There is nothing surprising about a lower league club encountering financial problems. The 20 clubs in the Premier League made operating profits of £900m before transfers in the 2017/18 season. The 72 clubs in the EFL made combined losses of £411m in the same period.
Being a club in the Manchester conurbation with its two top Premier League sides is not easy. Bury have been in financial trouble before. In 2002 I remember being one of many football fans who donated £10 in return for having my name put on a seat.
However, clearly there has been mismanagement in the case of Bury. The Financial Times has described it as 'a case of speculative property finance intruding on the world of lower division football where simply running a team rarely provides returns.'
Previous owner Stewart Day was the sole director of a company called Mederco Ltd. It entered into leases on the car park that the club owned on the Gigg Lane stadium. The spaces were then subleased to retail investors for £9,995 each, with the company offering buyers returns of 9 per cent for five years. According to an administrator of Mederco, the payments are about £190,000 in arrears. Other property schemes connected to Mederco, such as student accommodation development, have collapsed into administration.
In December last year Mr Day sold the club to Stewart Dale for £1. He had had a career in the building trade, mainly through equipment hire. He did not even know that Bury had a football club.
Kieran Maguire of the PriceofFootball has commented: '11 days later [Dale] set up two new companies, Bury Heritage and Bury Leisure and started transferring assets to them, including the club’s trophies. Some would describe this as the action of a sociopathic asset stripper.'
Last month Bury put forward a Company Voluntary Arrangement to settle its outstanding debts. Non-football creditors would be paid just a quarter of the £4m they were owed.
This happened over the objections of some of the largest creditors including HM Revenue and Customs. The main creditors were Mr Dale and RCR Holdings, an Oldham registered company founded just days before the CVA meeting. As the largest shareholders, they had voting rights that overrode other creditors' objections. Mr Dale has declined to comment on reports that RCR Holdings is connected to members of his family.
The Insolvency Practitioners Association has announced that it is going to investigate the CVA: Investigation
C & N Sporting Risk pulled out of an offer to buy the club earlier this week. One issue was a mortgage attached to Gigg Lane taken out by Mr Day worth £3.7m. This was reportedly accruing interest at £1,500 a day. This was a heavy burden for a club that made a loss of £2.8m in the year to May 2017.
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