The Guardian reported in December 2005 that at that point, Haslam had personally taken out £585,142 in loans from Mansfield Town, which was then a breach of the 1985 Companies Act. The law has since been relaxed, to allow directors to take out personal loans from their companies. A further £583,529 was also borrowed by Stags Limited – a total £1.16m paid out in loans by Mansfield Town to Haslam and his company.
When Haslam ultimately sold the club to Saunders on 9 December 2008, the day the £2.4m dividend was declared, the accounts say Stags Limited's "overdrawn loan account" stood at £757,494. Haslam paid it off with £436,663 from the dividend the club paid to him, and a further £300,000 in cash. Haslam personally owed £78,709 to the club, which Stags Limited repaid. The accounts record £51,643 paid to Stags Limited during 2008-09, for "rental of the ground and car parks".
Haslam bought the loss-making club in 1993 for £1, took responsibility for keeping it in business and in the Football League, and he managed the redevelopment of Field Mill, which was carried out as part of a new retail development on the land alongside it. That earned him the unstinting support of the local Labour MP, Alan Meale, who had worried for the club's survival before Haslam arrived. However, as the club struggled, and the evidence emerged of the loans Haslam had taken out, he became bitterly unpopular with many fans. The pressure built relentlessly as the Stags staggered towards relegation, until finally, after relegation, he agreed to sell to Saunders.
The new owners took charge of the club now separated from its ground, paying Stags Limited which still owns it, £120,000 a year to play there, according to Saunders. As Mansfield descended into the tough, relatively cash-strapped Conference, Saunders sank about £500,000 in personally to fight the financial fires which flared up around them.
"It is very difficult for a club of Mansfield's size to operate at non-league level," Saunders reflects. "We did not really have the income or the gates. A lot of fans who were disillusioned had said they would come back to the club once Keith Haslam had gone, but in the Conference, it didn't happen."
With Mansfield continuing to lose £10,000 a week, Saunders cast around for a buyer with more means to dig Mansfield out, so in September he sold the club to Radford, who runs the Doncaster-based One Call insurance group. Radford, like Haslam 17 years ago, bought Mansfield Town for £1, and he has pledged to shovel up £500,000 to shore up the club this season.
It took only a month for Radford to announce he had seen the statement made by Saunders and his two fellow former directors in the 2008-09 accounts that the £2.44m dividend "should not have been made because the club had insufficient net assets to permit it at that time", and to appoint Pinsent Masons. It is understood that their investigation is continuing.
Haslam, speaking to the Guardian after that announcement, denied there had been anything illegal about the declaration of the dividend.
"I believe it was legal," he said. "The decision was taken to declare a dividend; I bought Field Mill with it, and the club leases it."
He said he had not yet heard from the club. "I don't know what they're looking at; the club has not been in touch with me. I do not think the dividend was not legal, and I do not believe I will have to pay the dividend back."
Since leaving Mansfield Haslam said he has become involved in several other businesses. "I'm doing fine, thank you," he said.
www.guardian.co.uk/sport/david-conn-inside-sport-blog/2010/nov/17/mansfield-town-dividend-keith-haslam
Mansfield Town, Keith Haslam and that controversial dividend
The new owner of a club that fell on hard times is investigating the circumstances around a dividend which Field Mill devotees believe should not have been paid out
Alongside a corps of fellow former Football League stalwart clubs, Mansfield Town are labouring these days at the coalface of the Conference Premier, but down at Field Mill they have not forgotten the man who took them there, or how he got out with money – and the ground.
Earlier this month the club's new owner, John Radford, made the dramatic public announcement that he has "instructed lawyers and forensic accountants to investigate" the £2.44m dividend paid out by the club on 9 December 2008, the first struggling winter after relegation. The vast bulk of that dividend, £2.36m, went to Stags Limited, the company belonging to the club's former owner, Keith Haslam, which held most of the club's shares. Haslam immediately used £1.9m of the money to buy Field Mill, thereby separating the ground from the club which has paid rent to Haslam's company to play there ever since.
On that same day Haslam sold the club itself, without the ground, to three new directors led by the businessman and lifelong Mansfield fan, Andrew Saunders. On advice from the club's auditors they made it plain soon after taking over that they believed the club should never have declared that dividend, because, they said, it did not have the means to pay out such a large amount of money.
In the accounts for that year, to June 30 2009, Saunders and his co-directors, Steve Middleton and Andrew Perry, said: "A dividend was voted on 9 December 2008 of £2,442,488. In the directors' view, the dividend was illegal, as at the time the company had insufficient net assets. The directors are considering legal action to pursue this amount."
