AGM PROPOSAL: financing the renovation of the Old Spotted Dog Ground
Posted: 22 Nov 2020, 11:05
This proposal is from the Finance Committee. Please add questions or responses in the comments below
Proposal: to use £50,000 from a government ‘bounce back’ loan to prepare the Old Sported Dog Ground for next season
Back in May, with the club facing an unpredictable future as a result of unprecedented coronavirus restrictions and the freehold of the Old Spotted Dog Ground not yet secured, the Club Board authorised an application for a government secured ‘bounce-back loan’ to enable us to have a greater guarantee of our future cash flow.
In June we secured a loan of £50,000 at 0% and no repayments until June 2021, with an interest rate of 2.5% thereafter if we did not repay the loan in full at this point. The balance can be repaid at any time without penalties.
Fortunately, the club’s merchandise sales have remained strong and so far, we have been able to sustain ourselves without the need to rely on or use this additional funding.
However, estimates from the Old Spotted Dog Ground Trust (OSDGT) on the level of fundraising it needs to generate, simply to pass an FA ground grading and allow us to the Old Spotted Dog Ground next season, are daunting.
Currently, it expects to need to raise close to £175,000.
Why is this important?
If we want to play in Forest Gate at all next season, we need to achieve a ground grading of at least Grade H and preferably Grade G for eligibility for Step 6 football for the men's first team. If the women's first team is promoted this season, we need to comply with Grade E, appropriate to clubs seeking promotion from Step 5 to Step 4.
The biggest (and most expensive) issues are the lack of changing rooms and of a suitable pitch perimeter fence (which alone is predicted to cost £27,150).
There is no indication that the ongoing legal action involving Newham Community Leisure is likely to resolve itself soon to allow the use of the existing changing rooms in the warehouse, which is not covered within the freehold we own.
However, a visit by FA Ground Inspector Jon Smith in October has also indicated that we need to repair and resurface walkways and our ground capacity is limited by the need for extra terracing.
The Trust is confident that it can secure funds from the Football Foundation but other prospective funders remained closed to new applicants because of the ongoing health emergency. We also need to match fund in order to secure this level of grant from the Football Foundation.
Using the bounce back loan
This is not something we need to apply for: we already have the money. The government allows repayment over six years (June 2021 to June 2027) at 2.5% interest, by far the lowest rate available anywhere.
If, rather than repaying the loan in full next June and incurring no costs, we decided to use it as matched funding for grants and to pay for improvements, we would need to pay back £8,982 per year and over the course of the six years, we would pay £3,895 in interest.
Using the bounce back loan in this way would provide funds to match any grant from the Football Foundation: we plan to seek £50K from them. That would leave a more realistic, although still considerable target for fundraising of £75K from other sources.
What are the risks?
Repayments of close to £9K a year would fall on top of the £13,332 we have to pay on the loan for the purchase of the ground, making total loan repayments of £22,314.
However, the OSDGT receives £8,680 for the year from the rental of our land for a mobile phone mast and we currently pay Match Day Centres £11,385 for rental of the main stadium and for training, just for the Men’s First Team.
Taken together, this would mean that our additional spending, per year, is only £2,249 – less than the number of merchandise sales we generated in October 2020 alone.
Recommendation from the Finance Committee
The full £50,000 is used made available to the Old Spotted Dog Ground Trust as a for grants to prepare the old Sported Dog Ground for next season, with the recommendation to the Old Spotted Dog Ground Trust that it is used:
a) for making up any shortfall in other fundraising or sponsorship for the pitch perimeter fencing
b) as match funding for a grant for dressing room facilities and
c) to improve and repair walkways
Proposal: to use £50,000 from a government ‘bounce back’ loan to prepare the Old Sported Dog Ground for next season
Back in May, with the club facing an unpredictable future as a result of unprecedented coronavirus restrictions and the freehold of the Old Spotted Dog Ground not yet secured, the Club Board authorised an application for a government secured ‘bounce-back loan’ to enable us to have a greater guarantee of our future cash flow.
In June we secured a loan of £50,000 at 0% and no repayments until June 2021, with an interest rate of 2.5% thereafter if we did not repay the loan in full at this point. The balance can be repaid at any time without penalties.
Fortunately, the club’s merchandise sales have remained strong and so far, we have been able to sustain ourselves without the need to rely on or use this additional funding.
However, estimates from the Old Spotted Dog Ground Trust (OSDGT) on the level of fundraising it needs to generate, simply to pass an FA ground grading and allow us to the Old Spotted Dog Ground next season, are daunting.
Currently, it expects to need to raise close to £175,000.
Why is this important?
If we want to play in Forest Gate at all next season, we need to achieve a ground grading of at least Grade H and preferably Grade G for eligibility for Step 6 football for the men's first team. If the women's first team is promoted this season, we need to comply with Grade E, appropriate to clubs seeking promotion from Step 5 to Step 4.
The biggest (and most expensive) issues are the lack of changing rooms and of a suitable pitch perimeter fence (which alone is predicted to cost £27,150).
There is no indication that the ongoing legal action involving Newham Community Leisure is likely to resolve itself soon to allow the use of the existing changing rooms in the warehouse, which is not covered within the freehold we own.
However, a visit by FA Ground Inspector Jon Smith in October has also indicated that we need to repair and resurface walkways and our ground capacity is limited by the need for extra terracing.
The Trust is confident that it can secure funds from the Football Foundation but other prospective funders remained closed to new applicants because of the ongoing health emergency. We also need to match fund in order to secure this level of grant from the Football Foundation.
Using the bounce back loan
This is not something we need to apply for: we already have the money. The government allows repayment over six years (June 2021 to June 2027) at 2.5% interest, by far the lowest rate available anywhere.
If, rather than repaying the loan in full next June and incurring no costs, we decided to use it as matched funding for grants and to pay for improvements, we would need to pay back £8,982 per year and over the course of the six years, we would pay £3,895 in interest.
Using the bounce back loan in this way would provide funds to match any grant from the Football Foundation: we plan to seek £50K from them. That would leave a more realistic, although still considerable target for fundraising of £75K from other sources.
What are the risks?
Repayments of close to £9K a year would fall on top of the £13,332 we have to pay on the loan for the purchase of the ground, making total loan repayments of £22,314.
However, the OSDGT receives £8,680 for the year from the rental of our land for a mobile phone mast and we currently pay Match Day Centres £11,385 for rental of the main stadium and for training, just for the Men’s First Team.
Taken together, this would mean that our additional spending, per year, is only £2,249 – less than the number of merchandise sales we generated in October 2020 alone.
Recommendation from the Finance Committee
The full £50,000 is used made available to the Old Spotted Dog Ground Trust as a for grants to prepare the old Sported Dog Ground for next season, with the recommendation to the Old Spotted Dog Ground Trust that it is used:
a) for making up any shortfall in other fundraising or sponsorship for the pitch perimeter fencing
b) as match funding for a grant for dressing room facilities and
c) to improve and repair walkways