The full article.

If balance sheets are to be believed Rochdale Hornets were almost half a million pounds in debt at the end of May 2002.

This is shown in accounts which have been submitted to Companies House in Cardiff.

But club chairman Ray Taylor says the figures don't tell the full story. Taylor said a large percentage of the debt is owed to directors of the club who have loaned money to keep the club afloat.

"The figures sent to Cardiff are only abbreviated accounts as required by law. The detailed ones are for our shareholders and will be issued in due course," said Taylor.

"The full accounts are ready for our shareholders, but with everything that has been going on we have yet to call an annual general meeting. With the new share issue and the recent extraordinary general meeting it's been difficult to fit it in.

"There's not a lot I can say publicly until our shareholders have the detailed accounts.

"Most of the liabilities shown are loans from directors and loans from friends of the club. That amounts to well over £200,000. These people have loaned the money to fund the deficit that all the winning bonuses created. It's nothing more than that really.

"The reason for the leap in current liabilities is because of the way the money was provided."

Taylor pointed out that the rugby club's stake in the Denehurst Stadium Company is worth more than £1 million, although this valuation is strongly contested by Rochdale Council and Rochdale AFC who are joint owners of the stadium.

He added: "If that £200,000 comes out, the balance sheet takes on completely new meaning. And certainly, if we revalue the £500,000 investment in the stadium company to £1 million, as agreed at our extraordinary general meeting, and we think it's worth more, it changes the picture even more."

At the extraordinary general meeting, on 30 October, Hornets shareholders voted to issue two million shares at 50 pence each.

In the initial round they hope one million of the shares will be taken up. This would raise £500,000 to cover the current debt and allow the club to balance the books for the next three years.

In another twist to the recent saga the Hornets' board has reacted furiously to Football Club director Graham Morris revealing details of a proposed takeover of Hornets.

They felt this was a confidential matter.

In a statement issued on Thursday, Hornets said: "In March 2003 the Rochdale Hornets' board had a meeting with David Kilpatrick and Graham Morris, both directors of Rochdale AFC.

"During the meeting Mr Morris presented the Hornets' board with a letter offering £110.000 for the Rochdale Hornets Football Club, which included all Rochdale Hornets' holdings in Denehurst Park (Rochdale) Limited, the stadium company.

"A few months earlier valuers had professionally valued the Spotland Stadium at £4.21million, and consequently the Hornets' board felt the Rochdale AFC offer was not realistic. Therefore they rejected it.

"Mr Morris and Mr Kilpatrick were informed of the decision and they asked the Hornets' board members to destroy all documents relating to the offer and, for commercial reasons, not to make it public.

"Out of respect for the wishes of Mr Morris and Mr Kilpatrick the Hornets' board kept their confidence.

"It therefore came as a surprise last week when we were informed by the Rochdale Observer that Mr Morris had made a full statement about the offer, without informing anyone at Rochdale Hornets, despite the agreed confidentiality."

"The Hornets directors believe that the football club and Rochdale Council who also own shares in the stadium company, have a different agenda from their own.

"They also feel that the rugby club has not been given credit for a £400,000 donation to Rochdale Council and claim that they subsidised the football club for seven years."

The statement continues: "Times change and now Rochdale Hornets are struggling for their very life.

"There is a history, a quite ugly one, which brings no credit to either Rochdale AFC or Rochdale Council, but, in time we will chart that history for the public, from the £400,000 given to the Rochdale Metropolitan Council for the benefit of the people of Rochdale, and to the huge financial subsidy provided to Association Football between 1989 and 1996.

"At Rochdale Hornets we firmly believed we were in a partnership that would help develop professional sport in Rochdale.

"That clearly was not the case, our partners had another agenda which is now becoming clear, times change.

"Rochdale Council and Rochdale AFC now have a clear goal."

Dale director Graham Morris has asked the Observer to point out that his "statement" was in response to questions asked by the operators of the Dale website.

Speaking from New Zealand, Mr Morris said: "I did not actually issue a statement intended to have a go at Rochdale Hornets.

"I was asked certain questions and provided certain answers."

One of the questions was "What is the current state of play regarding the stadium company."

Another was "What exactly did Rochdale AFC have in mind regarding a takeover of Hornets."

A third question was "Rochdale AFC have played professional football at Spotland for approaching 100 years, so if the worst comes to the worst would this be in jeopardy if Rochdale Hornets ceased to play at the ground?"

The website article makes it clear that Mr Morris was interviewed after Hornets' officials had confirmed they had turned down a "lock, stock, and barrel bid" from the football club directors.