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At the end of February Nottingham Forest were languishing in a relegation spot in Division 1, but they were also facing money problems off the pitch. Despite their poor league position, Forest have the fifth biggest average attendance in Division 1, nearly 24,000. But this has not solved their financial plight, nor has the sale of their best players or the £17m pumped into the club since 1999 by owner and corporate financier Nigel Doughty. Now they have got themselves into a game of financial chicken with the local council who have a better record than most in terms of supporting their local clubs with both Forest and County hit by serious financial problems. But the council is ultimately answerable to the taxpayers and to the District Auditor and, if they go beyond what they are legally entitled to do, councillors could be surcharged.
Forest have defaulted on a £200,000 payment on a long-standling loan the council guaranteed to build the Trent End and they have also said they cannot repay the £4.3m capital sum due in June. The council's lawyers have given their fourteen days to pay or they will begin winding up proceedings. They also have the right to reclaim the lease to the ground. They could then renegotiate the rent to higher levels or could be forced to sell the ground to an investment company. Forest have debts of £20m. More than half of this takes the form of an expensive short-term overdraft and they have been trying to secure a bond deal with American bank Bear Sterns who have done similar long-term deals secured on future income with other clubs such as Manchester City. However, Forest may be a less attractive prospect, particularly given the highly publicised financial troubles of other clubs. They may have to settle for a five year bridging loan and negotiate the longer-term deal when times are better. In the meantime, they risk alienating a supportive council who are legally constrained in what they can do to support a club whose future looks highly risky.
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