Statement on KSDL Shares

07/01/2012

Sir John Harman on behalf of KSDL

Over the last few days statements have appeared in the electronic media and  the local press concerning a dispute over the shares of KSDL (Kirklees Stadium Development Ltd). Some of these statements are speculative or misconceived, and KSDL wishes to ensure accuracy, both in its own interests and in the public interest, given that Kirklees Council is a major shareholder.

KSDL Statement

KSDL exists to enable the interests of the Council and the Clubs to be properly represented in the operation of the stadium and, as can be seen from what follows, continues to work for an agreed way forward. KSDL has supported the proposed share transfer and has actively sought to resolve the remaining obstacle by negotiating a new financial settlement with KMC.

Calls by supporters’ organisations to damage KSDL income by boycotting stadium catering or other services are misplaced. Every penny earned by KSDL goes into providing the best facilities that we can for the clubs and their supporters. An example is the investment last year of around £750,000 in reconstructing the playing surface to keep it up to the highest current standards. KSDL has never paid a penny in dividends to shareholders, ploughing all profits back into the business and gradually paying down the original construction costs. As a result, both clubs have access to top class facilities at a cost far below what it would cost them to provide themselves, and the town has a multi-use venue, partly owned by the Council, which is already attracting significant income and is set to become the core of a major leisure destination for the region.

The company remains hopeful that there will be a successful transfer of shares to HTAFC and will continue to work to enable an agreement to be found, while providing the best possible facilities for the clubs and their supporters.

What is the share dispute about?

1.         From its beginning in 1992, KSDL shares were owned 40% by the Council, 40% by Huddersfield Town football club and 20% by the Rugby League Club*. Their agreement provided that no share transfer can be made by any shareholder without the others’ consent.

2.         After HTAFC had been bought out of administration by Ken Davy in 2003, all of the non-Council shares were transferred to a new company, Huddersfield Sporting Pride (HSP), as agreed by the shareholders. Then, following Ken Davy’s later sale of HTAFC to Dean Hoyle, those two individuals came to an agreement, in February 2010, by which 40% of the shares would be transferred from HSP to HTAFC, thus returning the share distribution to its original form.  KSDL is aware that there are other financial elements to this agreement but has no knowledge of their detail and therefore cannot comment further on them. This agreement had an expiry date of 31st August 2011 but the parties to it agreed to hold it open pending further negotiations described in point 5 below.

3.         The proposed transfer of 40 shares in KSDL from Huddersfield Sporting Pride to HTAFC required the approval of the Council. In the light of the pressure on its finances, the Council said that before it would approve the transfer, it wished to negotiate how it could be relieved of an undertaking it had signed in 2004 to provide annual funding to KSDL. It had given this undertaking to support the stadium at a point when HTAFC, and therefore KSDL, finances were in a parlous state.

4.         This request was not immediately acceptable to all parties, and no progress was made in resolving matters during 2010. Up to that point, all of these propositions were matters, not for KSDL itself, but for the Council and the owners of the clubs. But by early 2011, KSDL became concerned that prolonged uncertainty over the transfer was not in the best interests of the company, and over the summer months it negotiated a financial settlement satisfactory to the Council which commutes the annual revenue payment into capital contributions to be made under agreed conditions. In August 2011 KMC indicated formally that it could accept this settlement and therefore now approve the share transfer.

5.         In order to give effect to this settlement, the parties to the current stadium Collaboration Agreement (CA) have to amend that CA to restructure the Council’s financial obligation. It is in this context that a dispute over the rents charged to the respective clubs has emerged. The wording of the existing CA allocates rental charges between the clubs in proportion to their gates, but since 2004 the agreed practice has been to increase the proportion paid by Huddersfield Giants by a factor of 15/13**. The clubs have not been able to agree which of these formulae should be applied in future.

6.         KSDL would prefer to have had a final agreement in place on this matter and to this end has done what it could to achieve one. Last month a final attempt to have the rental formula determined by a process of arbitration was unsuccessful when Ken Davy restated that his position on this was non-negotiable.

7.         At its next Board meeting KSDL has to decide whether to proceed with the financial settlement with KMC in the absence of an agreement on the rental formula. If we do so, we expect that the Council will give its formal consent to the share transfer. But in the last few days it has become apparent that the February 2010 deal is no longer on the table, as Dean Hoyle’s lawyers have made clear.

Notes

*  The football and rugby clubs have each traded under various company names during the period but the generic titles HTAFC and HRLFC are used throughout this statement

** This was done by agreement between the clubs at the time that Ken Davy was the owner of both.

The actual rent payments due for 2009/10  were

HTAFC              £ 703,505.25   = 74.45%

Giants               £ 241,494.75   = 25.55%

If the calculation had been on 13 games not 15 the swing towards Town would have been an extra £24,900 to pay.

The proportion paid by the clubs has varied quite widely over the years as their fortunes (& gates) have ebbed and flowed. The football club has always paid the greater proportion due to its larger annual gate. The highest proportion paid by the football club was 88% in 1995-6 and the lowest 65% in 2007-8