Northampton council due to loan £1.5m to Saints rugby club

Northampton Saints wants to use the money to improve facilities at Franklin's Gardens

A council that lost millions of pounds in a loan to a football club is expected to lend £1.5m to a rugby team.

Northampton Saints has asked the borough council to help it improve Franklin's Gardens to "alleviate the short-term financial challenges".

Most of a £10.25m loan from the council to Northampton Town in 2013 disappeared and is being investigated by police.

A report to cabinet said there had been "a bad experience" with the previous loan but "lessons have been learned".

Northampton Borough Council's chief finance officer Stuart McGregor said the application had been discussed with auditor KPMG, which investigated the council following its multimillion-pound loan to the Cobblers.

He said immediate action could be taken to recover the funds if the rugby club failed to make payments on this new loan and an existing £5.5m loan.

"There is risk with any loan or investment," he said, adding the council also sought advice over the financial position of the club, legal powers of the council and the scale of the risk.

Police are investigating a £10.25m loan made by the council to Northampton Town Football Club

While admitting the authority had "a bad experience in respect of a previous loan to a sport club", the report says the rugby club has a "healthy balance sheet" and is "more financially stable than most".

However, the report points out the latest accounts show the club made a loss.

"This is primarily due to issues around player salaries, which are now in a four-year cap regime," Mr McGregor said.

"The club has previously been profitable... the intention is to maximise income from the ground and facilities so as to alleviate the short-term financial challenges."

A gig by Madness and a Tough Mudder endurance event would make use of the stadium during the summer, the report added.

The cabinet is expected to approve the loan - which could generate £90,000 per annum - at its meeting on Wednesday.