A council is being recommended to lend a further £1.5m to its local rugby club even while the loss of a £10.25m loan to its football club remains unresolved.
Northampton BC will be asked next week to approve the loan to Northampton Rugby Football Club despite what a report to its cabinet termed “a bad experience in respect of a previous loan to a sport club”, and a warning that the council’s risk manager considers it “to be a risk investment, albeit mitigated through the security of assets”.
Earlier this week Northampton won a court case against former directors of Northampton Town Football Club over part of the disputed loan for its Sixfields stadium (pictured), which remains the subject of a police investigation. The rugby and football clubs are unconnected.
The report by cabinet member for finance Brandon Eldred (Con) said the rugby club had borrowed £5.5m from the council in 2014, secured by a charge on its stadium and buildings and which was being repaid as agreed.
It sought the new loan for a “detailed list of capital items it wishes to invest in using these funds which will enhance the ground and facilities”.
Cllr Eldred’s report said, “lessons have been learned” from the fiasco of the football club loan and “the delegation will be made to officers to take any foreclosure action to enforce the security without reference back to cabinet or councillors”.
He said the rugby club made a loss last year “primarily due to issues around player salaries”, but had previously been profitable and “recognised by peers as being more financially stable than most”, with a balance sheet of assets worth more than £17m.
The loan would be charged with interest at 6%, proving the council with £90,000 a year of income, the report said.