Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of Scoop.it! Football Finance

Archive for April, 2010

More stadium madness

Posted by John Beech on April 30, 2010

Last week I blogged on the unrealistic plans for new stadiums in Plymouth and Bristol in connection with England’s 2018 bid (Are we going stark stadium bonkers?). This approach is certainly not confined to England, and an interesting example can be found in Qatar, bidding for the 2022 World Cup (1).  This particular article, citing Reuters as a source, states that officials have said that Qatar will build “12 air-conditioned outdoor stadiums if it wins the right to host the 2022 World Cup“. It also quotes a figure for the cost of the Qatari bid as $4 billion (approximately £2.6 billion).  Not exactly ‘ghutrahs for goal-posts’ then.  The first five of the planned stadiums can be seen here.

Now, a little surfing suggests that not all 12 will be new-build – some at least will be upgradings. The four billion dollars figure is however widely repeated.

The United Nations estimate of Qatar’s population for 2009 is 1.4 million, slightly less than the combined population of Birmingham and Manchester.  If we take the typical figure of stadium capacity being quoted as 45,000, and bear in mind that, as Peter Snow will doubtless be saying on Thursday night, this is just for fun, it’s not meant to be accurate, roughly a third of the population will be able to sit in one of these air-conditioned lovelies at any given time.  They will have cost roughly £2,000 per member of the Qatari population, or, to put it another way, roughly £5,000 per seat.  A fine legacy though, you have to admit.

To put this in a wider perspective however, the $4 billion cost of the bid is roughly equal to eight years’ worth of Oxfam’s gross annual income (from 2).

Funny old game?  More like funny old world.

Meanwhile, closer to home, Southend United (see postings passim) Chairman Ron Martin has been telling the Southend Echo how the club’s relegation will affect the seemingly eternal plans for the new stadium (3): “The stadium plans have been unaffected and they will continue.  Our business plan is built on taking Southend to a new stadium so we have more income and therefore can grow and all the activity in building up the youth setup is predicated on the growth of the club.  The biggest thing about being in League Two is a loss of income.  No doubt we will have less crowds, charge less ticket prices and commercially there will be less income but equally the wage demands are less in League Two. We are also extremely well placed to compete as a football team.

‘Extremely well placed’, eh!  Luck old Southend.  Do you know, I’m beginning to think he actually believes what he says!  Perhaps he might instead reflect on the slogan of Sainsbury’s, the superstore on which the club is becoming increasingly dependent (they paid off the club’s £378,000 tax bill to avoid winding-up this month [4]): ‘Try something new today!’.  Quite possibly Sainsbury’s are beginning to wish he would.

Posted in Costs, Stadium | Tagged: , | 4 Comments »

The Portsmouth Horror Show

Posted by John Beech on April 24, 2010

It is to the credit of Andrew Andronikou, the Administrator, that with an unexpected transparency that he has published the report (1) to be presented to the creditors at the meeting on 6th May.  That said, there is little more that can be said to deserve the term ‘credit’ in this latest episode of the sorry saga of Pompey’s decline and fall.

The report sets out to the creditors the various options, which are essentially that they agree a Company Voluntary Agreement (CVA) or the club is liquidated in an attempt to pay off the debts.  It is abundantly clear that, while the creditors cannot realistically expect to recover anything like all the monies owed to them (reports have suggested that the crucial figure missing from the report is settling for 23p in the £ [2]), liquidation would be an even less attractive option for the creditors.  Whether the creditors will accept this kind of level of payment remains to be seen, but it is difficult to see why Andronikou is so optimistic that a CVA will be agreed, although the quite what the situation is with prospective new owners, and their willingness or otherwise to contribute to paying off the debt, is, as yet, known only to Andronikou.

Inevitably the richness of financial data in the report provides the entrails to be picked over in order to assign blame for Pompey’s decline and fall.  A good starting point is the fact that wages had risen to the level of 109% of revenues, not exactly a sustainable business model.  It could only be sustainable with a benefactor prepared to keep pouring money into the club – a luxury that Portsmouth has not enjoyed of late.  A major tranche of the club’s debt is to previous owners – £39.2m in the form of unsecured loans and £14.2m secured against the stadium, the better part of half the debts – who are not prepared to write their money off, in effect, as equity in the way that Abramovitch or Gibson have done at Chelsea and Middlesbrough respectively.

