Salford heading for ‘ominous’ administration warns top sports lawyer

A top legal expert fears Salford Red Devils’ mounting financial crisis could see the club enter administration – signalling certain relegation from Super League.

Richard Cramer, a lawyer who has worked in rugby league circles for over 30 years, believes the signs look “ominous” for Salford’s future and fears they are a “sinking ship”.

The financially-crippled outfit were taken over by a consortium headed by Swiss banker Dario Berta which then failed to pay wages on time.

The saga has rumbled on and earlier this week it was announced that chief executive Chris Irwin had left Salford.

Cramer told Love Rugby League: “The most glaringly obvious aspect of this is the complete lack of communication and information from the Rugby Football League and the new ownership group.

“You’re left scratching your head thinking ‘what is the position of the club?’

“Chris Irwin gave a couple of interviews but now he’s gone and we’ve heard nothing from the owners since they took control. That begs the question ‘what is their plan and why haven’t they faced the cameras?’”

The ownership group have tried to secure the Salford Community Stadium and land around it as part of their takeover deal.

But with debts mounting, Cramer added: “You could easily spot that this was not just the acquisition of a rugby league club but a rugby league club with a property transaction linked to it.

“That, I think, has caused the issue because it sounds as though the property transaction involving the local authority has not completed or hit problems.

“And yet at the same time these new owners have been presented as the new owners – yet from their perspective it was conditional on getting the property transaction over the line.

“I think where it has gone wrong was the RFL being desperate for new owners to take over so that they could run with 12 teams at the start the season.

“Anything else would have been disastrous, not just from a PR point of view but also to avoid a breach of the broadcast contract with Sky.

“The new owners have become frustrated with having to put money into the club and the slow pace of not being able to conclude the property transaction with the local authority.

“The likelihood is that if they can’t close off the property transaction – and all the benefits that come with it – they then say ‘without the property deal being done, we can’t press ahead’ and that would be an unmitigated disaster.

“We don’t know – because no-one’s telling us – but that’s probably why players are leaving because they’re making sales to balance the books.

“Not just to bring money in for cashflow reasons, but also reduce the wage bill. Irwin has gone after barely a couple of months and that to me suggests this could be a sinking ship.

“When players are also jumping that ship – and nobody can blame them – the writing looks inevitably on the wall so I suspect this is heading towards some kind of insolvency.

“If the property deal was going to happen, I don’t think you would have that this instability and players wouldn’t be leaving.

“If there is a winding up petition or an HMRC pressure for non-payment of PAYE or any unpaid taxes, then it’s a very tough battle to defeat the taxman.

“In which case you put the club into administration and that gives an element of protection to keep it alive and allowed it to be sold as a going concern.”

Speculation persists that NRL side Sydney Roosters are looking to take over Salford and potentially renaming it as a Manchester club.

“If the Roosters got Salford, I think it would be a very good thing because you wouldn’t have that level of uncertainty that is there now,” stated Cramer.

“It might also be a bit of a forerunner to Australian investors looking at English clubs such as London Broncos, for example.

“There’s also the wider position of the NRL looking to take a stake in Super League because it looks like there is definitely interest from Australia in the English game.

“I think that is the only realistic way out of this mess for Salford – but I’m just not sure the Australians would be interested in them as a Championship club.

“If the ownership group can get hold of the ground, happy days – but I’d imagine the chance of that happening is just whittling down day by day.

“Watch this space – but you may well find that there is an application for the club to enter administration.”

That would be disastrous for Salford’s future and Cramer added: “Under IMG’s grading criteria, they probably regard an active insolvency as a fatal blow to Super League status.

“Therefore I suspect it would result in an automatic relegation from the competition at the end of the season. You’ve also had cash-flow problems hanging over the club for many months because the previous owners massively overspent and didn’t cut their cloth accordingly.

“The whole saga has been a debacle and is a terrible look for the sport whilst also showing up bad leadership at the club and the RFL as well as the governing body.”