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Jersey Reds directors have been accused of driving the beloved island club into a “financial black hole”, with cumulative losses of £2.6m since 2017 and an outstanding tax bill of more than £450,000.
The claims came from Ministers, as they hit back at suggestions Government should stump up more funding – in addition to £370,000 supplied in recent months – to keep the club afloat through the 2023-2024 season.
However, a comments paper published by Ministers this morning tore apart the proposal – arguing that it carried a “material deadweight risk”.
It laid out what was described as a “track record” of “weak” financial management by the board, and said this demonstrated that there could be "no confidence" in their abilities to "conduct the affairs of the company prudently".
Facing a grilling in the States Chamber this morning, Economic Development Minister Kirsten Morel and his Assistant Minister, Lucy Stephenson, attempted to shed more light on how the club had “consistently overspent and drawn down investors’ money at a much faster rate than expected” and the Government's various attempts to keep them afloat with funding over the years.
In a statement, Deputy Morel also spoke of a number of instances when the club had allegedly failed to engage or speak openly about their difficulties.
He claimed that the Reds’ board had failed to communicate their difficulties to Deputy Stephenson in November 2022 – only to ask previous Government CEO Suzanne Wylie for “urgent funding of £250,000 with a further £250,000 to follow later in 2023”.
The request was denied in January this year in a letter from Deputy Stephenson, who offered to meet to discuss matters further – this offer “was not taken up”.
Among the key financial difficulties to emerge this morning was that the Reds are currently facing a bill of more than £450,000 in unpaid taxes – including ITIS, Social Security and GST.
The report released by Ministers this morning stated that "the professional club has had its ITIS payments effectively deferred in recent months and this figure can no longer be considered part of the club’s economic value".
Pictured: Ministers produced a report outlining funding provided to the Jersey Reds in previous years – which also referenced £400,000 in ITIS debt.
These payments totalled £400,000 – a debt which was apparently re-profiled earlier this year to allow the club to repay it over 36 months rather than 12 months.
Released earlier today, a report by Ministers also cast doubt on the total value of the Reds to the local economy – a benefit cited by supporters as an argument in favour of continuing to support the home side.
To support his proposal, Deputy Lyndon Farnham has shared two key documents attempting to quantify the Reds' economic value:
A 'Business Model Review' penned in July 2023 by Santander, the key sponsor of the Reds' St Peter home turf, the Stade Santander, which claims that "the economic value of Jersey Reds to the island is estimated at between £3m and £6m per annum".
A Jersey Reds document sets out "an analysis of the many benefits derived by the island of Jersey from professional rugby activity" – including taxes, bar duty, staff salaries – and claims that the "grand total direct benefit" to the island is over £5m.
The Ministerial report explained that, in 2016, consultants Via Analytics were asked to measure the economic value of Jersey Reds to the wider economy.
This independent assessment determined that Jersey Reds made a contribution of £1.4m to £2.1m annually – cash largely derived from tax on payroll and fans from visiting clubs travelling to watch their team play in Jersey.
However, Ministers suggested in their report that this figure may no longer be accurate due to declining spectator numbers, and the club's current financial situation.
Their report says that matchday spectator numbers have steadily fallen from over 2,000 at home games in September 2013 to around 1,500 in the 2018/19 season, further falling to around 1,200 per match in the most recent season.
Others have suggested that the value of the Jersey Reds is intangible, such as local rugby fan Dominic Boletta and other supporters rallying outside States Chamber today.
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