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The money was paid to Ashington FC, a non-league football club in Northumberland, by a cash-strapped local authority, an investigation has claimed.
The payments, if properly handled, would be legitimate and the auditors’ report describing them has not expressed concern.
More than £1 million of taxpayers money was provided by a Labour council to Ashington to build a 250-seat stand and clubhouse, according to auditors.
But the Northern League Division One team had just 176 spectators last Saturday.
The £1 million development was more expensive per seat than any stadium built by a Premier League team apart from Arsenal’s Emirates Stadium, an analysis by The Times has shown.
The authority’s accounts have been queried by auditors and now find themselves being examined by police over unspecified matters.
Jeremy Corbyn has before praised the development company concerned, known as Arch, whose task it was to regenerate coalfield communities.
Mr Corbyn said it showed that “Labour is standing up for you in every community across the country”.
Two members of staff at the football club, a general manager and an administrator were paid £70,000 a year by Arch.
Arch also paid the football club £39,000 for Christmas entertainment, utility bills, alarm repairs and tables at dinners.
Furthermore, club owed Arch at least £17,000, reportedly borrowed to pay utility bills.
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In 2014 Arch’s board agreed to spend £981,000 to support the club’s development.
The sum was later topped up by £99,000 agreed by Arch’s investment committee, under the delegated authority of chief executive, Peter McIntyre, to pay for increased subcontractor costs, plus an extra £180,000 for increased costs.
Auditors have said that Mr McIntyre was clearly involved in decisions around the club.
Mr McIntyre later joined the club’s board and has since left Arch for Sunderland council.
Mr Lavery’s spokesman has said that questions should be directed to the council and football club.
The club has said that the ground was upgraded with the help of Arch and Northumberland council in “one of the most deprived areas in the country”.
