EXCLUSIVE: Wirral Council “considered lending” £1.5 million to Tranmere Rovers Football Club!
An invoice (which you can read for yourself above) from GVA Financial Consulting Limited to Wirral Council dated 30th January 2019 was for financial advice costing £6,000 on whether to lend £1.5 million to Tranmere Rovers Football Club.
The invoice stated (m stands for million):
“The council have considered lending a facility of 1.5m to Tranmere Rovers FC. 1m was intended to be used to refinance an existing loan and the remaining 0.5m was to be used as working capital. The purpose of this report is to assess whether the interest rate of the loan to be agreed could be below the existing rate of the current lender while still providing the council with sufficient return and was not a full counter party due diligence report.”
Wirral Council’s Cabinet last week agreed a partnership agreement with Tranmere Rovers Football Club that stated:-
“However, there are occasions when the Council can support the club by providing funding in the way of a grant or loan. This will ultimately be of benefit to the Council as well as to the club i.e. a grant will include relevant KPI’s (sic) to support the Council’s objectives. A loan will be on a commercial basis and generate a rate of return for the Council.”
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Investing in a football club is for fools.
In 1982 Wirral Council did loan Tranmere Rovers Football Club £200,000.
Tranmere Rovers accounts for the year ended 30.6.18 show a £377,292 loan from Wirral Council was paid back in full in July 2018.
I don’t know about lending money to a football club, why don’t they buy share in it?, But they should be looking into how they spend so much money on consultation fees?
I think the rationale behind a loan versus shares was that with if it was a loan Wirral Council would receive regular payments whereas if Wirral Council bought shares then what it would receive would depend on the value of the shares when sold. Bearing in mind that Wirral Council would first borrow the money for either option – regular interest payments on a loan would cover the payments that Wirral Council would have to pay for the borrowed money to the Public Works Loan Board whereas if shares were bought the payments on the borrowed money would have to be found from somewhere.
Strangely enough the story I published today is about £36,000 Wirral Council spent with a consultancy company, but if your point is specifically about financial consultancy – as Wirral employs many accountants – I don’t understand why financial advice on proposals from Wirral Council employees can’t be sought rather than paying for someone outside of Wirral Council to give it.
So they pay £6000 for financial advice to speculate? This cannot be done in-house then I guess.
The Devil’s Advocate in me says, perhaps the advice they paid for could be offered as due diligence, if they took the advice.
The Council has a recent history of not taking consultant’s advice though, such as the advice they were given about the golf resort by Capita Symonds.
Thanks for your comment.
What was the advice given to Wirral Council about the golf resort by Capita Symonds?