Sale Sharks' financial crisis

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Sale Sharks' financial crisis

by sharonl 15.04.13 22:39

Kennedy backs Sale Sharks for another year

Last updated: 15th Apr 2013 at 09:05am

By Tamlyn Jones, North West Correspondent

Sale Sharks owner and property tycoon Brian Kennedy has agreed to back the club financially for another year as they battle increasing losses.

The rugby union club, which has 100 staff and ground shares with Salford City Reds, has posted higher operating and pre-tax losses amid falling revenues despite a rise in attendances.

Newly filed annual accounts said the club had renegotiated its previous external funding, comprising a £4m loan and £2.5m overdraft, into one £5.5m consolidated loan which was repayable by 2015.

The £1m shortfall in this facility was provided by a related company and secured against property and personal guarantees by Kennedy.
The report added that Sale Sharks had loans due to "companies under common control" worth £5.1m at the end of its 2011/12 financial year and a further £1.6m to related company Cheshire Sports Promotions.

"The directors have considered the future profitability of the consolidated group and have prepared cash flow forecasts. Based on these, the consolidated group would have a shortfall in cash against the current funding arrangements," the report said.
"Consequently, the directors have received written confirmation from Mr Kennedy that he will provide additional funding for each month as required, in addition to the £5.5m external funding, for a minimum period of 12 months.

"This will enable the group and company to meet all of its working capital requirements and liabilities and enable the group and company to continue as a going concern.

"The company continues to benefit from its financial support of its shareholders without which we would be unable to prepare accounts on a going concern basis."

Revenue for the 2011/12 season fell from £7.7m to £7.5m and an operating loss of £563,000 doubled to £1.1m.
A 2010/11 pre-tax loss of £567,000 rose to £1.2m loss while the total attendance increased in the year to July 2012 from 120,594 to 126,409 people.

Sales Sharks currently sit in tenth place in the Aviva Premiership table. (There are only 11 in the league. Sale Sharks were bottom but have now moved one place up) The club had not responded to a request for further comment at the time of publication.