Concern about financial difficulties in the Football Association of Ireland (FAI) prompted the Irish Sports Council to get legal advice on how to “ringfence” its funding from the association’s creditors, official documents show.
It is understood one option considered by the council in 2011 was paying the FAI’s annual grant in monthly instalments.
Another proposal involved setting up a bank account into which the €3 million annual grant would be paid.
Fears that the FAI’s exposure to bank debt over the redevelopment of the Aviva stadium escalated two years ago when it emerged the association was repaying only interest on the loan.
Documents released under the Freedom of Information Act show the council’s board discussed in March 2011 “the necessity for the executive to ensure that any [council] funding allocated to the FAI be ringfenced and protected from any claims by a creditor should the FAI end up in financial difficulty”.
Legal advice was subsequently sought and, while not released under the Act, The Irish Times understands this advice set out two options: restructuring the grant payment schedule to as many as 12 instalments a year, or setting up a separate bank account that would be protected from creditors in the extreme case of the FAI becoming insolvent.
Instalments
At the time the FAI received its grant in two instalments of 75 per cent up front and 25 per cent on submission of audited accounts.
The council subsequently decided to pay its grant in two tranches of 50 per cent each over the course of a year.
This arrangement was extended last year to the GAA and the IRFU. The three organisations are the top recipients of funding from the council, receiving €8.3 million together in 2012.
The documents show FAI chief executive John Delaney was asked to appear before the council in November 2011 to be questioned about the association’s finances and development plans. Mr Delaney told the board he “was comfortable with the FAI’s ability to meet its debt obligations over the coming years and did not feel this sense of comfort was in any way aspirational”, according to board minutes.
Asked about his salary, which then stood at €400,000, Mr Delaney said this “was set by his board and was dependent on his ability to secure commercial contracts for the FAI and as with everyone else he has his own personal obligations”, the minutes recorded.
Mr Delaney agreed to a €40,000 cut in salary last year.
Auditors
There were previous tensions between the two bodies over the FAI’s decision to refuse the council’s internal auditors access to copies of board minutes, the documents also show.
In April 2010, the council’s chief executive John Treacy wrote to Mr Delaney expressing “regret that access to information that had been agreed . . . in an advance of audit was subsequently withdrawn”.
Mr Delaney replied that copies of board minutes could not be supplied to the auditors “because these were strictly confidential and had highly sensitive commercial information in them”. He added this information was unrelated to the projects supported by the council, which were mainly grassroots programmes, regional coaching and developing the women’s game.
However, Mr Delaney said to prove the FAI “maintained the highest level of corporate governance” its director of finance had shown “physical evidence” of minutes and agendas on his laptop to the auditor.
“In particular, he showed her the specific reference in the board meeting minutes where the board approved the association’s annual budget and that it received a monthly detailed financial report.”
“I wish to assure you we did not withdraw any previously agreed access to information,” Mr Delaney added.
Tetchy exchange
There was a further tetchy exchange last April when Mr Delaney queried a cut in the FAI allocation from €3.35 million in 2011 to €2.99 million in 2012.
Mr Delaney wrote saying a “10 per cent reduction was discussed” with the council, whereas the figures showed a 10.7 per cent decrease. “Can you advise if this increased cut is an error or the actual figure?”
In reply, the council said the 10 per cent reduction applied to underage participation funding, while the women in sport funding had been reduced by 22 per cent “which was considerably less than the overall reduction of 40 per cent in the council’s budget for this fund. As a result, the figures which you received . . . are correct.”
