Stenhousemuir: SPFL side 'should have entered administration' last season as chief blames 'reckless' previous regime

Stenhousemuir chairman Dan Wharton has revealed that the Ochilview side ‘should have entered administration’ last season, claiming that the previous regime’s “gamble” under the stewardship of Iain McMenemy left the Warriors on the brink of complete catastrophe.

The Scottish League One outfit, who operate as a community interest company, won promotion last summer after a first-ever title success and enjoyed a play-off push this season under the stewardship of former Scotland full-back Gary Naysmith. That fourth-placed marked a historic best SPFL finish for Stenhousemuir - who from the outside looking in looked like like a club very much on the up. But off the pitch the Warriors are struggling to simply keep the doors open. Claims of overspending and a lack of strategic planning have been directed at the club’s previous board of directors amid a battle behind the scenes.

Speaking to shareholders at the club’s recent AGM, Wharton explained Stenhousemuir’s grim financial situation, admitting that it had taken “a substantial amount of work to satisfy the auditors” to allow them to sign off the club’s accounts as a going concern.

Stenhousemuir ‘should have entered administration’

He said: “We inherited a club on a high on the pitch, we inherited hope and history, but with no processes, no credible commercial plans or financial forecasts. There was willingness, a wanting to succeed, but no leadership or vision either at board level or CEO level. The club was truly in need of help. The Covid-19 period was financially good to the club, with the cash funds rising to £373k. That was the opportunity to secure the club’s future by being prudent, by controlling cash flows and budgeting to have the best team on the park that our commercial revenues could sustain. The board at that time decided to go for it.

“They decided to gamble. And in a lot of respects it paid off - a first league title in our history. An incredible achievement. I remember the chairman at the time (Iain McMenemey) telling us what a great achievement it was. How we would remember this for ever. What he failed to tell us, as he stepped down, was that we also had no money left and were heading deep into our overdraft. The accounts for the financial year ending 2024 show an operating loss of £179k, compared to an operating loss of £139k in the previous year. These followed on from a loss of £117k the year before that. Meaning the club had lost in excess of £430k in three years under his leadership.”

“We are audited annually, and, on this occasion, we had to undergo some serious questions on the solvency of this business. It has taken a substantial amount of work to satisfy the auditors to allow them to sign off our accounts as a going concern. I need to tell you that only a few weeks ago, while we were still battling for the promotion spots, that the club had to decide whether it was to be placed into administration or not. To be clear should the club have gone into administration, financially, it might actually have been the right thing to have done.

“But of course, the points deduction and the embarrassment to the club and supporters would have been too much to bear. As a board we agreed that we would support the cash flow of the club, and we have in place a pledge of £75k from directors and the Supporters Trust. In addition, the auditors have requested a signed document that legally requires the board to raise further funds, should the forecasts be unachievable, or our overdraft is withdrawn.”

Wharton, who is also group CEO of Stenhousemuir’s main club sponsor LOC Hire, added: “I’m quite optimistic however. We now have a board that’s fit for purpose. A board that’s committed to making sure that this club’s future is secure.”

In response, former club chief McMenemy - who led the Warriors for nearly six years before stepping down last year - told the Falkirk Herald that a “wee bit of spin” has painted a different picture from how Stenhousemuir was actually run previously.

“We decided back in 2019 that we had to rebuild the football club essentially,” he said. “Restructure it and rebuild it. That had to cover personnel, the infrastructure, finance and of course the football side of things. So we brought in a chief executive and we restructured staff. We knew that we were never going to have the biggest budget because we don’t have a financial benefactor and we've don’t have a huge fanbase. We started to develop what we thought would be a cutting-edge football department that would maybe give us a talent ID and recruitment advantage.

“We then built a war chest of about 400k and we maintained that for probably a couple of seasons in the bank. We balanced the budget for a couple of seasons with that money sitting in the bank. But at the same time, we were flirting with eighth spot in League Two and potentially dropping out of the professional game. And we thought if we drop out of the professional leagues with hundreds of thousands of pounds in the bank, that would be a dereliction of duty.

“Over the years we did a complete seating deck replacement, we replaced the pitch, we replaced the training pods, we did lots of safety stuff around things like the structural walls. The club had been flooded twice so we replaced all the drainage, changed all the lights to LED because of the energy costs, had a plan for floodlight replacements, we had unexpected things too. So we spent hundreds of thousands of pounds on investment in the club. All stuff though that was future proofing the club and the very fabric of the building and the ground. But because we'd raised that money in advance and deployed it over two or three seasons, every season is going to show that as a deficit, as an overspend.

McMenemy: Stenhousemuir’s previous board achieved what they hoped for

“We also decided to get out of League Two. We had the money, let's then devote some additional money into the player budget. We waited until the football department that we were trying to build was ready to come online and then we deployed it and put the extra money into the budget. We backed Gary (Naysmith) for his first full season in charge, which was the second year that the new football department was in place with ID and recruitment. And of course, the plan worked. We won the title that season, the first one in the club's 140 year history.

“So everything that we'd planned to build towards had actually come to fruition. The money that had been invested in infrastructure and in the playing budget achieved what we'd actually strategically planned as a board for the club to achieve. What it did mean though is that the year that followed was going to be more challenging financially and it would be a return back to the model that most clubs employ, which is you spend what you can raise otherwise you've got a deficit.

“But what we did do is that myself, a couple of other board members and a couple of other supporters committed and made a promise to the club that if the finances ever got to a position where it was getting sticky and there was any talk of administration, we would come in and support the club financially to make sure that was never an option on the table. And it was never taken up because they never reached the point where the club was going to go into administration. So that money that we had promised was never asked for.

“It wasn’t a case of overspending for the sake of it, as has maybe has been portrayed. It was a plan to build the club, to get us out of League Two, to put the money into the various infrastructure projects around there and really try and get the club into a different position that could compete and stay in League One. All the former board members, I know I speak for them all, are all completely behind the club and want to see the new board succeed because their success will be the club's success. We just want to see the club continue to flourish. We think there's maybe a bit of spin being put on to the stuff about administration and about the spending to cover off some pretty eye-watering increases to season ticket prices and things like that. But so be it. That's football.”

Stenhousemuir would have been the third SPFL club to enter administration last season, with Inverness Caley Thistle and Dumbarton - who were both League One opponents - suffering financial difficulties.