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From claims of overspending and quick use of investors' cash, to losses spanning years, an unpaid tax bill of more than £450,000 and a 'surprise' request to a former CEO for emergency cash... Ministers have today sought to expose what they describe as a years-long track record of "weak" financial management by Jersey Reds directors.
So, where did the problems begin? And what funding decisions were taken and when? And how were they communicated? Express sets out the timeline, according to Government...
It emerged last week that the club had ceased trading and stood on the brink of liquidation, having failed to pay September salaries.
While Government is refusing to provide more funding, having already supplied a £370,000 emergency cash injection, backbench politician Deputy Lyndon Farnham – under whose tenure as Economic Development Minister the Reds received hundreds of thousands in grant funding – last night launched a bid to get them to reverse their position. That proposal is expected to be debated later today or tomorrow after politicians agreed to reduce the normal lodging period.
Ahead of the debate, Economic Development Minister Kirsten Morel set out why Government does not believe further funding to be "appropriate" in a report. Subsequent statements were also made by Deputy Morel and his Assistant Minister, Deputy Lucy Stephenson, in the States Chamber this morning.
Published this morning, Ministers' report said Deputy Farnham's emergency funding proposal carries "a material deadweight risk".
Pictured: Ministers said that the Jersey Reds's "track record of weak financial management" provides "no confidence in the directors ability to conduct the affairs of the company prudently".
"Whilst extremely sympathetic to the players, coaches and staff, Members should observe that Jersey Reds (in its various legal entity guises) is a private endeavour with a long history of financial problems dating back to November 2016," the report said.
The report went on to alleged that the "depth of financial problems" facing the club were known by "directors of Jersey Reds (trading company) and the separate investment company directors and anchor investor" when an emergency funding request was made and declined at the beginning of this year.
Recalling how three professional rugby teams had filed for bankruptcy in 2023 amid decreasing support from the RFU, the governing bod of rugby, the report continued: "Notwithstanding the reduced level of central funding from the RFU, it is incumbent upon the directors of Jersey Reds to ensure they maintain high standards of corporate governance and financial management."
"When faced with a reduced level of income steps should have been taken to set expenditure budgets accordingly and the track record of weak financial management dating back to 2016 and continuing to the present day affords us with no confidence in the directors ability to conduct the affairs of the company prudently in the remainder of the 2023/24 financial year," it went on to state, concluding that it is "not appropriate to provide further public funding to this private business".
The report also breaks down the £1.7m in funding that the Jersey Reds have received from successive Governments since 2019, while Deputies Morel and Stephenson shed further light on funding discussions, decisions and denials in the States Assembly this morning.
Government grant of £125,000
Government grant of £250,000 (the first instalment of multi-year support totalling £450,000) – This multi-year grant was for the purpose of "securing professional rugby in Jersey" and was intended to enable Jersey Reds to become financially sustainable over an extended three-year period after which no further Government support would be required.
Government grant of £150,000 (the second instalment of multi-year support totalling £450,000)
Loan guarantee for 80% of a £500,000 loan to Jersey Reds from Santander International as part of the Government's covid-19 support
Government grant of £50,000 (the third instalment of multi-year support totalling £450,000)
Re-profile of ITIS debt repayment of £400,000 to now be repayable over 36 months rather than 12 months
January: The Reds approached Government’s then-CEO, Suzanne Wylie, with a request for urgent funding of £250,000 with a further £250,000 to follow later in 2023
January: Deputy Stephenson responded to this request in a letter which highlighted the previous Government support and made it clear that it was not possible to underwrite further support
CLICK TO READ: Deputy Stephenson's letter to Mark Chown of the Jersey Reds' Board of Directors.
June: The club approached Government again "to request urgent funding from the Department for Treasury and Exchequer to prevent an imminent and unstructured collapse"
June: Emergency payment of £220,000 from Government to sustain operations sought and granted by decision of Ministers
August: The Reds approached Government once again "to request a second urgent payment to meet their imminent wage costs"
August: Emergency payment of £150,000 from Government to sustain operations sought and granted by decision of Ministers "to allow for the work assessing the club’s long-term viability to be completed and for the Council of Ministers to be able to assess the case, meet and make a final decision".
September: Despite not being able to pay wages, the club announced in the media that it had hired new coaching staff.
Speaking in the States Assembly this morning, the Assistant Minister for sport said that board members from Jersey Reds showed "no appetite for change" to their organisation's business model during discussions with Government.
Deputy Lucy Stephenson was questioned about the Reds during the early stages of this today's States sitting, with a focus on whether the £370,000 of emergency funding provided in recent months had come with conditions.
Deputy Moz Scott asked whether discussions had taken place about whether a representative from the Treasury Department, or from the island's business community, might join the club board, or if there might be a change of club chairman.
Deputy Stephenson said: "There were lots of scenarios raised [during the discussions] and the decision [to provide no further financial support] was not taken lightly.
"The response from the Reds board was lukewarm, with no appetite for any type of change."
Deputy Stephenson had earlier hailed that Jersey had some "incredible" athletes who had represented the island around the world, and that she felt that these people had not received the same treatment as Jersey Reds.
She said: "This is a frustration for me and I am committed to review how better support can be provided to provide pathways for athletes in a fair and even way."
Pictured: Deputy Lucy Stephenson, who has political responsibility for sport, said that board members from Jersey Reds showed "no appetite for change" to their organisation's business model.
Members also asked Deputy Stephenson about why the decision that no further Government funding would be provided to the Reds was no communicated for eight days after a Council of Ministers at which it was decided.
She said: "There were efforts to contact one of the main parties who was unfortunately away – a Teams call was offered but could not happen [until the following week] due to their diary commitments.
"There has been a pattern of behaviour that saw difficulty in getting hold of some of the individuals involved, one of whom could not be there and wanted to be there face-to-face.
"The Government position on long-term funding has been very clear during almost a year since a meeting that took place in November 2022."
Deputy Stephenson also clarified that the two payments made this summer, totalling £370,000 had been authorised by letters of instruction from Ministers as a result of the decision having been taken to over-rule advice from civil servants.
When Deputy Raluca Kovacs asked what conditions would be provided to any future Government funding for the Reds, Deputy Stephenson concluded the period of questions by saying that she did not agree that any further financial support should be provided.
Later, Deputy Morel – who so far had not commented on the funding saga – delivered a statement on the Government's position regarding the Jersey Reds in which he claimed that the club had shown an "inability to stick to a budget", having "consistently overspent and drawn down investors money at a much faster rate than expected".
He also noted: "Despite not being able to pay wages, the Club announced in the media that it had hired a new member of the coaching staff at the beginning of September. I have to question such decision-making by the club, when I believe it knew at the point of hiring, that it did not have the funds to pay salaries."
Noting that the Reds had apparently been given numerous warnings over the years that "they cannot rely on Government funding and that they have to live within their means", he said it was "deeply regrettable that despite significant financial support, Jersey Reds have not been able to reach a stable financial footing".
While Ministers had "acted to give the Jersey Reds the best chance of surviva" he said that, "the continuing inability of the club to operate within its means and its failure to offer a convincing case for the responsible continued provision of public funds meant that we couldn’t continue to support further funding".
You can read that statement in full here.
Following the initial announcement of the Reds' collapse last week, none of directors of the club or its trading arm have made public comment.
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