Weymouth’s woes

The South Coast does not seem to be a successful part of the country when it comes to professional football. Think Brighton, Portsmouth, Southampton, Bournemouth… and Weymouth.

Promotion to the Conference South and then the Conference, and playing in a relatively new stadium, seemed to herald a new era, and this was evidenced by strong gates. However, behind the scenes trouble has been brewing for some considerable time. Current Chairman Ian Ridley has said that the club is within ten days of going into Administration unless £50,000 can be found to hold off creditors who are owed a total nearer £500,000, a very high debt level for a club in Tier 6 (1).

Ridley is in his second spell as Chairman, and wrote of his first spell in the eminently readable, but perhaps ironically titled as things are panning out, Floodlit Dreams: How to Save a Football Club, an absolute ‘must read’ for anyone interested in how football clubs are run at this level of the game. Two messages scream out to me from the book – it is virtually impossible to achieve goal congruence (getting everyone to agree on one organisational goal, and also agreeing on how to achieve it), and trying to fit in a part-time role as a director of a football club along side the demands of a day job puts you on a hiding to nothing.

Ridley must be admired for his openness – how many chairmen would be as up-front as he was at a recent fans’ forum (2)? Yet he has had to contend with what he has termed ‘civil war’ among the fans (3). Some fans, arguing over a smoking zone, seem to have lost sight of Weymouth’s real and very immediate issue – survival.

The saga of problems at Weymouth is a long and complex one, certainly one that I cannot do justice to in a single blog posting. Whatever the causes of the club’s current crisis, and whoever is responsible for them, will be long argued over. Let us hope that the argument is not an academic one, but in just over a week it might become so. To lose a club in a town which should certainly be able to justify a slot in at least tier 6, if not tier 5, would be a tragedy. Weymouth deserves to survive.

More on the Mitchells

Back in July I blogged on the Mitchell family of Dorset and the unusual arrangements at Dorchester Town following Eddie Mitchell’s involvement with Bournemouth (1).

The FA have taken action regarding Dorchester Town and its ownership by Eddie’s sons Tom and Josh (2). The new owner is Tony Newman, and Chairman Dave Roberts purrs reassuringly “He’s done business with Eddie in the past but there is no direct involvement between the two. Tony is not involved with Seven Developments [Eddie Mitchell's property development company], he’s his own man and runs his own estate agency. It’ll be no different with Tony coming in, he’ll finance the club now and I’ll still be chairman”. One potential snag with this new arrangement however is that Roberts is a director of Severn Developments, and the FA is still considering its position on this – it may yet be the case that the arrangement still falls foul of FA new rules.

Meanwhile Eddie Mitchell is having his work cut out for him at Bournemouth. Following a meeting with the Football League, it has emerged that the full transfer embargo on the club remains in place (3). Mitchel and the new board have started to sort out the club’s debt problems that they have inherited, but there is still a long way to go.

What I find strange in all of this two-club saga is the lack of any mention of sanctions. If we had been talking about players involved at two clubs, there would have been swift action to deduct points for fielding an ineligible player – why is ‘fielding an ineligible director’ not an offence?

Italy’s new ‘Premier League’

The BBC has reported under the headline Serie A to form breakaway league that “Serie A is set to copy the formation of England’s Premier League“, to be known as Lega Calcio Serie A (1). Before looking at a rather important detail that the BBC omits, it is worth looking at whether the formation of the Premier League is such a good model to choose.

There is no argument that the Premier League has negotiated enormous broadcasting rights over the year, but does those who voted for its formation benefit from this?

The original membership, it is worth noting, consisted of 22 clubs (reduced to 20 in 1995): Arsenal, Aston Villa, Blackburn Rovers, Chelsea, Coventry City, Crystal Palace, Everton, Ipswich Town, Leeds United, Liverpool, Manchester City, Manchester United, Middlesbrough, Norwich City, Nottingham Forest, Oldham Athletic, Queens Park Rangers, Sheffield United, Sheffield Wednesday, Southampton, Tottenham Hotspur, and Wimbledon – not a Premier League that we would recognise today, so it’s worth a closer (although I admit not terribly deep) look at how they have fared since the euphoric days of 1991.

• Arsenal
  One of the few who have enjoyed continuous success, although much of that is directly attributable to Arsène Wenger’s efforts bringing results and hence revenues.

• Aston Villa
  Have not been relegated, but financial success has eluded them.

