CLUB STATEMENT December 19th 2024.
Happy New Year? – Another baffling announcement by the Morecambe Football Club Board.
In the Unofficial Preview of the Season which appeared on these pages on August 3rd, I wrote:
“As was mentioned in my Review of last season, the club has not covered itself with glory in communicating any information about the Embargo which was placed on it towards the end of the campaign. All we know is that this has come about because of some `misunderstanding’ over VAT payments – how much and how this came about remains a mystery. So we have had to rely on the BBC to actually learn what has happened at our own club. On July 11th 2024, “Auntie” told us the following:
Morecambe have had their transfer embargo lifted by the English Football League but must pay a fine of £5,131.82 for failing to meet their payment obligations.”
Since then, we have had to rely on another source – journalist Martin Calladine this time – to learn the identity of the mysterious potential buyer of our club – one Kuljeet Singh Momi. The club have known – and apparently have been negotiating – with this gentleman for several months but, once again, have kept this information strictly between themselves. They probably have good reasons for doing this – confidentiality; the fear of prejudicing any potential deal or whatever. But it would be good if – even if they aren’t going to come clean with any details – they at least kept the club’s supporters in the loop as far as what is happening behind the scenes.
The mystery as to how the problems with the HMRC arose; who was responsible for them and how much money was involved have never been explained by the club’s Board. But this foul-up caused a three-point deduction to be imposed on the club along with the embargo that meant that Manager Derek Adams was unable to offer contracted players extensions to these agreements last season and found himself in a position where he basically had to sign anybody who would put pen to paper as fifteen journeymen or non-league rejects became the core of his squad on a single day at a time right before the season actually started. This isn’t Derek’s fault: his hands were tied by events way out of his control off the field. But it equally can’t be blamed – for once – on Jason Whittingham, either: this was the club’s own doing.
But what did they do?
According to the official website, nothing worth actually taking the trouble to explain. On December 19th December 2024 – yesterday – they told us this:
“Following the Club Financial Reporting Unit’s statement today, the Club acknowledges and accepts the ruling regarding breaches between 27th September 2023 and 1st July 2024.
We also appreciate the Club Financial Reporting Unit recognition of our consistent cooperation throughout the enquiry, including our timely responses to information and meeting requests, despite the challenging circumstances faced by the club since July, including the loss of key personnel and ongoing ownership issues.
We are pleased to report that all key roles vacated during the Summer have been filled, and the club is up to date with all HMRC liabilities, continuing to settle these obligations on time since July.”
So that’s all ok then, isn’t it? Whatever has been going wrong has all been settled; there are no further worries to concern ourselves with and we can all live happily ever after…
Well, actually everything is not ok – and very far from it.
Yet again, this statement by the Board leaves even more questions unanswered then it actually addresses. On a simply technical level, for example, it makes no effort to explain what a `Club Financial Reporting Unit’ (which I’m sure I’m far from being alone in never having actually heard of before) actually is. What relevance does that have to our club?
Putting that very large issue to one side – what were these `breaches’ which apparently occurred `between 27th September 2023 and 1st July 2024’? Again, they don’t tell us.
They don’t tell us, either – as was the case when the club had an embargo slapped on it months and months ago – how these breaches were allowed to happen nor do they – crucially – tell us how much money was involved.
So let’s try and find some answers to these questions now.
First of all, I need to explain what the Club Financial Reporting Unit actually is.
Given its disastrous stewardship of its remit in recent years (just look at the cases of Bury FC; Macclesfield Town; Hereford United and Boston United for proof, as if any was needed) the EFL (English Football League) has very belatedly set-up an organisation it assures us is `independent’ to look at financial misdemeanours being committed by its members. They have called this body the Club Financial Reporting Unit. Yesterday, this body (consisting of Christopher Quinlan KC; Alison Royston and Nick Igoe – whoever they are…) published a Report about the financial breaches by our club which led to an EFL embargo earlier this year. In its covering statement, the EFL introduced this Report in these very alarming terms:
A statement from the independent Club Financial Reporting Unit:
Morecambe Football Club has received a two-point deduction, suspended until 30 June 2026, for the failure to self-report on five separate occasions the non-payment of amounts due to HMRC within the required two working days.
The suspended points deduction will be activated should the Club fail to notify the League of any future HMRC default prior to 30 June 2026, as per EFL Regulation 17 – HMRC Reporting.
(You can find the Report this announcement is based on by copying and pasting the following link:)
Astonishingly – given that the threat of a further points deduction is the key element of the EFL’s statement– the Board don’t even acknowledge this potential punishment or the parallel threat of another embargo, let alone make any attempt to explain how they intend to make sure that these two nightmare scenarios will not come to pass.