Is it as simple then as attributing Pompey’s ills to their involvement with the ‘wrong sort of benefactor’? Well, only at a very simple level.  At the next level down in a hierarchy of causation, there is the issue of how it would have been possible to have avoided the wrong sort of benefactor.  Certainly these benefactors must accept a major part of the blame – after all, they chose to take on the role.

To me the story of Portsmouth since Gaydamak decided to walk away has been a savage indictment of the obvious inadequacies of the benefactor model, offering examples of a benefactor who gave up, a benefactor who simply didn’t have the necessary funding, a benefactor so disinterested that he never visited the club, and a benefactor who ended up in that position by default rather than by plan.

The media have tended to focus more on the mid-size debts, and there are plenty of rich pickings among the entrails here.  The staggering level of debt to agents, for example.  The largest is to Jaques Perais for the sale of Diarra to Real Madrid, a matter of over £2m.  So significant is the debt that Perais is on the Creditors committee (a first perhaps for football Administrations?), other members including two football clubs Stade Rennais and RC Lens (again perhaps a first?).

The small-size debts reveal a particular horror show.  Among is the shameful debt of £2702 to those stalwart supports of the game, St John Ambulance.  Pompey fans have a history of dipping their hands in their pockets – in 1976 SOS Pompey raised £35,000 [which would be of the order of £200,000 today] from fans to save the club (3) – and it is not surprising that fan Tom Purnell established a webpage to raise money to clear the disgraceful debt, something that was achieved in roughly a day (4).  Well done Tom!

Since the publication of the report, it has been suggested that the figure of £119m debts may yet rise further (3).  In particular, there is still some uncertainty over future bonuses and appearance fees for players that will need to be paid.  The Portsmouth Evening News has already uncovered two unlisted debts that are even more shameful (4) – the club owes two cancer charities almost £15,000, money already raised in their names.  The fans have shelled out over St John’s Ambulance, the players have shelled out to keep ground staff in their jobs (5), so isn’t it time that the former owners and/or the former Chief Executive dug deep to stop the club’s name sinking even lower?

I must admit that although I am not often shocked by new stories of appallingly bad management in English football, Andronikou’s report is exceptionally disturbing reading.  Just how many more wake-up calls do we have to have before the game gets itself properly in order? The self-serving Premier League Chief Executive Richard Scudamore is right when he says Pompey’s problems are just that (6), but, unless the process of governance precludes the antics we have seen in the boardroom at Fratton Park of late, English football continues to head remorsely towards a brick wall.

Posted in Benefactors, Ethics, Governance, Insolvency, Ownership, Premier League, Public relations | Tagged: , , , , , , | 8 Comments »

The times they are a-changin’ 3

Posted by John Beech on April 21, 2010

The relationship between politicians and football governance has never been a legendary affair – it’s probably best described as at best ‘casual and flirtatious’ rather than ‘deep and meaningful’.

True we have seen the major changes brought about by the Taylor Report (1), which came not just in the wake of the Hillsborough disaster but a series of stadium disasters leading to tragic loss of life.  But I would see this as a response to a Health & Safety issue rather than as engagement with football governance issues.

We have, of course, also seen the Task Force (2) and the Burns Report (3).  It would be hard to argue that these have resolved the major problems of governance, club ownership and the dysfunctional structure of football governance.  Yes, there have been significant reforms, but we still have a dysfunctional governance structure.

The emergence of, in particular, the issue of fan ownership of clubs in the current manoeuvring in the run up to the General Election needs to be seen in this broader context.  The Labour Party has suddenly thrust the issue into the political forum by announcing plans for change in its manifesto (4).  Offering fans a chance to buy 25% of the shares in their club has got to be a step in the right direction, but it does rather smack of tokenism in trying to solve the fundamental problem of replacing the flawed benefactor model.  The related question of exactly how you get the current owners of 25% of the shares to sell is begging.

The Conservatives, ever ready to enter the debate, seem to have been caught short – even David Cameron couldn’t claim this was really a Tory idea.  Their shadow Sports Minister responded that fan ownership “may not always be the best solution” (5), presumably a reference to Watford and Lord Cashcroft.  The Lib Dems’ response included “Ministers need to promise to look at other issues of desperate importance to fans, like ticket prices, safe standing and facilities for disabled supporters“.  Perhaps they should promise to look at the quality of pies while they are at it – a Pie Task Force headed by John Prescott is an idea surely worthy of consideration.