• Blackburn Rovers
  Have stayed up except for a blip in tier 2, but have made significant financial losses year-on-year through overspending on players.

• Chelsea
  Certainly successful on the pitch, but their accounts tell a very different story. Staying not only up but in the Big 4 has stretched the deep pockets of Roman Abramovich. ‘Benefactor’-dependent.

• Coventry City
  Relegation in 2001 saw them with huge debts (and within 25 minutes of Administration recently) and a stadium which they do not own.

• Crystal Palace
  A pattern of yo-yoing, then in tier 2 since 2005. Serious financial problems and stadium ownership issues under Ron Noades and then Mark Goldberg, including a spell in Administration. Currently up for sale and under a transfer embargo.

• Everton
  An average performance on what might have been anticipated – at least they have stayed up every season (just, on one occasion). Owner Bill Kenwright dreams of a takeover by a billionaire as he sees their debt as big and worrying (but manageable), so it’s hard to count them as a financial success.

• Ipswich Town
  First relegated in 1995, they’ve made one short appearance since. Into Administration in 2003 with debts of £54m. Now pinning their hopes on reclusive ‘benefactor’ Marcus Evans.

• Leeds United
  Best not to ask really. Once a European high-flyer, lately it’s been a tale of enormous debt, Administration and a drop to tier 3.

• Liverpool
  Has certainly enjoyed on-the-pitch success, and few fans would not envy being fourth of the Big 4. Their dependency on banks is not something to envy though, and still their is no new stadium in spite of their success.

• Manchester City
  One dip to tier 3 and a subsequent one to tier 2. Some worrying financial losses in recent years. Now ‘benefactor’-dependent.

• Manchester United
  Highly successful on the pitch, thanks to Ferguson. Successful financially over this period, although while revenues have increased nine-fold, pre-tax profit has increased just under five-fold.

• Middlesbrough
  A couple of instances of yo-yoing (and hoping to repeat that as they are currently in tier 2). Financially dependent on Steve Gibbons, one of the game’s few benefactors who do not need quotation marks round that soubriquet.

• Norwich City
  Have spent more of the time in tier 2 since 1991; now in tier3. Have become Delia dependent, but know in need of a new benefactor.

• Nottingham Forest
  The pre-PL glory days are long gone. In spit of their loyal following, a downhill path to tier 3, although now back to tier 2. Regular financial losses.

• Oldham Athletic
  Downhill since 1994. In tier 3 since 1997. Into Administration in 2003, and almost extinction. Still seeking a new benefactor.

• Queens Park Rangers
  It was slowly down-hill to tier 3, but back to tier 2 in 2004. In Administration in 2001.

• Sheffield United
  All but two seasons have been spent in tier 2 since 1994. Consistent financial losses.

• Sheffield Wednesday
  Relegated in 2000 and again in 2003, but back to tier 2 in 2008. In debt and seeking new investment.

• Southampton
  Survived in the PL until 2005, but relegation coupled with debts incurred by building a new stadium pushed them into Administration this year, and into tier 3.

• Tottenham Hotspur
  Have spent the whole of the time in the PL, enjoying moderate success. Made a good profit in the last available accounts, and looking with caution to build a new stadium.

• Wimbledon
  The least successful of all the founder members, thanks to the antics of its owner. Into Administration in 2003 and Milton Keynes, and the following year relegated to tier 4. No longer exist as a team recognisible as the old Wimbledon, although AFC Wimbledon have so far made excellentprogress on the road back from oblivion.

The Premier League has hardly been an unmitigated success from the perspective of its founder members. It has managed to position itself as the most significant league in Europe, and the world, but at what price? Well, taking the aggregated debt figure for the twenty clubs in the PL last season, a tad over £3 billion. Hardly a model you would expect the Italians to want to emulate.

The BBC report it seems may have been slightly misleading however, and the new Italian ‘Premier League’ is perhaps not strictly a breakaway league in the Premier League sense. According to a sportbusiness report (2), Serie A and Serie B will be managed separately, but with a common president, Maurizio Beretta. Seria A will be able to negotiate joint broadcasting rights for their members, but a lot of important detail has yet to emerge in the English-speaking media. What are the arrangements for relegation and promotion? Will there be parachute payments, for example, or, dare I suggest, rocket payments (3)?

Much will depend on the future relationship between Serie A and Serie B, but it would appear that it has the potential to be significantly different from that between the PL and the Football League’s Championship. If any Italian-speaking blog readers can flesh out the detail of the relationship, it would be very helpful!

