Town were given until December 31st to agree to a new payment schedule regarding the back rent they owe on Portman Road at Ipswich Borough Council’s executive meeting on Tuesday evening. The new proposals would see the club begin repaying the £654,702 due to IBC from June 1st 2012 in quarterly payments over four years, or in its entirety within three months of promotion to the Premier League.

In March, it was revealed that the annual rent on the land on which the Portman Road stadium stands had jumped by 643% from £15,000 to £111,500 backdated to 2004, the council having initially targeted a rise to £250,000.

While Town have paid the new sum since the rent review was carried out last year, the club has dug its heels in regarding the additional £654,702 owed from the period back to 2004 when the rent review was initially due, an independent arbitrator having set the new figure, a process which cost the Blues £98,500.

At the executive meeting, Town chief executive Simon Clegg put the club’s case, arguing that IBC’s former chief executive James Hehir, who died in November 2009, had made a verbal agreement regarding the issue of back rent with Marcus Evans: “We do accept that legally the council can seek back rent, not only to the time that the rent review was initiated on November 12th 2007, but to the time when it could have been initiated on June 1st 2004.

“But we believe that to try and claw back monies from before the arbitration outcome is inappropriate and to further attempt to claw back monies from before the initiation of the review immoral.

“The basis of our position is commitments given to Marcus Evans, the owner of the football club, by your previous chief executive, the late James Hehir.

“He specifically made it clear that the council would not seek any back rent, whatever the outcome of the arbitration process.

“James Hehir also articulated such a position at separate meetings with the Marcus Evans Group finance and legal directors and my own predecessor Derek Bowden.”

Clegg says that this position has been backed up by those both within the club and the council at the time but current IBC chief executive Russell Williams said he could find no evidence of such an agreement: “While James met the club at various stages, there is nothing in writing to suggest the alleged statements or commitments were made.

“Secondly, I have spoken to a number of people at the council, everybody I could think of that James could realistically have spoken to about this subject, and they have all confirmed that he did not tell them about any such statements.

“Thirdly, none of the council officers who knew James well, and I include myself in that, can imagine he would have given such a commitment in the manner suggested.

“This position is based in part at least on the fact that he was a very experienced chief executive, who would know that he didn’t have the authority to make such a commitment.”

The Blues chief executive also felt that the timing of the decision to review the rent in November 2007 - three-and-a-half years after it was due — being so near to Marcus Evans’s takeover might lead to speculation regarding what might have triggered it: “The initiation of the rent review occurred only four weeks after the public notification that Marcus Evans was going to acquire the football club. Timing which may lead some people to suggest that this was somewhat opportunistic.”

Leader of the Council David Ellesmere argued otherwise: “The lease which was signed pre-dates the current owner’s involvement in the club by quite some years so is not something which has been put in as a result of the change of ownership.”

Clegg believes the club shouldn’t be treated as just another company by IBC given its unique position in the town: “A jointly prepared Ipswich Borough Council and Ipswich Town Football Club paper produced in 2006 estimated that the economic benefit of Premier League football to be in the region of £50 million per annum to this local community.

“I cannot think of any other organisation in Ipswich which would have that effect on local business, not to mention the unquantifiable sense of pride that would be felt by everyone associated with this great town.

“It is too easy, particularly in the current economic climate, for Ipswich Borough Council to simply treat the football club as any other business.

“That view, in my opinion, is short-sighted and naïve. We should be seen as a community asset, something we as a club pride ourselves in, and as a promotional vehicle for local business. Success by the football club will deliver far greater benefits to this town than any other initiative.”

Clegg hopes the two parties won't end up facing one another in court: “A decision to legally pursue this matter will have far-reaching and long-term ramifications for the relationship between the council and what I would suggest is one of this town’s greatest assets and institutions.”

But David Ellesmere says IBC is in no position to treat Town differently from other businesses: “[Writing off the debt] would put a big financial hole in the council’s budget, it would be the equivalent to a 5% surcharge increasing Council Tax on all Council Tax payers in Ipswich or would lead to large scale redundancies or cuts in services and I don’t think we can agree to that.”