What they are saying I’m afraid does not excite me – it would foolhardy to imagine that within weeks of the formation of a new government of whatever persuasion that we will be setting down the road to a glorious new era of fan ownership.  On the other hand, what does excite me is that they are bothering to say something, however half-thought-through.  That football governance is seen as something that swings floating voters is, to me at least, significant.  The placing of the problem on the political agenda is recognition that there is a problem, something which politicians and political parties have been slow to recognise, and the problem is one which matters to an increasing number of ‘Thinking Fans’ who despair that ‘the game’ can sort itself out.

Pity that Supporters Direct is not fielding some candidates.  They’d get my vote.  ;-)

[See also postings 1 and 2 on the changing times theme]


CHANGIN’ TIMES UPDATE 30 April 2010

The Football Supporters’ Federation has seized on the current interest in football being shown by the political parties (A) and has sent a series of detailed policy questions to all the major parties (B).

In a related ‘changin’ times’ theme, the Independent Manchester United Supporters Association is encouraging fans to flex their political miscles by not renewing season tickets as an anti-Glazer protest (C). Putting pressure on the Glazers by reducing their cashflow is a potentially powerful tool if enough fans act (or rather, don’t act).

Posted in Fans, Governance, Ownership | Tagged: , , | 2 Comments »

Sign of the times

Posted by John Beech on April 19, 2010

Did you know that “PepsiCo has tied up with Microsoft Advertising to launch a digital campaign“, and furthermore that this is part of Pepsi’s ambush marketing strategy?  No?  Well, it’s all reported here, and it’s to do with the World Cup!

If ambush marketing is a term you are not familiar with, my colleagues Nick Burton and Simon Chadwick define it thus: “Ambush marketing is a form of strategic marketing which is designed to capitalize upon the awareness, attention, goodwill, and other benefits, generated by having an association with an event or property, without an official or direct connection to that event or property” (1).  To be blunt, it means using an event as a vehicle for your advertising without going through the tiresome business of signing up (and thus paying) to be an official sponsor.  One of the most famous examples dates from the World Cup in 2006, when Dutch fans wearing lederhosen with the logo of Bavaria beer were forced to take them off if they wanted to enter the stadium, Budweiser being the official beer sponsor of the vent (2).

Ambush marketing is not something new then.  It has become part of the post-commercialised football scene.  What does surprise me though is the scale of ‘legitimacy’ it has now achieved – that a joint ambush marketing strategy is so openly discussed, without any reference to its (un)ethical dimension.  It’s acceptance as part of the football business does little to restore any remaining vestige of the increasingly inappropriately-called beautiful game.

Posted in Ethics, Marketing | Tagged: , | Leave a Comment »

Final final warning for Southend United?

Posted by John Beech on April 14, 2010

Back in the High Court after a 35 day adjournment, Southend have been given a further stay of execution, but this time for only seven days (1).

Chairman Ron Martin’s views on the situation are, as ever, a tad confusing.

After the hearing a club spokesman said “The funds are going to be sent immediately and should be with HM Revenue and Customs within 24 to 48 hours” (2).  Quite so, but why once again the club has engaged in such brinkmanship is unclear.  Yesterday Chairman Ron had expressed his confidence that the club would avoid being wound up (3), presumably meaning, to coin a variant phrase, “There’ll be a cheque in the post tomorrow afternoon”.

Things had obviously not been running smoothly, as the day before he had blogged “In my efforts and intention to discharge the HMRC indebtedness I have had little to no time today to turn my attention to the intended “third and final phase” blog. My apologies for this but I am sure supporters will understand the importance and I will ensure that the blog is completed and dispatched on Wednesday” (4).  Sure enough, up he’s popped (5), beginning with an attack on the Echo for an article which he suggests is “littered entirely with conjecture and supposition, hardly encourag[ing] the reader to take much of what is written as genuine“.  It’s not clear which particular article he is referring to.  The one I enjoyed said “SOUTHEND United chairman Ron Martin has defended the way he runs the club and insisted it would have been “morally wrong” to allow it to slide into administration. The Blues narrowly avoided being placed into the hands of administrators earlier this month over £2.1million debts to the Inland Revenue, which have now been repaid.  Mr Martin said the debt was caused by a combination of players’ wages, losses due to relegation, difficulties in securing finance because of the recession and delays with moving stadiums.He said it would have been morally wrong for the club to dodge paying back the money by going into administration. Mr Martin said: “That is not my way”” (6).  I’m sure HMRC will be relieved to hear they are dealing with someone with such a clear view of what is morally right or wrong.