The Companies Act 2006 states that a company may only pay a cash dividend "out of profits available for the purpose", which is defined as "accumulated profits". In that difficult first Conference season Mansfield had a turnover of only £1.2m altogether, and recorded a loss of £600,000. The previous year, the last in the League, the club turned over £1.8m but still made a loss of £200,000. Field Mill, though, had been newly valued at £1.9m by Knight Frank, surveyors of Baker Street, London, and at June 2008, the club's profit and loss account was £743,780 in the black. Haslam maintains the payment of the £2.4m dividend by the club was legal and he is not expecting to have to pay it back.
Saunders never followed up on that bold statement in the accounts because, he said, Mansfield Town did not have the money to instruct lawyers to mount a legal action. Radford, though, bought the loss-making club from Saunders on 27 September this year. He had the 2008-09 accounts, the circumstances of the dividend and the ground transfer explained to him, and immediately declared he had instructed lawyers, Pinsent Masons in Leeds, to investigate.
"If the investigation supports the view of the former directors [that the dividend was illegal]," an official club statement said, "the club will take any necessary steps to recover any monies for the benefit of the club which should not have been paid out in the past."
The statement added that the investigation will also examine "certain other payments to various individuals and companies totalling over £600,000 [which] have also been brought to the attention of the club."
These payments are understood to be loans which Haslam, and Stags Limited, took out from the club over a number of years. The Guardian reported in December 2005 that at that point, Haslam had personally taken out £585,142 in loans from Mansfield Town, which was then a breach of the 1985 Companies Act. The law has since been relaxed, to allow directors to take out personal loans from their companies. A further £583,529 was also borrowed by Stags Limited – a total £1.16m paid out in loans by Mansfield Town to Haslam and his company.
When Haslam ultimately sold the club to Saunders on 9 December 2008, the day the £2.4m dividend was declared, the accounts say Stags Limited's "overdrawn loan account" stood at £757,494. Haslam paid it off with £436,663 from the dividend the club paid to him, and a further £300,000 in cash. Haslam personally owed £78,709 to the club, which Stags Limited repaid. The accounts record £51,643 paid to Stags Limited during 2008-09, for "rental of the ground and car parks".
Haslam bought the loss-making club in 1993 for £1, took responsibility for keeping it in business and in the Football League, and he managed the redevelopment of Field Mill, which was carried out as part of a new retail development on the land alongside it. That earned him the unstinting support of the local Labour MP, Alan Meale, who had worried for the club's survival before Haslam arrived. However, as the club struggled, and the evidence emerged of the loans Haslam had taken out, he became bitterly unpopular with many fans. The pressure built relentlessly as the Stags staggered towards relegation, until finally, after relegation, he agreed to sell to Saunders.
The new owners took charge of the club now separated from its ground, paying Stags Limited which still owns it, £120,000 a year to play there, according to Saunders. As Mansfield descended into the tough, relatively cash-strapped Conference, Saunders sank about £500,000 in personally to fight the financial fires which flared up around them.
"It is very difficult for a club of Mansfield's size to operate at non-league level," Saunders reflects. "We did not really have the income or the gates. A lot of fans who were disillusioned had said they would come back to the club once Keith Haslam had gone, but in the Conference, it didn't happen."
With Mansfield continuing to lose £10,000 a week, Saunders cast around for a buyer with more means to dig Mansfield out, so in September he sold the club to Radford, who runs the Doncaster-based One Call insurance group. Radford, like Haslam 17 years ago, bought Mansfield Town for £1, and he has pledged to shovel up £500,000 to shore up the club this season.
It took only a month for Radford to announce he had seen the statement made by Saunders and his two fellow former directors in the 2008-09 accounts that the £2.44m dividend "should not have been made because the club had insufficient net assets to permit it at that time", and to appoint Pinsent Masons. It is understood that their investigation is continuing.
Haslam, speaking to the Guardian after that announcement, denied there had been anything illegal about the declaration of the dividend.
"I believe it was legal," he said. "The decision was taken to declare a dividend; I bought Field Mill with it, and the club leases it."
He said he had not yet heard from the club. "I don't know what they're looking at; the club has not been in touch with me. I do not think the dividend was not legal, and I do not believe I will have to pay the dividend back."
Since leaving Mansfield Haslam said he has become involved in several other businesses. "I'm doing fine, thank you," he said.
www.guardian.co.uk/sport/david-conn-inside-sport-blog/2010/nov/17/mansfield-town-dividend-keith-haslam
