Carlisle United say their new financial link with Edinburgh Woollen Mill is not an "emergency measure" - but instead something that could help the club in the long-term.
The possibility of United easing their reliance on chairman Andrew Jenkins has been raised by a new arrangement with the company owned by Cumbria's richest man Philip Day.
Carlisle's chief executive Nigel Clibbens has dismissed suggestions that any loan from Day's business, with Brunton Park used as security, is simply a measure to resolve short-term financial difficulties.
Instead, he says it reflects a growing partnership. And while Clibbens insisted there had so far been no discussions with EWM regarding ownership change at United, he did suggest the new deal was going to lead to significant financial support.
In an interview with , he said: "It's not an emergency measure. If we were looking for emergency fixes the directors could have perhaps taken the offer we turned down [from the recent overseas investor].
"The arrangement we've entered into is more in terms of dealing with the issues and risks the club faces going forward, and progressing and develop
News of the deal initially appeared in documents filed with Companies House, which showed a new charge against Brunton Park and that EWM had made "loan facilities" available to United.
While the Blues are not yet commenting on exactly how the link may develop - claiming aspects are still to be "thrashed out" - the prospect of EWM taking significant involvement in the Blues' affairs will intrigue supporters with, it is understood, the possibility of someone from Day's business eventually joining the club's board.
A long-standing sponsor, the prospect of EWM expanding their commercial backing of United may also be on the horizon, with stadium naming rights even among the potential areas that could be up for discussion.
Clibbens said discussions on the new arrangement had been stepped up in the last three months, with more "intensive detailed negotiations" taking place in the last month.
He added that it was important to have conducted talks "outside the spotlight" and, when asked if the deal could eventually lead to ownership change, he said: "That's speculating down the line. I don't want to do that. It just sets expectations and that wouldn't be right. We need to learn the lessons of the past on second-guessing the future."
It appears, though, to represent a new direction for the club following the recent demise of the controversial 650-day overseas "billionaire" saga.
The chief executive, meanwhile, insisted that 80-year-old Jenkins' support for the club is unchanged.
Clibbens said: "We didn't need this to get the accounts signed off, because Andrew is there. The position is no different from previous years, which is a comfort but also a problem to fix.
"Andrew would have supported the club if we needed him to, and given the required comfort to the auditors as and when required.
"Andrew Jenkins has always supported the club, and if this arrangement hadn't come along, Andrew would have continued to support the club as he always has.
"That is the measure of him, as he has always committed to the club with finance personally, and we're very fortunate that we've got somebody like him.
"But all of us, directors and fans alike, know we can't rely on that. We've made it clear all along that we want to see the club develop and the directors are committed to that - I think this shows some progress in doing that."
Clibbens said the club will outline further details of the EWM arrangement "in the coming weeks" while former Blues director Day's firm are yet to comment.
Clibbens also said the firm have "confidence in the people who are running the club", but added that United could also now benefit from EWM's "business expertise".
Clibbens added: "They [EWM] are a long-standing commercial partner, they have been really supportive to the directors and club over many years, and they have strong community links, which is perfect for us.
"To have them on board in a more involved way, backing the club and what the directors are doing, and wanting to work with us, is really good for everyone.
"The response from fans has been really positive from what I've seen so far. I think it's a step forward for the club and encouraging for EWM as they look at the response."
The chief executive, meanwhile, admitted the club was making losses, adding that a source of "rainy-day" money remained crucial.
He said: "The club is loss-making, as it has been over a long period.
"The budget made available to football is far more than the club can afford standing on its own.
"It can and has shown a profit from player sales and cup runs, but they can't be guaranteed. If they do happen, that cash gets put straight back into the football team and football operation.
"If they don't happen, the club can then only break even if the player costs are cut substantially or, if not, a loss needs to be picked up by someone, and funded. That means new money.
"It's very fortunate that Andrew has always been there as the backer of the club to bring stability and make up the "shortfall" when required, and provide that "rainy-day" money.
"This is about the club taking steps to avoid the need to rely on his willingness."
WHAT DETAILS CAN YOU GIVE ABOUT THE EWM CHARGE AGAINST THE GROUND?
Edinburgh Woollen Mill and the club entered into a new arrangement in the middle of last week and, as part of that, a charge over the ground was agreed. It's a standard charge, the full details will be registered shortly and the documents will then be available for everybody to see. We will be sharing more details and outlining what this means for the club moving forward in the coming weeks.
Put simply, it gives EWM security over the stadium. It is pretty common practice in football clubs; Fred Story had one before, which was recently released when his loan went away, so not something new for the club.
DOES THAT MEAN THERE HAS BEEN A LOAN FROM EWM THAT IS SECURED AGAINST THE GROUND?
