Equipment Leasing
Equipment Leasing – a warning
A wide range of companies offer clubs equipment under leasing or hire-purchase arrangements. This can include door entry systems, computerised tills, CCTV, display screens, projectors and air-conditioning systems.
The proposals are often presented attractively, supported by glossy brochures and persuasive sales representatives. However, while such arrangements may appear good value at first glance, they typically involve complex long-term leasing contracts, often running for several years and sometimes containing automatic renewal clauses if cancellation notices are not served within strict time limits.
In most cases, these arrangements operate as finance leases or hire-purchase agreements under which the equipment never ultimately belongs to the club. The company promoting the equipment is usually separate from the finance company that actually owns it. Once the agreement is signed, the club’s contractual relationship is with the finance provider, not the supplier.
This distinction becomes critical when problems arise. Where equipment fails, becomes obsolete or is no longer required, suppliers frequently disengage, leaving the club to deal directly with the finance company. Finance providers are typically robust in enforcing their contractual rights and may threaten legal action, apply penalty charges and add further costs. This can place significant financial and emotional strain on club officers.
We have encountered clubs that have paid tens of thousands of pounds over the life of a lease for relatively modest items such as CCTV or access control systems. In one case, a club had accumulated multiple overlapping leasing agreements with total liabilities approaching £80,000 for equipment that was either under-used or no longer in operation. In each instance, the contracts were legally binding and offered little or no scope for early exit.
For these reasons, we strongly advise clubs not to enter into leasing or hire-purchase arrangements for such equipment, however plausible or professionally presented the offer may appear. We frequently see agreements signed by the Secretary or Chairman before being properly considered by the full committee. Once signed, the club is committed, regardless of later misgivings.
In most cases, clubs would be better served by purchasing equipment outright, possibly supported by a straightforward maintenance agreement, or by arranging conventional bank finance where necessary. These options are usually cheaper in the long term, provide greater flexibility and avoid the risks inherent in complex leasing contracts.
Clubs that already have leasing arrangements in place should review the contracts carefully, paying particular attention to termination and renewal provisions, and should diarise any critical notice dates. Any proposal to upgrade leased equipment should be treated with caution, as this often results in a new agreement with extended terms, rather than an improvement to the existing contract.
As a matter of good governance, all proposed leasing or hire-purchase agreements should be presented to and approved by the full committee. Clubs should ensure that no single officer or committee member has authority to sign such agreements unilaterally.