An Oxford college holds the key to the future of Banbury Rugby Club's ground.

New College holds covenants on the Bodicote Park site, put up for sale earlier this week, which state it must be maintained for recreational use relating to rugby and associated activities.

Bursar David Palfreyman said it was willing to negotiate away the covenants with a potential purchaser but was keen to see the existing building put to good use with the rugby club still based there.

He added: "New College will try to facilitate whatever is the most appropriate use for that site.

"Whatever arrangement is reached, it seems unfair for this building not to end up in a future development with the playing fields fenced off for the community where the rugby players could keep on going. However, it is not in anyone's interest to end up with derelict buildings -- that would be a waste of a valuable resource."

New College originally owned Bodicote Park, which was bought by The Charity for a Recreation Ground for Banbury, for £500,000.

The charity sold the site in Oxford Road to Sainsbury in 1994 for £3.2m, but instead of using the money for public benefit it used the £1.7m to build a grandstand and another £1m to prop up the rugby club.

The Charity Commissioners ruled the money had been mis-spent and should have been used to provide a playing field for Banbury.

It has said surplus money left over after the sale of the 32-acre Bodicote Park will be used for the general benefit of the people of the town.

A spokesman said: "The money will either be distributed to organisations with similar objectives to the Charity for a Recreation Ground for Banbury, which owned Bodicote, or the charity will be retained as a grant-making body for Banbury.

"The charity should not have provided any financial support to the non-charitable companies, but it appears that the trustees used the charity's funds to subsidise the loss-making business.

"This together with the initial cost of the new building and other expenditure such as floodlighting brought the charity itself to the brink of bankruptcy."

Mr Palfreyman said New College had sold the land at a "certain price for a certain purpose" and its position now had to be safeguarded, but it would not try to buy back the land.

He did not expect the site to interest housing or retail groups because of the "massive planning issues involved" and the fact that such a use would contravene the covenants.