Salford City Reds are due to face a winding-up petition on January 7, an action started by sponsor Steur Gregsson but continued after its settlement by HM Revenue and Customs and two former players, Vinnie Anderson and Luke Patten.
It is thought the club had asked Salford council to loan them £750,000, with a similar amount coming from Peel Holdings, the owners of their City of Salford Stadium. But speaking to the BBC on Tuesday, mayor Ian Stewart said: "Times are tough and, in many ways, the Reds are yet another victim of the recession."
He went on: "We would have loved to try and help them out, but given the spending cuts the city council is already facing, that proved impossible."
He added in a number of newspapers: "The Reds have had a long and proud history in Salford over the last 116 years, but they are now victims of cash flow problems and the current economic climate.
"The city council's ability to support the club financially is now at an end, and it is for the club's existing board to decide the future of the Reds.
"Whilst we can no longer help financially, we will do everything in our power to support the club and would urge any single investor or group of investors who are interested in a takeover to act extremely quickly before the club board of directors make a final decision on the future of Salford City Reds."
Anderson and Patten, who both left the club at the end of the 2012 season, are pursuing claims of £40,000 each, relating to a "salary sacrifice" arrangement. Their legal representative, Richard Cramer, remains hopeful, though, that their situation can be resolved before the petition is held next month.
"It`s a big blow to the two boys," he told Press Association Sport. "They are actively pursuing their claims for not insignificant sums. We were cautiously hopeful for today and we are still hopeful a takeover will take place.
"From the boys` point of view, they`ve been hanging in there for a deal being struck and we are still hopeful that will happen. The claims are still there and the fallback is the winding-up petition on January 7."
It has been thought that Salford have been in advanced talks to secure new ownership and investment for some time. HMRC are chasing an amount in the region of £50,000, allied to the monies owed to Anderson and Patten. There was no comment from the club of the Rugby Football League on Tuesday night.
- Sports & Recreation
- Politics & Government
- Salford City Reds
- Vinnie Anderson
- Luke Patten