Fields of dreams can become a nightmare
Dermot Crowe examines how the property boom was a mixed blessing as some clubs stayed on the merry-go-round for too long
Published 17/01/2010 | 05:00
LATE last November, Portlaoise and Clara, champions of Laois and Offaly, met in a Leinster senior football semi-final. One may reasonably assume that both warmed to the prospect of conventional headlines after a troubling year beyond the white lines. A tense, high-stakes football match is infinitely preferable to giant debts and an uncertain future. In a sense it wasn't just a match but a reaffirmation of real GAA values.
Portlaoise won comfortably but no matter how confidently their players expressed themselves and paraded their gifts, there was no escaping the predicament the club was in. Of all the clubs scarred by the downturn in the economy, mourning the death of the Celtic Tiger and its implications, Portlaoise is unrivalled -- the pinnacle of misfortune. They owe considerably more than any other club, but the show must go on. In spite of a wretched 2009, and maybe because of it, they were still able to pull off some great feats on the field.
The club has since turned into a new year comforted by the mission of going a step further and reaching the All-Ireland final on St Patrick's Day. They stand a chance of emulating their predecessors in 1983 who won the All-Ireland in a decade that became synonymous with economic strife and hardship. Yet they never faced the challenge presented to Portlaoise's modern flag-bearers.
Even if Portlaoise win the All-Ireland, it won't lessen the burden of debt they have to address, currently standing in the region of €6.5m. Clara's financial situation isn't as serious but they are still left with a €2m debt and anxious to offload property as soon as possible to ease the affliction. Like Portlaoise, they bought land to develop new facilities and then failed to sell their existing grounds, ending up with a substantial loan commitment.
Throughout the country, clubs and county boards are having to tighten their belts, although there are some fortunate exceptions, where the timing was pinpoint. Parnells, on Dublin's northside, sold land near Dublin Airport for €22m in 2008, just before the property market nosedived, a parcel of land they had bought for £50,000 20 years earlier. They were also able to agree a deal with the Marist Fathers in Coolock which has seen them acquire 12 acres of land at low cost, where they have an ambitious plans to develop an ultra-modern €30m sports facility. Included in the plans is a small residential development, medical centre and pharmacy.
A few months' delay offloading their assets might have created a vastly different scenario, but they acted prudently and had good fortune. In Portlaoise, the club took a costly risk by entering into a deal with a Cork development company, Firestone, who agreed to purchase their existing grounds for €19m, provided it got planning permission for a mixed development. The grounds are located at the rear of O'Moore Park, and the club had earmarked a new site on the edge of town for modern club facilities and multiple pitches. The cost of the new grounds would be €6.5m. How could they lose?
To buy the new land they borrowed the money from Firestone, awaiting the planning decision on their own grounds. The bid was rejected after an appeal by local residents and in the meantime, the value of the existing grounds has plummeted. Firestone is giving the club more time to resubmit a modified planning application, but the cost of the submission is €150,000 and the club is hoping to meet the GAA's Finance Committee soon to seek a loan to meet that cost.
The GAA and Leinster Council has already loaned or contributed in grant form in the region of €100,000 to Clara, which covered one year of their interest-only loan repayments, and the club now has a massive overdraft after taking on the burden last year. Mick Sheridan, club chairman, said they would be looking for further assistance, another loan, so that they can buy more time to try to sell off their original assets.
"We are waiting and waiting. We are facing into another year paying back an interest-only loan -- we need to sell property. That was the intention when we bought; in hindsight we bought a bit dear but who could see that at the time? We had the chance of putting six pitches together, three full-size; long-term it's the right way to go. At the time we were expecting €2m for the original grounds. We hope to get €1.2m now. We have a contract signed but we're waiting for things to fall into place."
Running the club costs around €70,000 each year, and 16 teams are being catered for. Clara is also contacting every club in the country in the hope off selling €100 tickets for a fundraising draw. "We're hoping, if we sell half of them, that it will raise €125,000," says Sheridan. "If every club responded it would give us breathing space." It is not a good time to be calling on help from clubs, with many of them already hard pressed.
Portlaoise treasurer John Hanniffy, a former Laois hurling goalkeeper, says the property company that loaned them €6.5m has been understanding and given them a six-month period to break the impasse. The club needs a successful planning application and it then needs to find a buyer, even at a vastly reduced price, before the year is out. There are no guarantees. They are considering the prospect of repossession and their new facility, which had been earmarked for state-of-the-art development, will provide the basics for the foreseeable future: a few pitches and portacabins to give players shelter from the elements.