Town had previously offered to pay the back rent only on promotion to the Premier League but Ellesmere said that that would amount to much the same thing: “Any payment which is contingent on a certain event not in the council’s control would effectively amount to writing off that debt.”

Councillor Sandy Martin added that in any case IBC couldn’t write off the debt even if it was minded to: “We’re not legally allowed to do so under EC competition rules.”

Speaking after the meeting, Clegg said Town, who require a significant subsidy from Marcus Evans each season to cover losses, will assess where to go next and doesn’t rule out season ticket price increases next season: “I want time to go away and consider this.

"I’ve made it very clear what the owner’s position is and the financial position of the football club — we’re not in the position to pay this at this moment in time.

“We’re totally dependent on the ongoing support of Marcus Evans to keep the football club solvent and one of the other alternatives is to hit the season ticket holders. But I don’t want to do that, they’ve seen a significant increase in price this season as it is.

“We’re in very difficult economic times. You can’t constantly be going back to the season ticket holders, which was why we held season ticket prices stable for four years until the price increase that we had to impose on them this year as a result of the increase in rent going forward.

“I’m not looking to run scare stories,” he added. “I just want the council to be very aware that we’ll have to look at every option if they continue to pursue this.

“But they’ve given us a get-out clause — promotion this season. In the context of things, I would be very happy to write that cheque.”

Council leader Ellesmere says IBC would not seek to damage Town’s promotion prospects even if the Blues fail to agree to the new payment schedule: “If the club continues to refuse to pay what it owes and we do need to proceed to a winding-up order, we would not take the final steps to place the club into administration [which would lead to a 10-point deduction] until after the end of the season.”

A winding-up order would also be the result if Town agreed to the schedule and subsequently defaulted on payments.

The council also confirmed that it would not pursue any increase at this year’s rent review, while no further interest would accrue once the club agree to the schedule no further interest will be added.

Photo: Action Images / Matthew Childs

Photo: Action Images

tractorboybig added 16:59 - Oct 12 Everyone else has to pay what they owe the council. Find Cleggs arguement about a verbal deal with a dead chief exc a bit hard to swallow. May be MEdoes not want to dig into his pocket, can see prices going up and up and up.
0

jas0999 added 17:19 - Oct 12 Can see both sides of the story. Hopefully an agreement will be reached soon.
0

Tractorog added 17:47 - Oct 12 Allow town to have premission for a few extra concerts
0

flashblue added 18:12 - Oct 12 This is ridiculous. The legal position is the club owes the money. No question at all. All this crap about verbal commitments - yeah some bloke I met in the street who said he worked for ITFC said I could have a free season ticket for life. This business about state aid is a total red herring as well - there is no competition here, no one else competing to rent the land.

0

stonojnr added 20:09 - Oct 12 @tractorboybig quite clearly thats not true,the GMB union publish data on uncollected council tax, and according to them IBC failed to collect 2.3million pounds for the year 2010/11 alone. just think how many statues could be moved around the town for that kind of money. 650k seems rather like small beer in comparison. but alot of people are making the same mistaken assumption the council have, that ME is a millionaire and can therefore simply afford i because hes rich. but ME didnt become a millionaire by signing blank cheques for 650k all the time, the club is still monetarily indebted to him and has to propped up purely by his continued investment. the clear message is that rather than ME paying the difference, it will be the fans who suffer and pay instead. and Im quite sure Clegg/ME/ITFC would not invent a story such as they have about deals that were made, if it were not true (note the council dont dispute that story, simply theres no record of it)

0

runaround added 21:07 - Oct 12 I hope this gets sorted soon as it helps no-one to have it dragging on. The only question should be can IBC legally backdate that rent increase? If so, then however cheeky it is ITFC have to pay up. If IBC had acted illegally then i'm sure ITFC would have worked that out and challenged it? Roll on Saturday when we can get back to football talk
0

RegencyBlue added 21:26 - Oct 12 On balance I think the club will have to pay up one way or the other. The rather unedifying spectacle of Clegg and co arguing about a sum they would spend on an average player without a second thought is doing the clubs reputation no good at all! Given what happened with the Administration and the number of local businesses who lost money because of it I wouldnt be playing the community club card either.