What he was actually so busy doing was pressing on remorselessly with the ever more costly plans for the new stadium, ten years in the offing, and not yet a sod cut.  He’d been busy negotiating a deal with the local council’s development control committee “to stagger a £6million payment towards town centre regeneration” and to ask, with joint applicant Sainsburys, for “a revised timescale to pay for a range of community projects agreed when planning permission was given” (5).  Again, quite so, if you haven’t to the money to pay your players and you haven’t got round to sending a cheque to HMRC for £400,000 when they are threatening to wind you up within twenty-four hours, you would want a bit of leeway in paying £6m+, wouldn’t you.  The logic is unarguable.  ;-)

The ice on which Ron Martin skates gets thinner and thinner and thinner.  Meanwhile the club is five points from safety with four games left to play, and League Two football beckons. Home attendances this season have so far averaged a shade over 7,000.  The proposed Fossetts Farm stadium will, if it’s ever built, have a capacity of 22,000.  Memories of the folie de grandeur built by George Reynolds, he of Darlington fame, linger on…

If you’re reading this Ron, the above is neither ‘conjecture’ nor ‘supposition’, by the way; it’s commentary.

Posted in Debts, HMRC, Insolvency, Stadium | Tagged: , , , | 2 Comments »

Player mobility and Sunday’s semi-final

Posted by John Beech on April 12, 2010

Deep joy in the Beech household, of course, after the much wished for but more than somewhat unexpected result for Pompey against Spurs.  It was a strange game for other reasons though.

There were those familiar ‘Pompey’ faces – Crouch, Defoe and Kranjcar – on the Spurs bench, and although Kaboul was cup-tied he was no doubt there.  A Spurs fan would equally have been watching for Boateng, Brown and Rocha, albeit on the Pompey bench, and might well have been looking for O’Hara, on loan to Pompey and thus contractually constrained from playing against Spurs, perhaps sitting in the stands with Kaboul.  Now, I don’t keep stats on the numbers of players cup-tied, let alone on players who pop up later on the opposition bench, but it did strike me that this was a tie with particularly strong reunion connotations.

This of course is no surprise given that professional players have moved between teams since the 1880s, when Preston North End regularly turned out a team of imported Scots, but it was nevertheless particularly striking that ’till I die’ does not apply to players in quite the same way it does to fans.  Which means that club loyalty is just that – loyalty to a club but not in the same way to its players.  But if the players move around so much, and in this case between two specific teams, it doesn’t help with the notion of local identity and a sense of community implicit in the team.  Perhaps I’m just being old-fashioned, but I find it difficult to ‘dump’ ex-players as readily as they themselves dump their previous clubs.  The problem I have is in seeing a club as something permanent and not related to its ever-changing squad of players.

Hey ho, I’ll get over it, but it has reinforced my view that the all-too-often often opposing diad of the sociocultural  ‘club’ and its business form the ‘company’ constituting a football club should more rationally be thought of as an uneasy triad of ‘club’, ‘company’ and ‘crew’, to use a naval term as Pompey prompted this rambling.  In terms of ‘identity’, it is a peculiarity that both ‘company’ and ‘crew’ regularly change (well, especially the former if you are a Pompey fan) while it is ‘club’ that goes on for ever, even if in a resurrectionist form.

Posted in Community, Fans, Identity, Transfers | Tagged: , , , | 3 Comments »

The Premier League Old Boys Club

Posted by John Beech on April 9, 2010

This is the mixed bag of clubs who face the drop from the Premier League.  Likely contenders for membership this year include of course Portsmouth, Hull City and West Ham, all of whom have been hitting the headlines for the wrong reasons with regard to their financial performance as much their on-the-pitch performance.  It’s not a club that you have to pay any membership subscription to belong to; on the contrary, it’s an elite club in receipt of handouts – parachute payments.  And in the case of the aforementioned clubs, the money will come in handy to tackle their existing debt mountains.

