Another wall in the edifice of the Worcester Warriors has crumbled. The company responsible for paying the squad, WRFC Players Ltd, has been wound up. All employees are now officially out of work, while administrators, governing bodies and potential buyers pore over the state of the club’s main operating company, WRFC Trading Ltd, which has been placed into administration, and the constellation of companies that surround it.
What will the administrators find? There is a lot to unravel. Over the past 18 months, the Guardian has looked into the club’s management and financial arrangements since it was bought from the Allen family by a consortium in September 2018. The tale that emerges around the erection of a bewildering network of companies and microcompanies helps to illustrate the mess the club finds itself in.
On 28 September 2018, a consortium led by Jed McCrory, a former owner and chairman of Swindon Town and director of various other lower-league football clubs, agreed terms with the previous owners, when his company Militibus Quanco paid £1 for a majority shareholding in WRFC Trading. The club’s long-standing operating company came with Sixways Stadium and the 50 acres of land within which it sits, advertised for sale by Livingstone Partners at £28m less than a year earlier. (In the interim, Worcester had seen a spike in pre-tax losses.)
On the same day, another of McCrory’s companies, MQ Property, paid £6.25m for the freehold of the stadium and land. Immediately, a 999-year lease for the assets was sold to what MQ Property’s first set of accounts would later describe as a “connected party”, Link Corporate Trustees, acting on behalf of Alpha Real Capital. That company, again on the same day, extended a 175-year lease back to WRFC Trading.
On the face of it, those transactions amount to a sale and leaseback of the stadium and land, but its triangular nature appears unusual. No one was willing to explain to the Guardian how and why the structures had been set up in this way. The documents appear to suggest that MQ Property raised finance against Sixways from a connected party in order to buy the asset from WRFC Trading. When a long leasehold was returned to it, WRFC Trading bore the responsibility of the future payments.
In the relevant accounts later published, that 175-year lease was valued as an asset of £16.5m for WRFC Trading, while the freehold, which remained with MQ Property, was valued at nil, because of the retention of the 999-year leasehold by Link Corporate Trustees. WRFC Trading’s minimum future lease payments were registered as £6.25m. The value of the asset at this point therefore sat in WRFC Trading, not in MQ Property.
McCrory’s consortium consisted of: Scott Priestnall, a businessman whose father, Martin, was once a director of Luton Town; Errol Pope, a trader presented as the financial backer; and Dave Seymour, former flanker for Sale and Saracens. Only McCrory was to assume position as a director of the club and its new group of companies, according to documents at Companies House.
Within weeks of the takeover, McCrory advised the club’s board of his intention to leave for personal reasons, but he said he had found two candidates to take over, Jason Whittingham and Colin Goldring, who had become owners a few months earlier of Morecambe FC.
Having taken up positions as directors of Worcester on 17 October 2018 Whittingham and Goldring assumed control on 11 June 2019, when McCrory departed all directorships. And yet a closer look at the dates appears to raise questions over the relationships between the company directors. Bond Group Sixways, which became the parent company at the top of the entire group as McCrory departed, thus owning WRFC Trading, was incorporated with Whittingham as its sole director on 22 June 2018, a full three months before McCrory’s consortium had bought the club. No one has been willing or able to explain to the Guardian how this came to be. It seems the plan may have been for Whittingham, at least, to take over.
At this point, according to documents at Companies House, Whittingham has significant control of Bond Group Sixways, which owns Militibus Quanco. Goldring’s status is unclear. There is nothing in the relevant documents of the parent company, or any of the others, to suggest he owns anything, but he is widely referred to as the owner of Worcester Warriors, nonetheless, and describes himself thus on correspondence.
Militibus Quanco (subsequently renamed Worcester Sport in August 2020) owns WRFC Trading, which creaks under tens of millions of pounds’ worth of debt and has cumulative losses of £60m since its incorporation. But at least the latter owns a 175-year leasehold for the Sixways site, valued at £16.5m, paying instalments for the leasehold to a company outside the group.
Finance has been raised through a charge on all the companies in the chain. Among the companies sits MQ Property, which, according to its accounts, owns nothing but the freehold for Sixways – and that has been valued at nil.
Then along came Covid and the accompanying financial pressure.
The government announced help for community sports clubs to survive lockdown in the shape of the Sport Winter Survival Package. One of the conditions of each loan was that the government, through its agent Sport England, took out primary charges on each club’s assets, in order to protect the public money. Essentially, any debt or finance levied against any asset had to be cleared before a club could receive its funds.
In order to qualify for its loan, WRFC Trading used that loan to clear any debt against its assets. Or in the case of the Sixways site, to bring the asset back under its outright ownership.
On 17 February 2021, WRFC Trading collected its £15.3m loan by using £4.4m of the public money to release charges that had been raised against Worcester’s P-shares, their shareholding in Premier Rugby. And it used another £4.83m of the loan to buy back the 999-year leasehold of the stadium and land. On the face of it, this was a discount of nearly £1.5m from the £6.25m the connected party had paid for it two and a half years earlier. Sport England told the Guardian in May 2021 that this was due to the level of repayments WRFC Trading had been obliged to make for the leasehold in the first few months of the 175-year term, which is corroborated by WRFC Trading’s accounts for the period ending June 2020.
