Durham agree £3.74m rescue package to convert council loans into shares

Durham finished fourth in Division One in 2016 after winning their final game of the season

Durham have agreed a financial rescue package with Durham County Council over the debts that led to their relegation this season.

The council's loans of £3.74m to the club have been converted into shares.

Durham were relegated from County Championship Division One by the England and Wales Cricket Board (ECB) on 3 October, amid debts of £7.5m.

They accepted a £3.8m aid package approved by the ECB and will start next season with a 48-point deduction.

The agreement with the council means Durham's debt to the local authority will not be written off.

Instead, the council will have shares in a "community interest company" (CIC) that will run the club.

"The financial situation Durham faces is untenable and the club is effectively insolvent and not viable in its current state," read the council report.

"The council's role and participation in the new board is still to be determined."

A Durham statement read: "The club is pleased that this has been achieved without the need for significant public debt write-off, as has been the case elsewhere in cricket."

Durham also face a four-point penalty in the 2017 T20 Blast and a two-point deduction in the One-Day Cup, and have lost the right to stage Test cricket at their Riverside ground.

The CIC, which will be run by a new chairman and involve a new board of directors and management structure, can pay up to 35% of profits to shareholders each year.

'Joe Public will not be happy about this'

Although the council's statement of accounts reveals an overall underspend for 2015-16, the local authority has needed to make budget cuts to a total of £153.2m, to which an estimated £104.8m must also be added over the next four years.

The document reveals Durham is the most deprived authority in the north east in terms of "the scale of income deprivation".

Independent councillor John Shuttleworth described the rescue package with Durham as "ill thought out".

He told BBC Newcastle: "We're writing off almost £4m in effect.

"Recently we've closed care homes and leisure centres and restricted services to vulnerable people - old and young - and shut schools.

"I don't think Joe Public out there is going to be very happy about it."