Hanniffy has felt anger and disillusionment over the planning decision, regarding it as exceedingly harsh and he laments the serious cost implications for the club and local economy. And there is a human cost. "My father is a psychiatrist," he says, pausing, "and I have had to draw on his services. It's been like a death in the family." The news of the planning rejection arrived on Christmas Eve, 2008, like a bombshell. "Last Christmas was absolutely the worst, incredibly, incredibly stressful -- I still don't know what it was all about. Like, it wasn't that we were going to be making money out of it. It was about providing facilities."
The GAA's finance director, Tom Ryan, won't discuss individual cases, but he has sympathy for all clubs that encounter financial trauma. Through much of 2008 his office examined the situation on the ground and found around a dozen clubs on the critical list. Others included James Stephens in Kilkenny, Clonakilty, Mullahoran of Cavan and Kilbride in Wicklow.
"Nobody is immune from it, no more than ourselves," says Ryan "It would be a mistake that if people who did benefit from windfall gains like that allowed it to leak into their ongoing operations. I don't get a sense that that is happening. One of the things we would always try to do when people are selling properties is we would tell them to ring-fence the proceeds and put them into a trust and it's there for future developments."
And what of those who got badly burned? "The problem with them is the scale, when you are talking of seven-figure sums. Contrary to the perception that there might be about us, we do not have the capacity to swoop in and take that problem off someone's hands. So you are talking about buying some breathing space so that people are not having to take the nuclear option, they can keep the wolf from the door. And you would, of course, try to intervene with lending parties. You know when you meet these (club) people, it's only ambition to do better for their club (that has caused it), it's not a question of greed. If things had kept going for a couple more months, they'd have been okay."
Having spent most of 2009 "trying to flush out" all those in bother, Ryan feels they have a good grasp of the extent of the crisis. "I thought it would have been more. I suppose it's the natural thing when land comes up and you want an extra pitch. You take the opportunity. But we are not in the property business, it's (about) matches and games. It's voluntary people who are involved and it's a terrible worry and burden for people to bear."
He says those struggling share common features -- asset rich and cash poor. "The inclination was to buy first and then sell, don't be stuck without a pitch. Don't have no place -- and grab the land while available as the prices are going up. That has left people with a surfeit of land and a deficit of cash. We will do everything we can; we are not going to leave a trail of these things behind us. We encourage people to tell us about the thing, bring it to the surface, while we can look at options, rather than at the 11th hour when they are on the brink of repossession."
Nationally, the GAA expects to show marginal profit from 2009, like the previous year, when its audit is completed. Clubs may look at Croke Park as a cash cow but there are 1,700 clubs to support and even the €37m expected to be gleaned from three years of rugby and soccer internationals wouldn't amount to much if it were spread evenly among them. A quarter of a million is being made available from that fund for each county board to disperse as it sees fit for club projects. "So, instead," says Ryan, "the idea is that a small number of clubs within each county will benefit."
The GAA has had to be inventive in maintaining attendances at its games. "We spent a lot of money in '09 in getting people into matches as opposed to creating revenue, so those held steady, even if the revenue won't be up," Ryan explains. "It will probably be the same in 2010 to protect the habit of people going to matches. The (2009) audit hasn't started but it won't be hugely different from the previous year."
Recent reports that Roscommon County Board is seeking a bail-out by Croke Park concerning a debt of €1m euro were denied by the chairman Michael McGuire. The loan was granted by a local business man, John Murphy, in 2006, interest-free, on condition it was repaid in six years. McGuire admitted they would struggle to meet that deadline and officers had been in touch with Croke Park to seek advice. The loan has been authorised by the GAA and was offered at a time when Roscommon GAA faced serious financial difficulties, even though the country was booming.
"In no way are we looking for Croke Park to pay it," McGuire stressed. "All we were doing was looking to have a chat with the finance people there (Croke Park) to seek their advice in putting some arrangement in place. One way or the other, Roscommon will be paying it."
McGuire is coming to the end of his five-year term and has first-hand experience of the challenge facing clubs and county committees trying to keep their heads above water. "Last year we broke even. There was a lot of hard work in fundraising, and our main focus is on coaching and games development and will continue to be. We had to reduce expenses, such as county teams, you look at things like catering and gear and all that. The managers agreed. There was no fall out. We were just more frugal with things. You had to look on that. Some journalist rang recently to ask were we taking a team holiday. I said not alone were we not taking one this year but as long as I was chairman we hadn't been on one. All county teams operate out of a budget now. We put budgets in place and we stuck with them. We have had no controversy at all. They know the money just isn't out there."
Ballymore Properties finished as county team sponsor in 2008, but Roscommon was fortunate in signing a deal with Sierra Communications. "We have been blessed," says McGuire. "Down the line at local level, club championships and all that type of thing, we have had serious difficulty. But main sponsors have been steady. I know a lot of counties have had to change recently."
