Southend told to post £1m bond by National League

Southend United were formed 118 years ago

The National League have ordered Southend United to provide a £1m bond because of ongoing uncertainty over their financial situation.

A takeover of the club by a consortium led by Australian businessman Justin Rees has been held up by ongoing problems over a housing development at Fossetts Farm related to the deal.

Contracts were exchanged last December, but the takeover has yet to be completed, and the club faces a winding-up hearing in court on Wednesday.

A statement from the league said they were concerned about the club's "ability to fulfil its financial obligations" for the 2024-25 season.

The statement continued: "The National League has advised Southend United Football Club that as a result of the club’s failure to provide the League with detailed, objective and independent evidence that the club has sufficient funds to meet its financial obligations....and in light of previously-expressed concerns (underscored by the most recently-filed accounts), the club will be required to post a bond of £1million, which will be held in escrow to the order of the League.

"The bond shall remain in place until the sooner of (i) an ownership agreement with the consortium currently in talks with the club being successfully concluded, to the satisfaction of the National League and the FA; or (ii) the club demonstrating, to the satisfaction of the National League, that is has sufficient financial resources within its own means to meet its financial obligations for the forthcoming season."

Should Southend fail to post the bond, the league say they will consider "further sanctions" against the club.

Southend said in a statement that they were made aware of the bond earlier on Monday.

"We will consider appropriate steps over the forthcoming days to protect the club’s position pending the sale to the COSU (Custodian of Southend United)," they said.

COSU have effectively been running the National League club since the exchange of contracts with long-time owner Ron Martin, and Rees told BBC Essex in May that they had already spent £3.5m, including the provision of new training pitches.

But he also warned that he could not give a "carte blanche guarantee" that the takeover would go ahead because of the delays to completion.

Martin originally put the club up for sale in March 2023 and that summer said he was willing to sell his stake for £1, providing he was paid £4.5m for their Roots Hall stadium.

The delay was caused by Southend-on-Sea Council having to carry out due diligence on Citizen Housing's plans for Fossetts Farm.

And in a letter published last Friday, council leader Daniel Cowan said new heads of terms put forward by Citizen Housing "did not satisfy the criteria" laid out to advance the deal.

"Our terms being only partially met, and at a late hour, means that we need to do further work with external advisers which if it proves to be good will enable us to move closer to developing Heads of Terms ready for new due diligence," he continued.

"This is a trying time for all involved and we remain in regular dialogue with all interested parties including, COSU, the developers and supporters groups."

The hearing on Wednesday is the latest in a series of winding-up petitions the club have faced.

This one was lodged by by legal firm Stewart Law LLP over unpaid work done for the club in previous disputes and when the case was put back in May, the judge said it was the final adjournment.

Southend were formed in May 1906 and in their 118-year history have been as high as the second tier of English football in the 1990s and again in 2006-07, a season which also saw them reach the League Cup quarter-finals.

They missed out on a play-off place last season because of a 10-point penalty imposed by the National League because of their financial issues.

Analysis ' 'The only goal is survival'

by Victoria Polley, BBC Essex sports editor

This is another big blow for Southend United’s finances and puts the takeover of the club in further jeopardy.

There was so much positivity and hope for the future of the club when contracts were exchanged for the sale of the Blues back in December.

Since then, there’s been hurdle after hurdle for the consortium (COSU) and delay after delay, with the added complication of the property deal related to the takeover being the latest obstacle in the way of getting anything over the line.

The National League rightly want solid assurances that Southend United will be able to fulfil the next season financially but the bond puts further demands on the consortium who have already spent in excess of £3.5m on a club they don’t yet own to keep it afloat.

The mounting problems means the agreement of the property deal between the Blues’ current owner Ron Martin and the City’s Council which will help fund the redevelopment of Roots Hall, if the takeover goes ahead, is of the upmost important and urgency.

Many other clubs will be thinking about pre-season training and new player signings but for Southend United, who remain under transfer embargo and in takeover limbo, the only goal at the moment is financial survival.