Sven-Göran Eriksson’s new chums

I don’t have a lot of time for those engaged in professional football who fail to recognise that they are working in a business. But I also have little time for those who do not recognise that they are working in sport. In fact, it’s the challenge of meeting both these two needs in decision-making that I find exciting and attractive to research. Ignore one of the two totally, and you are in trouble.

At Notts County, where Munto Finance took over from the Supporters Trust recently amid some heated debate (1), the new owners have attracted media attention with the appointment of Sven-Göran Eriksson as Director Football (2). Quite what impact this will actually have is yet to be seen – I do, however, recall the much-trumpeted announcement of Ron Atkinson as Director of Football at Halesowen Town (3), an appointment that had little if any impact during its short tenure.

Munto took over the club in mid-July (4), but the necessary approval from the Football league was only announced this week (5).

In the meantime Munto have not been inactive in areas other the appointment of a Director of Football. At almost the same time as the Eriksson appointment, Munto told Nottingham Rugby Club to quit Meadow Lane – whatever their rights, this was hardly a sensitive or sporting sense of timing.

It turned out that Munto were not, in the ruling of a High Court judge, within their rights to expel the rugby club (6). Munto declared “Due to the close relationship both clubs have enjoyed over many years, Notts County FC has been clear that it never wished to hinder professional rugby in the region and had, at every stage, offered to help the rugby club to find alternative accommodation which would suit the requirements and aspirations of both clubs. Notts County will abide by the court ruling but regrets any detrimental effects the ruling may have on its progress and its own drive for promotion this coming season.“

In spite of the claim that they have never wished to hinder professional rugby, Munto’s next move, within a fortnight of the High Court judgment, was to lock the rugby club out of their office accommodation (7)! This comprises the old restaurant bar, which the rugby club had cleaned, decorated, and spent £6,000 on installing a suspended ceiling. The lockout followed less than 24 hours after the notice to move out. After discussions, the lockout has now been lifted.

Latest development, just over a week after the lockout? The Football League has approved the takeover of Notts County by Munto Finance. Apparently they think that people who ignore existing contracts and place a fellow sporting club in very severe difficulty of carrying on are ‘fit and proper persons’. I just wonder how many of those supporters who voted to sell their shares to Munto have no qualms about what has been happening. Recent events suggest that Munto’s directors are naive, in particular with respect to public relations, and do not understand the sporting ethic.

Munto have clear aspirations to reach the Premier League. So did George Reynolds at Darlington. Aspirations are fine, but a reality check would be in order. In case Munto have forgotten, and however well this season may have started, Notts County is in League 2 and is the no.2 club in Nottingham. Live the dream, not the fantasy!

Pragmatic solutions need to be solutions

I’m generally a fan of pragmatic solutions. Probably this is a result of being an academic – university regulations tend to be riddled with the magic words ‘normally’ and ‘in exceptional circumstances’, er, normally. This allows for some flexibility to produce the ‘right’ solution in unusual circumstances.

The point though is that such applications, which keep to the spirit of the body which sets the regulations, need to have an underlying but implicit rationale. Case law is developed into what is ‘normal’ and what is ‘exceptional’. However, it is essential that the implicit rationale applied is fair and consistent. And, unlike football, the system is subject ultimately to independent external scrutiny.

Lately we have seen some strange applications of regulations from football’s governing bodies.

In the case of Newcastle Blue Star, no pragmatic solution was found, resulting in the club folding (1).

In the case of Chester City, the understanding we have of FA and Conference regulations has been thrown into disarray. Twohundredpercent offers a thorough review of how their regulations have been ‘applied’ (2). Perversely, one outcome has been the FA ruling that Conference regulations need to be reviewed urgently. The outcome of the pragmatic application (although some might argue that the regulations have been ignored rather than applied) is that Chester City continues as a club (which is broadly good news) but still under the control of Stephen Vaughan (which is rather less so).

How can we make sense of what has happened?

To me, it seems as if the principle of ensuring that a club survives has over-ruled the principle of whether a particular company should be allowed to survive. The distinction between ‘club’ – a social rather than legal construct since 1885 in the case of the vast majority of clubs, albeit a damned important construct – and ‘company’ – the legal entity which owns and operates the ‘club’ – is a vital one. See for example my previous posting Subbing the club or the owner?