Connacht Council treasurer Michael Holland is reporting an increase in club and county gates in the province in 2009 but at grassroots level they are feeling the pinch. "From talking to clubs around the province, the lotto was the main income for many of them -- a lot have given up the lotto for the simple reason that the crowds are not in the pubs at the weekends. I would say in 75 per cent of the clubs the lotto was the main income."
That includes his own club, St Croans, in Roscommon. "We were taking in €1,000 a week and we had to give it up," he says. The club secretary Majella Smyth says they have decided instead on an annual draw, where 300 members are asked to pay €100, with several thousand euro worth of prizes on offer. St Croans won the intermediate championship for the first time in 20 years last year but have had to deal with hard realities off the pitch.
"We have bought another field adjacent to the main field we have so that will be part of the plans," says Smyth. "We'll probably have a few draws. For the last few years there has been a gradual decrease in the lotto takings until we weren't making any money on it at all. It was once the main source of income for our club. We would have brought thousands in a month alone. You could make up on €7,000-8,000 a month. The new playing area will be all-weather and cost over €150,000 to complete, with a stand planned further down the line."
St Kevin's of Castlerea are county champions for the last two years but also struggle to pay their way. Michael Guthrie is their former treasurer. "Our main income is our weekly lotto. We have the weekly bingo, but the money from that is very small, more of a social outlet, it keeps people coming to the club," he says. "It's sponsorship after that -- it has fallen away. Serious drop. Fellas who were giving you money are now saying we have nothing. Things are very tight. That is a general consensus; while there are sponsors the amounts would not be as big.
"In 2008 we spent €30,000 on resurfacing. That had to be raised, with no grant assistance. Went out and fundraised, held golf classics, the usual. The average club, I would say, costs €70,000-80,000 to run, the bigger clubs would be more. Buses, physios, doctors; that's the reality of it. Affiliation and insurance was over €12,000 for us alone. It's all about getting people behind it. It's amazing how you get by. It's a joint effort. It is certainly an awful lot tougher."
He estimates that sponsorship has dropped to a quarter of its original value. "I am in business myself, it's (money) not there. We were looking at doing a few things round the pitch, like a stand, but you now have to hold on. You have no business going near banks and to be honest with you why would you put yourselves in debt? People will do things as they have money. Sports grants are gone at the moment, there are certain amounts from Croke Park, but it's limited."
The treasurer of Munster Council, Michael Power, is expecting a good return for 2009. But there are certain factors at play: the Munster hurling and football championships had lucrative replays and this year seven senior championship games, out of nine, will be televised live. It remains a good brand. "We went stronger than ever with family tickets last year," says Power, "and will be working on the same basis if not stronger (in 2010) as the reality is that the country is in meltdown and a lot of our people are out of work."
Offaly County Board is selling its lottery online, no longer trawling the pubs for buyers, using a company called LocalLotto.ie. Chairman Pat Teehan says the board hopes to develop the lottery to the point where it generates up to 15 per cent of income. Offaly's sponsorship with Carroll Cuisine is now the longest running in the country, dating back to 1991 and the Leinster football semi-final against Meath. Both sides met lately to talk about extending the deal for a further three years.
Last year Offaly showed a profit of €245,000, but they had exceptional gate returns, with local gate receipts up by €90,000. After years of Birr rule, Tullamore emerged in fairytale fashion to win the senior hurling title and the county final attendance almost doubled. O'Connor Park's redevelopment has entered its final phase, having started in 2005. Teehan says the idea of beginning a project like it now is fanciful. "You could not do it -- no, not on the same scale. Croke Park would not sanction it."
In recent years a number of county boards, Westmeath and Clare being prime examples, were on the verge of committing to major land deals which would have meant moving their county ground to out-of-town green-field locations. Fortunately, they did not follow through. In the case of Dublin club Parnells, the move has been in the other direction.
"Most GAA clubs are moving out of their local area -- we are doing the opposite," says chairman Frank Gleeson. "We are going to try to surpass Nemo Rangers in terms of the quality of the development facility; they have been seen as the benchmark. We went down and visited them. We had a look at Mallow GAA club too."
In one fell swoop, Parnells' outlook and ambition have become stratospheric. "Parnells were the top Dublin club 20 years ago, (and) regularly won Dublin championships and won Leinster," says Gleeson. "Our ultimate ambition is to win the All-Ireland club championship; it might take 20 years. I would like our juvenile teams to be competing in Division One in both codes. It might take five or ten or 20 years but I know it's do-able.
"We managed to secure ourselves for the next 100 years by hitting the jackpot at the right time."
Many other clubs can only look on in envy.