0

churchmans added 23:21 - Oct 12 legal or not a 643% rise is taking the pee! imagine your mortgatge,allotment,rent,cards going up that much. taking the pee cos we got money! lets up and move! edge of ipswich docks under the bridge where the old power station was and volvo place was at sandy hill lane. they are paying the new chief exec nearly £200,000 that is also takin the pee while every year they put up our council tax rates.

0

ClassyCranson added 02:12 - Oct 13 I am not going to comment on the validity of the back dated rent claim, other than to say as the owner is picking up the shortfall in the football club's losses year in year out. As such he is perfectly entitled to challenge it whether he is right or wrong ultimately. Given the losses the club makes it is effectively a claim that the owner would have to pick up if determined to be a valid claim rather than the football club. As a stand alone entity the club is massively insolvent. Without sight of the lease as a starting point, it is pointless to argue who is right and who is wrong in this argument and I am sure both parties will respect a Court decision as arbitration seems inevitable. The council leader comments in the 3rd paragraph from the end of this article are not factually correct. This is suprising given he is the leader of of the council and effectively will be in control of decision making at the highest level at IBC. 1. A winding up order is far more serious than Administration. In an winding up order scenario the club would cease to operate, the players would be free agents as their contracts would be automatically terminated on the making of a winding up order. The football club could come back but it is highly likely that would be in the lower reaches of the non - league. Think of what happened to Aldershot in the early 1990s and Maidstone United and that is the effect a winding up order has on a football club. 2. Administration is usually taken out to prevent a winding up order being granted. Court sanction is not required in Administration for the company to continue to operate where in a winding up order it is. Where a company makes hugh losses in the period leading up a winding up order the Court is very unlikely to make an order for it continue to operate, if any appeal was to be made after any winding up order. 3. If a winding up order was made against the club mid season it is highly unlikely it would be unable to subsequently fulfil its fixtures during the course of the that season and would be thrown out of football league as a consequence. 4. If IBC obtained a winding up order against the club (highly unlikely) then they would not be able to obtain an Administration order as well. Only creditors with a certain secured rights fit into this category and IBC as don't fit into this category. 5. Creditors of all categories don't obtain winding up order then place it administration, it only serves to increase costs. 5. If arbitration rules in their favour and the IBC were then to ultimately obtain to either a winding up order or place the club into Administration all debts aginst the club would crystallise and IBC would only recover only a nominal sum against their debt at best from any distribution from a liquidator or administrator. If the arbitration rules in IBC favour then the club would be given time to pay. A winding up order would not automatically happen if the club defaulted on any agreed repayment schedule. IBC would have to issue a winding up petition and ask for the Court to grant a winding up order if the club defaulted. A winding up petition is usually only undertaken as a last resort on a valid debt. As mentioned previously both parties will not let either administration or liquidation happen over this debt. There is a massive dffierence between a winding up petiton and winding up order. A lot the media nationally don't understand the difference and report it incorrectly. I think this argument is the pre - cursor for the battle for the freehold of Portman Road. The purported rent arrears at the moment is only really a side show. Neither party should be talking publically about the back rent dispute, as it will be resolved by arbitration. If you fall into the IBC catchment area and are a regular at Portman Road then you are in a no win situation as either your match ticket or council tax will go up on the back of the outcome of this back rent decision. In his 4 years at the helm so far the owner has not let this club down. I am also not that critical of Simon Clegg but if he did say, that this football club's is one of this town's greatest assets and institutions then that is an embarrassing understatement by him. It is obviously by far the town's greatest asset and institution. Sorry if it has seemed that I am rambling. Roll on Saturday so we can talk about football again. I hate these massive (two week) breaks in the season.

0

bobble added 06:11 - Oct 13 councils are evil stickybeaks who are bankrupting the country with their ridiculous levels of bureaucracy and daft legalisation, leave the poor tax exiles alone you nasty council tax men.
0

tractorboy2434 added 14:21 - Feb 10 In the words of Clegg the club will find it very difficult to pay this money unless it is paid in quarterly instalments, yet more evidence that the club is struggling financially, I still think it is immoral to backdate a 643% increase.
0

Blogs 297 bloggers

Ipswich Town Polls