David Conn: Barnsley still facing an uncertain future

The news from Barnsley was heartening last month: the stalwart football club, 104 years in the Football League and a member of the Premiership as recently as 1998, had been bought out of administration by the town's mayor, Peter Doyle. Exactly a month on, however, and the mood is darkening; the Football Association and League have refused to ratify the deal because Doyle has not settled Barnsley's debts.

A creditors' meeting scheduled for yesterday was postponed to give him more time to reach a settlement. Before buying the club, Doyle, 59, satisfied the administrator, Matthew Dunham of RSM Robson Rhodes, that he had sufficient money to take Barnsley forward, but he is now saying he does not have a "bottomless pit" of money, is becoming disillusioned and "would have no regrets if the club shut down".

I can also reveal that on the day Doyle bought the club, he mortgaged the considerable land around its Oakwell ground to three individuals who had lent him money: Melvyn Laughton, Sean Verity and Stewart Davies. They have previously appeared in April 2001 as the "Sterling Consortium", when they lent £150,000 to Chesterfield, who were then in crisis, for which they charged "profit costs" of £50,000, plus a £30,000 arrangement fee on top of legal costs, secured on the club's Saltergate ground. Four local businessmen-supporters paid them off when the club went into administration just a month later.

Doyle told me yesterday that the Sterling individuals had provided him with money to pay Barnsley players' wages and ongoing costs, but refused to say how much he had borrowed or on what terms. He would also not say how he financed the takeover; he said he had saved the club from liquidation when it would have closed and now needed other people to invest in it. "But I'm becoming disillusioned," he said, "and I could just decide to walk away from it." If the club did fold, Doyle would still be left legally owning the ground and 30 acres of land around it, which he could then try to develop. But he insisted he had no interest in the assets: "I just want to make sure Barnsley has a football club."

Barnsley, generally regarded as a well-run, solid club under the former chairman John Dennis – recently reappointed by Doyle – were relegated last season to the unfamiliar Second Division. They plunged into administration last October owing nearly £4m and unable to pay the wages, PAYE and other ongoing costs. There was only enough money to last until the end of November; the players agreed to defer part of their pay and the PFA, the players' union, lent the club £220,000 to pay last month's wages.

Dunham said three seriously interested parties considered buying the club, but Doyle's was the highest offer. On 4 December, the deal was done: Doyle paid £2.85m, the club was transferred to his company, Cobco (515) Limited, while the ground and land were put into another new company belonging to him: Barnsley Football Club Holdings. The money, Dunham said, was only enough to pay off mortgages, so there was nothing for the tax and VAT, which amounts to £650,000, or general unsecured creditors, who are owed more than £600,000. But Dunham said that Doyle had satisfied him with proof that he had funding to take the club forward and it was understood he was going to settle the debts in order for the League and FA to allow Barnsley to continue.

The League's insolvency policy, supported by the FA, is that "football creditors" – mostly players' wages and money owed to other clubs – must be paid in full. Preferential creditors – tax and VAT – must also be paid in full. Unsecured creditors, the usual sorry list which includes £1,500 owed to the St John Ambulance and £5,500 to the South Yorkshire Ambulance Service, must agree a settlement: an acceptable level is considered to be 10p in the pound.

By law, this is not required; were Barnsley a garage or factory, and the administrator paid only enough to pay off the mortgage, the company and assets would be sold and the creditors would receive nothing at all. It happens all the time. There has been growing discontent among creditors with the League's policy, because in effect it places "football creditors" in a better position than even the Inland Revenue and Customs and Excise, but, during the current avalanche of administrations, the League has held firm to it. "We are maintaining to some extent football's good reputation," a spokesman said. "It isn't just football debts; we require that an honourable settlement must be made with all creditors, above what is required by law."

Doyle said yesterday he believed the policy was illegal, because it made football creditors preferential, but said he was prepared to negotiate and reach a settlement by the end of the season. He claimed the League was happy with that, but the FA had scuppered the deal and refused to allow Barnsley to play. But the League said it was still unhappy, that it had received no written proposals for the creditors and therefore Barnsley's League share had not been transferred to Doyle's new company. The club are in limbo.

The difference with the FA was technical, the League said; while the League would have allowed Doyle's company to play on until the end of the season, the FA insisted that technically the share remained with the administrator, who is allowing Doyle's company to play under licence. But as Doyle is paying the wages and costs, with, he said, the money borrowed from the Sterling Consortium, he is less than happy.

"I'm prepared to reach an agreement by the end of the season," he said, "but with all the stick I'm getting now – and I'm not a well man – I could walk away, and where would that leave it?"

Doyle refused to go into detail about his own financial situation, but said he had been in the oil pipeline business until an accident in Germany in 1982. After that he said he had been involved in shops, pubs and houses. Companies House records show that until 1995 he was a director of one company, Shaun & Grant Pipelines Limited, with his brother Shaun, who now runs a well-known security firm in Barnsley. Peter said he had been a Labour councillor for 10 years and is serving his first year as mayor.

Oakwell sits in around 30 acres of land which Doyle said ought to be developed to make money to run the club: "It could be restaurants, hotels, anything, and that was always the plan." Nine separate plots of the land, including the large car parks, were immediately mortgaged to Laughton, Verity and Davies on the day he bought the club.

All were members of the Sterling Consortium which lent Chesterfield money, a deal which Nick Buchanan, the former chairman of Hull City when it went into administration in 2001, helped to arrange. The three are involved in a variety of finance companies and are all partners in an accountancy firm, BKR Haines Watts. Both Verity and Laughton refused to discuss details of the Barnsley loan, but Laughton confirmed that they worked together to lend money as a consortium. "We do not charge exorbitant rates," he said, "but football clubs get rates commensurate with their stability."

He said he knew very little about football: "I wouldn't know what division Barnsley or Chesterfield are in. But my impression is that the football industry is going through enormous change, some clubs can't manage it well and they end up borrowing from where they can at whatever rates they can get."

To be clear, it is not the club who have borrowed the money, but Doyle himself, to finance his rescue. In the programme notes before the match against Mansfield two weeks ago, he wrote: "My money isn't a bottomless pit. The next time the club is in danger of shutting down I won't have to go to court to do it. And I would have no regrets if the club did shut down because I feel I have done my bit by saving the club once."

All of which adds up to a troubling and depressing new year for Barnsley fans, who are dazed, confused and looking into a deeply uncertain future.

davidconn@independent.co.uk