Latest development is the proposal to not only increase the payments, which will in any case rise from £12m to £16m per year, to a four-year period rather than the current two years, so each of the dropping clubs would receive up to £64m gratis (1).

However, facing them on the pitch next season will be clubs that include those promoted this summer from League 1, the likes of possibly Millwall and Huddersfield.  And what bonus will they have to compete in the transfer market with given that they are having to ratchet up a gear financially?  Well, precisely nothing, because, while we increasingly reward failure with parachute payments, the clubs that rise the pyramid without recourse to financial doping, do not receive any reward for their success.  Dysfunctional or what?  As regular readers will know, I have long been an advocate of rocket payments rather parachute payments.

To add to the insanity of this, it is worth remembering that the Premier League that is so impressed by its own generosity in paying roughly £30m per year to the Football League in what it calls, without any apparent sense of irony, Solidarity Payments (2).  Will we see any rise in this figure, given that the three  failed Premier League members will be benefitting to the tune of £48m a year?  I’m not holding my breath.  It seems to have become a way of life in football to reward failure rather success.

Posted in Governance, Organisational culture, Premier League, Pyramid movement | Tagged: , , , | 1 Comment »

Ups and Downs 1

Posted by John Beech on April 7, 2010

Like virtually every football fan, there is really only one football result each week that matters to me personally – I have to know it almost as the whistle blows (thankfully possible in the age that we live in).  The rest I could easily wait to read in the Sunday papers. With my particular perspective on the game, it’s perhaps not all together surprising that my focus broadens considerably once we reach that critical point in every season, the appearance of the BBC’s Ups and Downs webpage.  The financial impact of either relegation, or for that matter promotion, on a club which is already struggling can prove critical.

The financial impact of relegation is the more obvious of the two.  Broadcasting rights decrease significantly, matchday revenues (both from falling gates and lower ticket prices) decrease, and any new sponsorship deal will be at a reduced level.  In other words, the club’s budget takes a dramatic hit.  Unless players are on negative performance-related pay, i.e. contractually lower wages in the case of relegation, a demoted club is not well placed to cope in the lower league.  Even when there are parachute payments, these may already be committed to alleviating current debt problems.  If there are already serious debt problems, these will only increase.  Think Bradford or Leeds.

Promotion also puts particular pressures on a promoted club.  To compete effectively at a higher level budgets for player purchases and player wages need to be increased.  Sure, revenues will be increased, but you are hardly on a level playing field since all those clubs already in the higher division have the same order of revenues too.  The apologists for the Premier League like to put it out that the new boys arriving from the Championship have an extra £46m to spend, ignoring the fact that it is not ‘extra’ in the sense that it is over and above thye revenues of your new competitors.  What is needed in this case is rocket payments, a much more equitable idea than parachute payments, which reward failure and give relegated clubs an unfair advantage over clubs already in the division which the club has dropped to.

As with every season, many of the kind of clubs that I blog about feature on the Ups and Downs page, and their results excite me in a way they simply do not in early or mid-season.  Here then are my thoughts on this year’s crop, starting with the Conference Regionals and working our way up.

Conference North and South
Potentially coming up to this level are Nuneaton (now Town), Boston United, and Bradford Park Avenue, all of whom might be seen as rehabilitating themselves from previous financial crises, albeit a rather long rehabilitation in the case of Park Avenue.
At some risk of facing the drop are Hyde United and even Northwich Victoria.  [Club links are to previous postings on the particular club]

Conference National
Potentially coming up from the Conference Regionals are Hinckley United, and definitely coming up are resurrectionist Newport County.
Virtually certain to drop to this level are Darlington, which will only add to their financial woes.

League 2
Among the contenders for promotion for the Conference are Luton (hopefully in a stronger position that reflects the new ownership’s determination to get the club back on an even keel), Rushden & Diamonds (in trouble with HMRC as recently as last summer) and Oxford United (who see themselves as ‘transformed’ [1]).
Dropping down will almost certainly be deeply troubled Stockport, and they could be joined by Southend. Whether that would prompt Chairman Ron Martin to finally wake up and smell the coffee instead of pressing obsessively on with his ten-year preoccupation with a new 22,000 seater stadium (almost as big as Darlington’s when it opened) at Fossett’s Farm remains to be seen. He does of course have the distractions meantime of a winding-up petition from HMRC, due back in court in just a week’s time, and the late payment of wages (2).