I am suspicious that ensuring the continuity of the company and, implicitly, the interests of owners become a higher priority the higher up the pyramid the club is. Owners of lower level clubs can expect less sympathy with regard to the prolonged existence of the company. As well as Newcastle Blue Star, examples where there has been a reluctance to facilitate a pragmatic solution include the recent cases of Merthyr Tydfil and, in some respects, Halesowen Town.

Higher up the pyramid, the application of regulations seems to be more ‘hands off’ than pragmatic. Would, for example, the complete mess that Portsmouth find themselves in have been ignored if they were further down the pyramid?

Governing bodies’ responsibility should be for the survival of clubs, at whatever level, but not if it means the survival of a company with serious financial sustainability issues. Nobody wants another Aldershot (and let’s hope that includes Chertsey Town [3] where Spencer Day has been ‘outed’ as Spencer Trethewy), but there are, in my opinion, occasions when re-formation, two levels down, is the right way forward – occasions when a fresh start is exactly what is called for.

Half Premier League ‘technically insolvent’

The latest report from Equifax on the financial state of the clubs in the Premier League (as reported at 1) makes extremely depressing reading.

Details are shown below. The Equifax score is based on accounts data, age of accounts, trading stability, profitability, working capital, gearing, and legal and court information.

Club	Score out of 100 Aug 2009	Difference compared to May 2009	Technically Insolvent as at Aug 2009
Manchester Utd	100	SAME
Arsenal	98	SAME
Birmingham	72	N/A
Wolverhampton	70	N/A
Blackburn Rovers	68	SAME
Liverpool	67	UP
Tottenham	50	SAME
Sunderland	45	UP
West Ham	37	SAME
Manchester City	27	SAME
Fulham	20	SAME	Yes
Everton	18	SAME	Yes
Aston Villa	10	SAME	Yes
Chelsea	10	SAME	Yes
Bolton Wanderers	5	SAME	Yes
Portsmouth	2	SAME	Yes
Wigan Athletic	2	SAME	Yes
Stoke City	2	SAME	Yes
Burnley	2	N/A	Yes
Hull City	0	DOWN	Yes

This gives an average rating of 35.25, an improvement on May’s 30.88 for the continuing seventeen clubs. The improvement is thus largely attributable to the promoted Birmingham and Wolverhampton being being significantly more credit worthy than the existing clubs, among whom only Liverpool and Sunderland showed an improvement.

All in all, it is a picture of a sector in deep distress. Far too many clubs are dependent on injections from their ‘benefactors’ rather than on sustainable business models, and are therefore in vulnerable positions. The current difficulties Portsmouth are facing in changing ‘benefactor’ exemplifies this malaise.

This report simply adds fuel to the flames of concern expressed by UEFA regarding English club finances (2). How often does the Premier League have to be told it isn’t wearing any clothes before it takes some action to set itself in order?

Good news for Farsley Celtic and Folkestone Invicta?

When I last blogged on Farsley Celtic (1) they had just managed to get themselves into the Conference North with a 10 points deduction by the skin of their teeth. Latest development is that the club’s President and former Chairman, John Palmer, is in talks with the Administrator about a possible takeover (2). The club was nearly wound up by HMRC over a £200,000 tax bill, but it owns six acres of land. One possible blip is that another offer is also being tabled by an as yet unnamed party.

Meanwhile Folkestone Invicta – also in deep trouble with HMRC (3) – are reported to be ‘almost safe’ (4), with an offer to HMRC under serious consideration.

Cautious optimism seems to be the order of the day in both cases – caution because of the lack of detail yet in the public domain. Let’s keep our fingers crossed.

Chester City case continues causing Conference chaos

Latest development in this depressing saga is that the FA have in effect over-ruled the Conference – going ahead with the first match Chester are due to play, against Grays, would be a breach of FA rules (1) and it therefore now off.

To me, there are three issues here:

1. The issue of club v. club management
   In the case of Chester City the effect of the various rulings is to punish the club, rather than the club management, which is entirely dysfunctional.
2. The issue of the speed of governance
   A thorny one. Yes, things should have happened more speedily, but speedy decisions may lead to faulty decisions, which in the longer term is even more unhelpful.
3. The issue of governance
   Once again we see the perils of governance in English football which began with the formation of the Football League, potentially setting up clashes between the FA as the ultimate authority and league organisers as those who actually have the power in operational terms. The emergence of the Premier League was simply another step down this rocky road.