All our dealings are a commercial arrangement with EWM. The details we'll make public with EWM when we've agreed with them what they are comfortable with saying. We will be led by them.
At the moment, as far as the club's concerned, they are a long-standing commercial partner, they are really valued, they have been really supportive to the directors and club over many years, and they have strong community links, which is all perfect for us. To have them on board in a more involved way, backing the club and what the directors are doing, and wanting to work with us, is really good for everyone. Where that takes us remains to be seen. But all the directors are delighted to have them on board in a more involved way than in the past.
WHEN WILL BOTH PARTIES BE READY TO GIVE SOME REAL DETAIL?
Everyone was aware this would be breaking news and there will be lots of interest. We would expect that to be pretty soon. The response from fans has been really positive from what I've seen so far. I think it's a step forward for the club and encouraging for EWM as they look at the response.
CUOSC HAVE SAID IT WILL BENEFIT THE CLUB NOT JUST IN THE SHORT TERM BUT ALSO 'MOVING FORWARD'. WHAT COULD THAT MEAN?
It's early days. To choose to become more involved with us, shows they [EWM] want to back the community as well as the club, and have confidence in the people who are running the club. How that pans out in the coming months ... it's too early to start speculating. EWM is a very successful company, there's lots that the football club can learn from it - for example, its business expertise is clear and it's something that could benefit the club - and there is lots we can potentially do together, but the detail has yet to be thrashed out.
CAN YOU PUT IN LAYMAN'S TERMS THINGS LIKE FIXED AND FLOATING CHARGE, AND NEGATIVE PLEDGE, THAT ARE ATTACHED TO THE CHARGE?
We have an agreement with EWM, part of that is a legal document called a Debenture which is filed at Companies House. Fans can look at every clause if they wish. That has a number of terms in it, one is the granting of a fixed charge to EWM. That gives EWM specific rights over the ground depending on specific events. The easiest comparison is with a mortgage lender who will have a fixed charge on a house. EWM also has a floating charge, which gives other rights over other 1921 assets, like cash we are owed. The club could grant security to more than one company or person. That could affect EWM so the negative pledge deals with that situation.
WOULD YOU COME TO THAT ARRANGEMENT WITHOUT A LOAN; CASH INPUT?
The Debenture agreement is like a contract so if you give something, you as part of that contract, have to get something in return. In this case, it’s public and there for all to see that as part of the arrangement there is a loan facility.
IS EWM/PHILIP DAY GETTING ANYTHING ELSE IN RETURN FOR THIS ARRANGEMENT - SUCH AS EQUITY? IS THAT ON THE AGENDA?
There is no change in equity. If there was, including options for shares in future, there are strict EFL regulations, an owners and director test, and immediate public disclosure requirements. The EFL rules on ownership of clubs are very clear and transparent; as soon as you get to that point you've got to make it public. That's not an issue here.
IS IT RULED OUT OF THE AGENDA IN ALL THIS?
It’s not something that’s formed part of the discussion with EWM in this arrangement.
BUT IS IT PART OF A TRAIN OF EVENTS THAT COULD PUT IT ON THE AGENDA?
That's speculating down the line, I don't want to do that. It just sets expectations and that wouldn't be right, we need to learn the lessons of the past on second guessing the future.
DOES PHILIP DAY HAVE INTENTIONS TO OWN CARLISLE UNITED OR PART OF IT, BEYOND THIS INITIAL ARRANGEMENT?
This is a purely commercial arrangement, as we sit here now, with the EWM business.
THE TIMING IS INTERESTING AND ANOTHER KEY QUESTION IS - HAS THE CLUB BEEN IN NEED OF SOME SIGNIFICANT FINANCIAL HELP NOW?
In terms of timing, the cash cycle and funding cycle of all football clubs at this level are very similar. There's no getting away from it, this time of the year is the most restricted, as you come to the end of the season, but its not an emergency measure. If we were looking for emergency fixes the directors could have perhaps taken the [overseas investor] offer we turned down. The arrangement we've entered into is one that we've looked at not in terms of the here and now; but it's more in terms of dealing with the issues and risks the club faces going forward and progressing and developing.
Andrew Jenkins has always supported the club, and if this arrangement hadn't come along, Andrew would have continued to support the club as he always has. That's the measure of him as he has always committed to the club with finance personally, and we're very fortunate that we've got somebody like him. But all of us, directors and fans alike, know we can’t rely on that. We've made it clear all along that we want to see the club develop and the directors are committed to that – I think this shows some progress in doing that.
IT HAS BEEN SUGGESTED THAT THIS MAY BE TO COVER A SHORTFALL, TO GET THE ACCOUNTS SIGNED OFF. IS THAT NOT THE CASE?