That punitive repayment schedule ended with the repurchase of the 999-year lease. Thus it appears nearly £10m of public money had been spent replacing pre-existing debt with favourable finance. But at least WRFC Trading now owned its stadium and land again.
Sport England responded by placing charges on the same day on all of WRFC Trading’s assets, on behalf of the government. The Guardian understands that Sport England believed the 999-year lease, or virtual freehold, had been merged into the 175-year leasehold and now sat in WRFC Trading as collateral against the £15.3m loan. Sport England said the government was the first creditor.
It soon emerged that the picture was even more complicated. On 18 December 2021, MQ Property filed its first set of accounts, for the period ending July 2019. In the post-balance-sheet events, the end of the sale and leaseback of the stadium on 17 February 2021 is referred to, such that Sixways Stadium and surrounding land were “brought back under Company ownership”, ie the ownership of MQ Property, not under WRFC Trading, where all the debt was sitting – and still sits.
It appears the leases, rather than being merged to create a virtual freehold, were actually surrendered. MQ Property’s accounts refer to the transaction as a “settlement”. And so, as corroborated by correspondence seen by the Guardian, ownership of the stadium and land reverted to MQ Property, where the freehold had sat all the while since September 2018, valued initially at nil.
This is the alleged asset strip referred to in the letter sent in September 2022 by a major creditor to Sport England. How this happened with Sport England’s charge in place over WRFC Trading and its assets is not clear. Citing reasons of confidentiality, Sport England has not responded to the Guardian’s latest questions. Whittingham subsequently told the Daily Mail that same month that the details of the transaction were “far less sinister and interesting” than they appeared, while Goldring had told staff in a leaked letter in August that allegations of asset-stripping were “completely false”.
The administrators will be scrutinising this movement of assets between the various companies. Asset stripping is not illegal in itself, particularly if assets are moved out of a company to safeguard against its future insolvency before the company is in any difficulty. The broader question is whether public money should be used to facilitate it, particularly when the fate of a major community rugby club and its employees is at stake.
On 21 December 2021, three days after MQ Property filed their first set of accounts, Sport England placed a new charge, through Worcester Sport, over the equity of MQ Property but, crucially, not over its assets. On 30 June this year, MQ Property sold the six-acre site of the club’s £1m training pitches for £350,000.
A few days later, it was reported that, following a tribunal in April, Goldring had been barred by the Solicitors Regulation Authority from working for any law firm without clearance. Between approximately June 2016 and April 2017, during a stint as a “trainee solicitor” at a now-defunct Manchester law firm, he “caused or allowed” the disappearance of €8.3m of a Saudi client’s money, raising questions from some observers over the fate of a major community rugby club remaining under his influence.
On 4 August, Sport England took out a new charge on Sixways, but this time the stadium on its own, now sitting alone in a new company of the same name. At this point, Sport England knew WRFC Trading was facing a winding-up petition. In an extension letter on the same date, this one also signed by DCMS, reference is made to a petition brought on 29 July by ICM Stellar Sports, one of the biggest sports agencies in the world. In another letter deed, signed on the same day by all of the above, the stadium was valued at £14.65m, having been transferred to its new company from the previous owner, MQ Property, for no value.
Under the terms of a fresh 999-year lease, again dated 4 August, with Sixways Stadium Ltd, its new landlord, WRFC Trading’s use of its former asset is restricted to the playing of, and training for, rugby. All hospitality, sponsorship, pouring rights and marketing proceeds are to be retained by the new company. After five years, WRFC Trading, if still extant, will have to pay rent at market rate for use of the stadium. Access to the stadium is restricted to a path marked on a map in the lease documents.
Also in August, the news broke that HRMC had filed more winding-up petitions, against WRFC Trading and WRFC Players, for unpaid taxes. Now the club’s plight was common knowledge. Potential purchasers, including one brought by former chief executive, Jim O’Toole, insisted on administration as a condition of purchase, so that recent dealings could be investigated. Whittingham argued in an interview with the BBC that administration would bring about the end of the club.
As the club’s accounts were frozen, the owners raised the majority of the August payroll through a £600,000 three-month loan at 20% interest from a petrol-station company, charged over the stadium car park. On 1 September, in an email seen by the Guardian, the creditor who wrote to Sport England offered to replace that with a £780,000 loan, which would have covered the entirety of the payroll. If a suitable buyer could be found, who would keep rugby at Sixways, he pledged to release the charge to them for nil gain – an interest-free loan in other words, on the condition that rugby remained at Sixways. Whittingham and Goldring chose to stick with the original.
The rest of September played out to various unfulfilled claims by the owners of an imminent sale and the building clamour for the club to be put into administration, including in the House of Commons. It was not until 26 September, when the RFU suspended Worcester from all competitions after its latest deadline for assurances about the future of the club had been missed, that Whittingham and Goldring accepted administration as an inevitability.
And so the investigators were called in. Let the inquest be deep and wide-reaching.