Monday 23 January 2017

GAA facing its own debt crisis

Thomas Davis' financial woes highlight problems hanging over so many clubs as recession bites

Published 17/02/2011 | 05:00

DUBLIN GAA club Thomas Davis have admitted that they are in serious financial trouble, but the big question is: how many others are in a similar predicament?

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As the Thomas Davis membership meets in their clubhouse on Kiltipper Road, Tallaght next Monday night to discuss what chairman Andrew O'Donnell describes as the "current perilous state of the club's finances," there's a considerable volume of anecdotal evidence to suggest that many other GAA clubs all over the country should be similarly occupied.

There are widespread reports of clubs restructuring loans over much longer periods than originally embarked upon, applying for interest-free loans and special grants from Croke Park and seeking repayment moratoriums from banks as they struggle to devise an escape route from the debt bind.

Not that the recession-driven problem is confined to the GAA. Many rugby, soccer and golf clubs are equally challenged at a time when income streams, especially sponsorships and fund-raising ventures, have collapsed, membership has dropped and commitments entered into during the prosperous times now look fiercely intimidating.

Meanwhile, twitchy banks are no longer as accommodating as they used to be. From private to corporate debt -- and at all points in between -- the squeeze is on. That applies to sports clubs who, in the past, had no difficulty sourcing funds for adventurous development projects or even day-to-day running.

It's estimated that banks are owed hundreds of millions of euro by clubs across all sporting disciplines.

As the largest sporting organisation, and the one with the biggest network of units and facilities, the GAA, no doubt, top the indebted list and now the fear is that default day can't be far away for some clubs.

If it were to happen on even a relatively small scale, it would have enormous implications for the entire association.

Would Croke Park and/or provincial councils be expected -- or be able -- to bail out stricken clubs? And if they did, what impact would it have on funds available for clubs who avoided serious financial trouble, not to mention projects at national level?

The success of the Croke Park redevelopment generated a giddy attitude among the broader GAA family, especially when the economy was booming, credit was cheap and readily available and expansion was the prize currency of the time.

The huge debt on Croke Park was effectively wiped out ahead of schedule and, as county boards and clubs became emboldened by the GAA's growing prosperity, no project was deemed too ambitious.

Plans were drawn up in several counties to exploit the property surge by selling county grounds in the centre of towns and using the massive proceeds to relocate to larger, better equipped specially-built stadia on green field sites.

It was seen as the way forward, an opportunity for county boards to use the boom to acquire modern facilities in return for their prime locations close to the commercial centres of towns.

It seemed the ultimate win-win situation for the GAA, even if there were those who questioned the wisdom of moving to the outskirts of towns.

In the end, none of the deals were finalised in their original format and, given the much-changed economic world, they are most unlikely to ever go ahead.

It looked at one stage that, inside 10 years, such major projects would have taken place in Tralee, Ennis, Newbridge and Mullingar, plus some other towns which were keeping a watching brief on how the trail-blazers fared.

It was even mooted that if the proposed sale of Clontarf Golf Club went ahead, Parnell Park would be next on the target list for developers, for whom no asking price was so high.

Meanwhile, ambitious club developments were undertaken in all 32 counties, most with the enthusiastic backing of financial institutions, which were suitably impressed by the grand schemes.

The Portlaoise club were especially badly hit. Having sold their grounds behind O'Moore Park to a development company, they purchased a new site two kilometres away.

Application

The deal with the company was contingent on Portlaoise's old grounds being rezoned for property development, an application which was eventually turned down by an Bord Pleanala.

However, Portlaoise had already been advanced over €6m to buy the new site, leaving them with a major financial headache when the planning application failed.

While that was a particularly unfortunate case, it underlined the complication area into which clubs were entering in the middle of the economic boom.

Others had less ambitious schemes but, nonetheless, were at a level which wouldn't have been countenanced some years previously.

Everything was, of course, predicated on the economy retaining its record high buoyancy. Once the collapse rocked the foundations, it was only a matter of time before clubs began to suffer.

Now, in the fourth year of the downturn, the squeeze is tighter than ever and most unlikely to ease any time soon.

While it can't be easy for such a progressive outfit as Thomas Davis to concede that they are no longer in a position to meet their on-going financial requirements, it may be the start of an admission by clubs that their level of indebtedness has reached unmanageable proportions. Ultimately, that will become an issue for Croke Park, since all clubs are vested in the GAA.

Former Dublin manager Tommy Lyons warned last week that unless team costs (£19.3m last year) were brought under control, the GAA will face bankruptcy inside five years.

He argued that it was unsustainable for counties to spend an average of over €2m per month for the inter-county season (January to September).

He also expressed concerns that club debts could ultimately become an even bigger issue. That would now seem to be the case.

For, while Thomas Davis' statement to the membership that their finances are in a perilous position is one of the few public admissions from clubs of the true extent of the problem, it can only be a matter of time before others are forced to face up to the grim reality of a situation that looked most unlikely to develop five years ago.

Irish Independent

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