Ian Mallon: Moneyball - anatomy of a football financial crisis
MONEYBALL: A general view of a football. Picture credit: Piaras Ó Mídheach / SPORTSFILE
Details have emerged about how hundreds of thousands of euro worth of assets have been secreted away from a major schoolboys/girls league and into a company which now controls those and other interests.
The arrangement was discovered in one of the country’s largest underage leagues after members demanded to know the whereabouts of a €350,000 Sports Capital grant awarded by Government, along with other financial details.
Concerns were first raised after reported last week that those who run the Kildare and District Underage League (KDUL) were unable to produce appropriate financial statements for the league at its annual general meeting last month.
It emerged at the reconvened AGM last week, that the league no longer has any assets, and that cash and facilities for the KDUL is under the management of a previously undisclosed controlling company.
It has emerged that one of the key purposes of the new company is to distribute money generated by the league through registration fees, into a League of Ireland, commercial franchise operation - Klub Kildare.
Despite unwittingly providing approximately 55 per cent of all revenue generated by the new company, members of the KDUL were unaware that it was actually financing something it had not been privy to, nor had approved.
The discovery was made after members demanded to know why they had still not been provided with relevant financial statements, cashflow details, income and expenditure and banking arrangements – issues which have still not been presented.
The details have brought the league to the brink of collapse, as clubs demand further detail of how their assets have been placed out of their control, with an expectation that many clubs will leave the league at the end of this season.
Three years ago, unbeknownst to member clubs of the KDUL, a newly-created company under limited guarantee (CLG) was registered by two current and one former officer of the league.
Secretary Mark Donegan and Treasurer Pat Hand – along with a former secretary, and now the current secretary at Klub Kildare, Pat McNally – set up the ‘KDUL Academy Company Limited by Guarantee’.
Not only were clubs unaware of the development, members were told last week that Donegan, Hand and McNally cannot be removed from the controlling entity - barring death, disqualification or resignation.
Effectively the three are locked into the new arrangement, with clubs apparently powerless to have them removed from controlling their league.
It is normal that CLGs are democratic institutions where members should be voted into their positions.
Not only has that not happened here, those who should be entitled to vote were not even aware of the new company’s set-up to begin with.
This new enterprise immediately took over three entities in schoolboy football - the KDUL (League), Facilities and what is known as the KDUL Academy – an elite structure whose sole purpose is to prepare players and enter teams into Kennedy Cup, Gaynor Cup and SFAI Inter League competitions.
Last season there were no Inter League teams at boys level from U14 upwards, and no team was entered in the Kennedy Cup.
That, members claims, is because the primary focus of the KDUL Academy Company is on Klub Kildare – a commercial franchise which is set to unveil a €180,000 sponsorship partner in the coming weeks.
While most people agree with the merits of the FAI’s player pathway programme through its underage League of Ireland structure, elite clubs must be separate from grassroots leagues, due to conflicts of interest issues and to maintain the independence of clubs.
In almost all other cases throughout the country grassroots clubs and elite franchises are separate – in Kerry there was a direct link, but that has since been ended by members.
Why does this matter? Because Klub Kildare would run at a considerable loss if it didn’t receive funding from the league.
However, members say that this money should be invested in the grassroots structure and not handed over to an FAI licensed club, where children pay up to €400 each year to play for a team which is out of reach of many players from financially challenged backgrounds.
The controllers of the KDUL Academy Company deny that the entity was established to fund Klub Kildare – and that the new arrangement was simply set up to achieve Sports Capital Funding.
The discovery that all league assets owned by the KDUL will focus in the coming weeks on that controversial SCEP grant, which is also under the management of the new company.
That €350,000 is being invested in an all-weather facility at Killashee Hotel in Naas, which clubs have now been told they will not have access to, and will instead be used by Klub Kildare, almost exclusively.
The SCEP grant was originally applied for by the KDUL, but along the way, the application was changed to incorporate the KDUL Academy Company.
That grant is now under the control of the CLG, and along with all other assets, out of direct reach of the members who fund that very company.
This arrangement is set to be legally tested in the coming weeks and months, but for now, members are deeply angered that such a deal was not disclosed.
At last week’s AGM, a tense line of questioning by a club chairman and keen expert on CLGs was delivered, around the non-disclosure of financial arrangements to members.
“Why was a sports grant transferred in our name - where we, the KDUL league, have no knowledge of these transactions that were going on between one company and another limited company?” the interrogator asked.
“While we are forming (at least) 50 per cent of the income going into (the new company) we have no knowledge (of it) – 50 per cent of your income and we have no knowledge – that’s what this is all boiling down to here.
"We have no knowledge of these transactions, why? Why have we not been informed of that?” When the Treasurer said that because there had been no change of beneficiary, Pat Hand was told that “beneficiaries didn’t come into it”.
“You’re not answering my question, why were the clubs not informed?” The same question was asked another three times before the speaker from the top table finally acknowledged: “Maybe we should have.”
One of the great mysteries surrounding this strange episode is the association’s refusal to become directly involved in the situation.
The Pitch understands that FAI operatives are offering advice to the clubs as a collective, now numbering 17 disenfranchised teams - more than half of those who enter KDUL competitions.
However, assertions from FAI sources - carried in this column last week - that the association has no jurisdiction over the schoolboys/girls league is running thinner the deeper this crisis sinks.
SFAI sources this week said that as football’s governing body the FAI must intervene before the league collapses, leaving up to 6,000 children without football for the remainder of the season.
The bigger problem for the FAI is whether it did its due diligence on the very people it encouraged and licensed to run Klub Kildare, knowing that there would be a direct conflict of interest in how the league is run, and how the League of Ireland club is financed.
That conflict’ is now a full blown war between a League and the Clubs it has a duty to serve above all other interests.