I’m not an accountant. I’ve waded through the very nerdy and jargon-loaded CFRU’s report on the misbehaviour of our club and I remain of the opinion that someone far more qualified to explain the nuances of the document than I am – professional accountant Co-Chairman Graham Howse, for example – would surely be perfect and should be doing this, shouldn’t he?
I wrote in August:
“It’s a shame that the Board have not deigned to put anything on the club’s website about this subject – this entire fiasco does not reflect well on them if only because of their lack of communication with the supporters. As has been noted elsewhere, thoughts about mushrooms, manure and being kept in the dark spring all too readily to mind…”
Seemingly, it’s happening again. So come on, Graham – what’s going on?
All I can do is tell us when the `breaches’ above actually happened and then speculate about the amounts of money involved in Morecambe’s failure to pay the HMRC on time.
This is not helped by the fact that these precise details have been redacted (er, literally blacked-out) in the judgement of Morecambe’s financial misdemeanours by the CFRU (Club Financial Reporting Unit, remember – still with me?)
So – first things first – what was the nature of the Regulations which Morecambe FC broke?
The main one was EFL Regulation 17 – `HMRC Reporting’. According to the CFRU,
“There are five instances where the CFRU alleged that the Club incurred a default event within the meaning of EFL Regulation 17.1 and failed to notify the EFL and/or CFRU within two working days thereof. In each instance, the CFRU alleged that such was a breach of EFL Regulation 17.1 and therefore the Club was guilty of misconduct under EFL Regulation 17.4.”
I’m now going to quote exactly what the redacted report goes on to say about these five breaches: this is important because it gives us at least some basis – however flimsy – on which to guess the actual sums involved. So here we go:
“First failure to self-report. On 27 September 2023, the CFRU became aware that HMRC were attempting to contact the Club regarding a shortfall on amounts paid relating to PAYE which should have been paid on 22 September 2023, three working days after the due date… the Club ensured the outstanding amount of ❶❷❸❹❺❻was paid to HMRC on 27 September 2023.
Second failure to self-report. On 26 January 2024, the Club informed the CFRU that it was late in paying its PAYE due on 22 January 2024 but had paid it on that date, four working days after the due date of 22 January 2023. The total owed was❶❷❸❹❺❻❼❽
Third failure to self-report. On 8 March 2024, the CFRU was informed by HMRC that the Club had VAT outstanding in the sum of ❶❷❸❹❺❻❼❽❾
Fourth failure to self-report. On 29 April 2024, the Club notified the CFRU that it had not paid PAYE totalling ❶❷❸❹❺❻❼❽❾❿The said amount was due to HMRC on 22 April 2024
Fifth failure to self-report. On 1 July 2024, the CFRU emailed the Club to ask about reports that players would not be paid on time. In its response the same day, the Club said that players were paid but noted that PAYE due on 22 June 2024 had not been paid on time. It was not paid until 29 June 2024. The amount owed was ❶❷❸❹❺❻❼❽❾”
All this tells us humble supporters is when the club failed to meet its obligations to inform the HMRC about financial arrangements which it has agreed with the EFL should be done in a timely matter. The figures referring to these failures have all been blacked-out and I have attempted to count the number of blanks involved in each failure. Bear with me here: I’ve guessed. There seem to be six blanks in the first failure’s `outstanding amount’.
So does that mean that a six-figure sum was involved?
Probably not. The first blank could be a pound sign. It could also be a blank as required by punctuation – as could the sixth space. If this is the case, the club only owed a three figure sum. But if we apply the same logic to the fifth failure by the club, it either owed several millions at worst or just – just – several hundred thousands of pounds at least.
Yes – how absurd. How absolutely absurd. Surely these figures can’t be right. But – as I’ve explained – I’ve used the only tool available to me and guessed what the missing bits of a redacted document might actually be by counting the number of blacked-out spaces.
Surely it would be far more simple if the Board at Morecambe Football Club just told us.
So why don’t they, Mr Howse?
Personally, I think the club should go back to yesterday’s statement, bin it and write something intelligent that actually addresses the very serious issues the CFRU have raised in their Report and tackle the possibility of the further sanctions threatened by the EFL head-on. Simply ignoring them doesn’t help anybody. It shouldn’t be up to someone like me who is completely out of the loop to try and explain things like this: I don’t have the information. But the club does.
So how about sharing it with us?
shrimplythebestfootball 