League 1
Definitely some interesting clubs vying to gain promotion to League 1.  Notts County and Bournemouth are currently in the top three, the former being one of the most blatant cases of ‘financial doping’ this season and clearly in breach of the spirit of the mandatory salaries cap.  Both have fans who must feel badly let down by the recent run of management they have received.  Bournemouth have managed, in spite of the problems of a crippling transfer embargo, to turn out the results on the pitch, for which their manager and players deserve considerable credit.  In both cases though I would see promotion as a highly risky venture.
Comong down are likely to be Plymouth, who seem to have learned everything they know about football management from Ron Martin.

Championship
Coming up are likely to be Norwich which might encourage their sale.
Coming down are almost certainly Portsmouth, and probably two from Burnley, Hull, and West Ham.  Of these four, only Burnley seems even remotely geared up strategically to face the rigours of the drop, unless of course the mystery owner sniffing round Portsmouth turns out to be the Sultan of Brunei, a scenario which I consider somewhat unlikely.  I would guess that only Burnley’s departure might be mourned by the other Premier League Chairmen.

Premier League
Newcastle are of course already promoted, and this will prove an interesting club to follow off the pitch next season.  How this will impact on Mike Ashley’s personal strategy regarding the club remains uncertain.  Cardiff City still have serious promotion prospects, but off the pitch the focus is very much on the rest of this season – the seemingly forever toted Malaysian investment, a ‘final’ appearance in court against HMRC on 5 May, and the suggested departure of Spinmeister Ridsdale as a condition of investment.
At the top end there will be plenty to follow off the pitch before the start of next season following the generally poor showing in Europe, with Liverpool’s ‘Laurel and Hardy’ under increasing pressure (not to mention the position of their manager – I’ll leave you to think of your own metaphors from the world of entertainment).

I’ve numbered this posting ‘1’ as I plan to return to the theme at the end of the season when the certainties of promotion and relegation have been decided.

Posted in Promotion, Pyramid movement, Relegation | Tagged: , , | 6 Comments »

LINKS page expanded

Posted by John Beech on April 3, 2010

The LINKS page, accessible via the tag on the tool bar at the top of the page, has been considerably expanded.

Posted in Uncategorized | Leave a Comment »

Are we going stark stadium bonkers?

Posted by John Beech on April 2, 2010

How often have clubs fallen into the ‘cargo cult’ trap of believing that a new stadium with a greater capacity is the answer to their financial problems, only to find that it has increased their financial problems and has somehow failed to deliver as ‘fan bait’?  Think Darlington as the most obvious example.  Think Coventry (where I’m sitting bashing away at the keyboard) or St Johnstone (where Rangers were thrashed 4-1 last week in front of 6,000 in a 10,000 capacity stadium, the first new football stadium in Britain since the old Wembley – I lived in Perth for 20 years, which is why the club is on my radar screen).  Incidentally, for another classic example from Scotland have a quick look here.

To ask a related question, how often have clubs lumbered themselves with unsustainable debt by chasing the dream of a new stadium?  Think Cardiff City or Forest Green as recent examples.

Or to put it a third way, how often have clubs spent and spent on a dream before a sod is even turned?  Think Southend, which has been in court for two consecutive years over debts of £600,000 to HMRC, and has spent £1.2m (now there’s a spooky coincidence) on the as yet unstarted new Fossetts Farm stadium (see postings passim).

How often too have clubs faced spells in exile because selling off the old stadium happened way ahead of the new stadium being started, let alone finished?  Think Brighton as a classic example.

Or have let their stadium slip out of their hands in the belief that sell-and-lease-back made sense, only to find what was intended as a short-term expediency turned sour?  Think Leeds, think Rotherham.

Are you catching my drift here?  Embarking on a new stadium is a very high risk strategy, and clubs seem blinded to the fact that they, their gates, and their revenues may, like investments, go down as well as up.  Unless building a new stadium has a direct bearing on on-the-pitch performance, both outcomes are in fact equally likely.