The first issue is one that needs urgently tackling by the FA in particular, with a new approach to discipline and sanctions. The second is, indeed, thorny, but would be eased considerably if the other issues were resolved, leading to fewer contentious case; the third issue is the simplest to resolve in practice, but the hardest to resolve in practice – the ’starting with a blank sheet of paper’ option doesn’t exist, so how do we move to a more rational governance structure? With very considerable difficulty, as none of the bodies involved would be willing to give up power even for the good of the game.

One thing is clear – Chester City fans are already shaping up all too well for the ‘Most Put Upon Fans’ of the season 2009/10 award, although Halesowen Town fans will probably give them a good contest.

What’s happening at Millmoor?

Does any blog-reader know what is happening at Rotherham United’s traditional home, Millmoor? Is it just standing abandoned, failing to generate any revenue? Has it drifted into the pre-owned ferrous metals business of its owners?

Although I ask this partly out of idle curiosity, it does interest me to know what you would do with a stadium when you have forced the only obvious tenant out.

As with the previous posting, news would be appreciated.

Air-brushing on the Halesowen Town website

Following the unfolding saga of Halesowen Town (see earlier postings) has just got more difficult as the dispute between the two factions spreads to cyberspace .

As I write, the lead story on the club’s website reads:

“Halesowen Town Football Club welcomes the decision of the Courts in passing judgement and costs in our favour against a number of defendants including Robert McNaughton and Janet Susan Nelson.

We would also like to thank all those people for their calls, best wishes and support over the last few difficult weeks.

We remain 100% committed to exploring all possible avenues of solving the clubs issues in a manner we believe will in the long term be most beneficial for our shareholders.

Due diligence is underway to support new investment into the club and we look forward to the opportunity to present positive proposals to ensure the immediate and long term future of the club.” (1)

For the record, yesterday the same lead story read:

“IN RESPONSE TO RECENT REPORTS WE WOULD LIKE TO MAKE THE FOLLOWING STATEMENT.

Legal proceedings have been commenced in the High Court in Birmingham by Kelly Gentles and Morell Maison against a number of Defendants including Janet Susan Nelson and Rob McNaughton.

The proceedings seek to prevent the appointment of an Administrator to Halesowen Town Football Club as proposed by the Defendants. The proceedings also dispute the alleged resignation of Kelly Gentles as Director and Company Secretary and the alleged appointment of Janet Susan Nelson as a Director of the football club.

At a hearing before HHJ Browne QC on the 30 July 2009 undertakings were given to the court by Rob McNaughton and another party that an Administrator would not be appointed until after a further court hearing has taken place next week when all parties representations shall be heard.

A further statement will not be issued until after the next court date.“  (Still available, as I blog, in the Google cache [2], although this may well be over-written in time)

The previous statement, and all news stories since 29 May 2009, have been taken down.

If any blog-readers have any of the other postings from the website which have been air-brushed out, please let me know.

Halesowen Town latest

A month ago I suggested it was hard to see how things could get worse for Halesowen Town (1).

The Supporters Trust have acquired 51% of the shareholding and pressed ahead with plans to force the club into Administration (2). This move has been challenged in the courts by ‘owner’/manager Morell Maison, and it has just been announced that he has been granted an injunction preventing the Trust from taking the club into Administration (3). Maison is currently banned from football.

The details of the ruling have yet to be released, so it would be improper to comment on them. But it is issues of governance rather than of the law that concern me.

For the second time today, I despair at the lack of an effective fit-and-proper persons test.

Chester City latest

Chester City will play in the Conference in the upcoming season, but with a further 15 points deducted, in addition to the 10 for going into Administration (1).

This immediately suggests comparison with the 15 points deducted from Leeds United, where Ken Bates bought the club back from the Administrator, and the 10+20 points deducted from Luton Town.

If Chester follow the path of Luton Town, this second punishment will lead to the club playing in the Conference North in 2010/11.

Yet again, the club is receiving a double punishment which impinges seriously on the club’s future sporting performance, instead of punishing the director(s) responsible for the financial problems of the club. The only word for this is ‘ludicrous’. In the case of Luton it was ludicrous because the directors responsible were no longer in charge of the club. In the case of Chester it is ludicrous because the person who should bear the responsibility is still in place.

Yet again, clubs suffer because an effective fit-and-proper-persons test is not in place. When exactly is the lesson going to be learned?

[See also Luton Town and an unfair disadvantage]