GAELIC GAMES FINANCIAL CRISIS:THE GAA believes the financial crisis afflicting some units of the association is containable. Recession and falling revenues are creating severe difficulties for most clubs in coping with their everyday activities but the number of clubs in serious debt, defined as running into millions, is believed to be no more than a dozen.
“There are 10 or 12 clubs that are in difficulties to the extent that it’s not within their capabilities to address it and they would be ones that got caught on the property side of things,” according to GAA finance director Tom Ryan, who said the association along with the clubs involved and the banks are working towards a mechanism for dealing with the situation.
“It’s not that we’re unconcerned about the difficulties of the larger number of clubs. It’s just that our focus at the moment is on the bigger debts. We’re working with the clubs and the banks involved to try and come up with some means of getting out of it but there isn’t a route out of it that doesn’t involve property prices recovering or market conditions improving and that’s something none of us can control.”
The collapse in property values caused problems for clubs that were in the process of selling part of all of their lands and premises to development companies and had borrowed against the expected revenue.
Portlaoise’s are the best-known difficulties of the clubs involved and they borrowed €6.5 million against the sale of their club premises in order to purchase new lands a couple of miles away. The funding sale didn’t go ahead because planning permission for the development was turned down and the two properties involved not long afterwards plummeted in value.
In Dublin, Tallaght club Thomas Davis has also had its financial difficulties publicised and they were largely brought about by an inability to sell land to pay for completed club development.
“I’d be at pains to point out,” says Ryan, “it wasn’t speculation or people with an eye to a profit that was the cause of the problem. It was just the normal type of advancement that has been going on in GAA clubs for 100 years. In all cases it was just an urge to better their circumstances, get new pitches and more modern facilities.
“The way everybody was doing business was to buy first and sell later. That’s how it’s done in a rising market. That’s what happened these clubs. They bought first in anticipation of selling their old grounds but things turned just as they were on the cusp, literally in some cases just days from getting the sales away.
“Now they find they have more property than they need and more debt than they can manage. There isn’t a solution within the reach of clubs. We have a role but that role isn’t to assume the debt and pay it off because we wouldn’t have the financial scope to do that. All we can hope to do is buy some time and to allow the clubs the latitude to try and function in the meantime and to be still there when things turn around.”
Given the GAA has ruled out assuming the debts in question, there isn’t a huge amount that can be done to resolve the situation in the short term but Ryan says the hope is for a framework to be agreed, which can provide stability and breathing space for the clubs. “There will have to be negotiation for some latitude with the banks and we’ll have to give something – and I don’t know what that will be – additional security, maybe, although I’m genuinely not certain. The banks have been receptive and there’s a process ongoing.
“We know the solution won’t be a complete absolution of the debt or an immediate sale of the property to some white knight and it won’t be us absorbing the whole debt. It’ll be somewhere in between. The only way of unwinding this is for the properties to be sold and if that’s not going to happen for 10 or even 15 years we have to put in place a mechanism that alleviates the immediate concerns about foreclosure and things like that and also that keep sufficient funds in the club to cover its primary activities.
“We want to take the tension out of it and provide stability. From the banks’ point of view it’s not ideal either to have non-performing debt with a not-for-profit community organisation so stability’s in all of our interest.”
Asked how sure can he be that the incidence of serious debt is as contained as no more than a dozen units, Ryan says that for severe problems to arise would require a build-up of issues over a period of time. “Any number of clubs is suffering but at the critical end of the scale it’s been going on for two years so unless one surfaces that we literally know nothing about and haven’t been talking, it’ll stay at that number.
“For the organisation as a whole it’s not as catastrophic by any means. We’ve gone through exercises with the banks to make sure there aren’t other cases out there. When I talk about this 10 or dozen they are very, very serious cases: people in the millions.”