That’s not the case. We didn't need this [EWM arrangement] to get the accounts signed off, because Andrew is there. The position is no different from previous years. Which is a comfort but also a problem to fix. Andrew would have supported the club if we needed him to and given the required comfort to the auditors as and when required.
Let’s be clear, we are dealing with losses. The club is loss making as it has been over a long period. The budget made available to football is far more than the club can afford standing on its own. It can and has shown a profit from player sales and cup runs, but they can’t be guaranteed. If they do happen, that cash gets put straight back into the football team and football operation in the same season or it subsidises the next one, as in recent years. Either way it’s put back into the football setup. If they don’t happen the Club can then only break even if the player costs are cut substantially or if not, a loss needs to be picked up by someone and funded. That means new money.
It's very fortunate that Andrew has always been there as the backer of the club to bring stability and make up the “shortfall” when required and provide that “rainy-day” money.
SO THERE IS NO SUGGESTION THAT ANDREW JENKINS' WILLINGNESS OR ABILITY TO SUPPORT THE CLUB FINANCIALLY HAS CHANGED?
Andrew's position remains unchanged. Despite everything that's been going on, he remains 100 per cent committed to backing the club that he loves. I know he feels the pain and frustration of the supporters. He’s as passionate as them. He went out to meet fans before Luton and listened, spoke and took some pointed comments aimed at him. He will be meeting fans with the other directors on Saturday before Crewe.
This is about the club taking steps to avoid the need to rely on his willingness.
SO THE TAPS HAVEN'T BEEN TURNED OFF BY ANDREW?
No. In fact Andrew put in new money to fund Gary Liddle, but one of the things that's clear and accepted by the directors is the club must reduce the risk of relying on Andrew Jenkins. The onus is on the club is to find ways of making the club more viable and independent from Andrew. That can be done in a number of ways, such as trading and operating improvement, and that's a challenge. In terms of Andrew, he remains 100 per cent supportive of the club, but from a club point of view and my personal point of view, we need to reduce our reliance on him.
HOW LONG HAS THE CLUB BEEN IN DISCUSSIONS WITH EWM, AND HOW WERE DISCUSSIONS INSTIGATED?
We're always in contact with EWM so there's ongoing dialogue. In terms of this arrangement, discussions started to become more developed two/three months ago and we've been in more intensive detailed negotiation for around a month. As we know from experience, these things don't happen overnight because there's a lot to do before you get to the real detail. It's been well considered that’s for sure. I’m pleased to have been able to conduct matters with EWM outside the spotlight – under the radar so to speak, that was really important to this process and has undoubtedly helped all parties reach this arrangement.
WHICH PARTY MADE THE FIRST MOVE?
I don’t think there was a specific first move. Things developed from very general discussions based on personal relationships over a period of time. They grew from there.
IS ANY OF THIS DEVELOPMENT WITH EWM RELATED TO ANDREW'S DEBT?
This is all about the future. None of this arrangement affects anything that's already happened in the past, like Andrew’s loans or any other loans.
IS ANDREW JENKINS' DEBT BEING REDUCED? WHAT'S THE LATEST THERE? PEOPLE MAY LOOK AT THIS AND BE CONCERNED ABOUT ANOTHER DEBT POSITION AT THE CLUB.
The Pioneer debt has been reduced through the course of the year in line with what's always happened, part contra with the stand renaming rights, and part repayment. I think this may have been said before but I’m happy to reconfirm if it makes it clearer. Andrew has left his debt unchanged through 2016/17. It’s unsecured, he takes no cash repayments and charges no interest. In reality, it’s more like equity than debt. As I said, he put in new money to fund Liddle.
There are periods when Andrew’s debt might go up and down in terms of short term support similar to many other owners. This is what we're trying to get away from - Andrew can be seen to act as the bank, where he's able to give you short-term funding. That's not a comfortable position for the club or Andrew. It’s too easy.
In terms of the long-term debt, his position is clear. He's supportive, he's not looking to create a problem for the club by taking cash from it. That hasn't changed at all.
COULD FURTHER DEBT BE ANOTHER HURDLE TO INVESTMENT, AND WOULD ANDREW WANT HIS MONEY BACK?
Let’s be crystal clear on that. In the discussions that have been around investment, the status of Andrew's debt, based on the paper trails and correspondence I have seen, I don't think has been a significant barrier to any of the deals being done or caused them not to be completed. I know from the one I've been directly involved in, that wasn't a barrier. He's supported and acted for the good of the club. If him getting anything back was in any way detrimental to the club, he wouldn't do it, and he hasn't done it in the past when he could. I don't see it being done going forward. The same applies to the other directors who have provided loans.