Goals Soccer Centres finds a buyer but uncovers more accounting problems
Goals Soccer Centres has been bought in a prepack administration by its original founders, despite auditors uncovering new allegations of wrongdoing that have been handed to police, the company has revealed.
Bosses at the five-a-side football pitch operator said a new entity – Northwind 5s Limited, which is backed by Inflexion Private Equity and Soccerworld – has agreed to step in.
Ian and Barry McDermott, the sons of the original founder Ian McDermott who sold the business in 2000, have also invested via Inflexion.
They said: “We are delighted to be returning to the business we founded over 30 years ago.
“The business has grown substantially over the years with the market continuing to evolve and develop.
“We look forward to partnering with Inflexion as we grow the company further and continue to provide first-class football facilities to a loyal customer base.”
Following the sale, the current management revealed that Mike Ashley’s Sports Direct failed to make an offer, despite publicly stating it was keen to buy the business, and attacked HM Revenue & Customs over its handling of the tax problems.
And in a final attempt to put to bed allegations of malpractice, the business said auditors had uncovered inappropriate accounting, fake invoices and false revenues dating back to 2009 whilst audited by KPMG – overstating profits by as much as £40 million.
The new owners are expected to keep the business trading, saving the jobs of 750 staff in the process.
But the saga is expected to continue, with investigations into former chief executive Keith Rogers and finance chief Bill Gow already announced after £13.2 million of unpaid VAT was uncovered.
Goals said: “In addition to the VAT issues, the audit also identified other areas of inappropriate accounting… These reports identified some very serious issues dating back to 2009. This included the apparent creation of false fixed assets, false revenues and fake invoices. They also identified the wrongful payment of cheques to individuals associated with the company, in 2014.”
There was scorn for HMRC over its handling since the VAT issue was uncovered.
Goals said: “Although the company engaged openly with HMRC from late March 2019 and pushed to progress to a resolution of this matter, HMRC have so far declined to give the board clear guidance. The reasons for this are unclear.”
The company also hit back at accusations that it had failed to properly engage with Sports Direct – which had an 18% stake in Goals – when it made a £4 million offer for the business.
Goals said: “The board received a preliminary, but highly caveated offer for the shares of the company from Sports Direct.
“The board… co-operated fully with Sports Direct and provided them, on a timely basis, with access to the board members, key personnel, the bank, all financial information (including financial projections) and other relevant information… Despite this full co-operation… regretfully no offer was made. For the avoidance of doubt, Sports Direct were, of course, also given the opportunity to participate in the (sales) process.”
The final deal was overseen by Deloitte, which was drafted in to assist, alongside accountants, advisers and lawyers from BDO, RSM, Canaccord Genuity and BDB Pitmans – all taking “significant adviser fees”, the company added.
Goals’ debts stand at around £30 million, provided by Bank of Scotland, but the company said the funds generated from the sale will not be enough to fully repay the debts.
Shares in Goals, which was delisted from the stock market last month, are “very unlikely” to be worth anything, it added.