Darlington Football Club chairman George Reynolds warned yesterday that the club faces closure unless it is allowed to hold events other than football matches at its new stadium.

The warning came at a court hearing in Newcastle, where Mr Reynolds argued unsuccessfully against a High Court injunction to prevent the club hosting a car boot sale tomorrow.

He told the judge: "If we are not allowed to fetch funds in, at the end of the season the club will close."

The chairman's comments came soon after the publication of the club's accounts, which showed an operating loss of £1.1m for the financial year ending April 2002.

The Darlington Supporters' Trust has written to the club urging it to reassure fans over its financial position, saying: "We feel an explanation about the club's financial viability would be to everyone's benefit."

Mr Reynolds represented himself and the club yesterday as he argued against Darlington Borough Council's application for an injunction to stop the club holding a car boot sale, that had been due to be held by operator George Banks tomorrow.

But the judge granted the interim injunction preventing any sale until a full court hearing on October 10 in Leeds.

Mr Reynolds said he would "abide by the law" after the judge warned him the club's assets could be disqualified and he could face a fine or prison if he broke the injunction and went ahead with the sale.

Arguing his case, he told the judge: "If they are not going to allow me to stage concerts, have car boot sales, to have anything else but football, at the end of the season we might as well close the door, that is the end of the story."

Yesterday signs outside the stadium which had been advertising the car boot sale, were removed.

Following the hearing, Mr Reynolds told The Northern Echo: "I am delighted with the outcome.

"It was a good verdict for us. The section 106 planning agreement needs to be looked at by a court because it is a sham.

"We have to be fair about it, we will abide by the law. I don't want to rock the boat until after the trial with the judge."

Council leader John Williams was unavailable for comment last night, but deputy leader Bill Dixon urged Mr Reynolds to "sit down and talk" instead of pressing ahead.

He said: "The council's position is quite simple. We made a deal with George Reynolds.

"I had to fight an election last May where the residents were saying that the council wouldn't enforce this deal.

"We have done a deal. I expect George to live with the deal he has made, just like we will.

"Nobody forced him to do it. We sold him the land subject to certain conditions, we are prepared to talk to him about things.

"They key word is talk - and that is not happening.

"George Reynolds needs to realise that the council has a certain position and it would be regrettable if this finished up with him falling foul of the law."

Councillor Dixon added that if the club applied for proper permission to hold the car boot sales, the application would be looked at "with an open mind".

"We have never had a car boot sale and we would be worried about the impact on our market," he said.

"We have got to get people talking to each other, not through the lawyers, not through the courts.

"Let's sit down and work this out. But at the end of the day we, as politicians, made a commitment to our residents to stick by the conditions we made and we will.

"I was one of the signatories to it and we will stand by that - it is not negotiable.

"We need to get both sides talking and to find a way through."