Add to the heady dream of a new stadium that will somehow take you to the Champions League – well, you have to have ambition don’t you – the prospect of World Cup football in 2018 seems to be taking some clubs into even more irrational plans.  Now, it’s worth pointing out that England hasn’t actually won the bid yet, and, for all the perceived belief that it’s ours for the taking, it should be remembered that we are not alone in bidding.  Call me a curmudgeonly old killjoy for pointing it out, but there are actually six opposing bids, from Australia, Belgium/Netherlands, Japan, Russia, Spain/Portugal and the USA.

If we were to host the 2018 World Cup (and please note my use of the subjunctive; I believe we stand a better than average chance, but with six competitors it is hardly a foregone conclusion that we will), then of course we would want to deliver with the best and biggest stadiums possible.  (Don’t start me off on Scottish question – why a bid that did not include the only city in the world with three 50,000+ seater stadiums was not considered I’ll never know).  But should that mean building new stadiums that just don’t make sense in the longer term, stadiums that run a high risk of ending up as Darlington-style white elephants, with parts closed off as they are too expensive to even maintain?

Imagine you are a club in the Championship.  In 2005 you managed to buy out the lease of your stadium, which has a capacity of almost 21,000, from the local council at a cost of £2.7m.  In 2007/08 you managed to make a pre-tax profit of £1.4m, but in recent years you have more typically made a profit or a loss of less than £1m.  Your wages/turnover ratio has however crept up to almost 75% (1 but resist looking to see which club I am referring to just for the moment).  Gates peaked at an average of 16,500 in 2004/05, but have declined since, this season averaging at just below 10,500, in other words, your stadium is typically half empty.  You are currently sitting in the relegation zone.  You faced an HMRC winding-up order earlier this season and have recently been under a transfer embargo, all of which led you to borrow £1.5m from a company owned by foreign board members in order to ‘stabilise’ the club.  Last Friday the Chairman of the club said “Off the pitch, our wage bill for 2009 was the highest in our history as we increased our player squad and brought in loan signings. Coupled with a further fall in average match attendance, this generated a disappointing financial performance – a £2.9million loss. Included in the loss is a write-off of over £600,000 of costs associated with the previously proposed stadium redevelopment as we reviewed our plans and made the decision to start the redevelopment afresh.” What strategy would you now pursue in redeveloping the stadium you have only recently purchased?

If you haven’t guessed which club I am referring to it might come as a shock to learn the actual strategy which the particular club has chosen to pursue is, on the strength of England’s as yet uncertain 2018 World Cup bid, to plan a 44,000 seater stadium (2)!  To back themselves into a corner, the club, or specifically the shareholders, has just voted to “sell Home Park to a newly formed property company for £7.5 million …  It means the football team will become a ‘priority’ tenant of the new company, a wholly owned subsidiary of Argyle’s holding company, and pay it a ‘market rent’” (3).  Yes, it is Plymouth that I am writing about.  This newspaper report also quotes a figure of 46,000 for the capacity of the proposed stadium.

So, the good stakeholders of the club have voted to move from owning their stadium to paying a market rent on a stadium that would currently by 75% empty.  I despair.

Not that this 2018 madness is confined to Plymouth.  Bristol City (average attendance this season 14,500; capacity of Ashton Gate 21,500) are planning a new stadium with seats for 44,000 at a cost of £92m.  No doubt this has caused ructions across the city, with Rovers (average attendance this season 7,000; capacity of the Memorial Stadium 12,000) pressing on with a £35m redevelopment plan (4) which will increase capacity to 18,000.  That’s an increase in capacity at the two clubs of almost 30,000, clubs which are currently averaging 12,000 empty places between them, at a cost £127m – that’s over £4000 per extra empty place.

As I said in the title of the posting, bonkers.  It’s not as if there aren’t warning signs elsewhere – from yesterday’s press: “Ukrainian President Viktor Yanukovych on Thursday said his cash-strapped country must by January spend at least 3.8 billion dollars on preparations to host its share of the Euro 2012 football championship“. (5)

Posted in 2018, Debts, Stadium | Tagged: , , | 10 Comments »

The times they are a-changin’ 2

Posted by John Beech on April 1, 2010

[The second of an intermittent series of reflections on a new and positive zeitgeist in English football which has been developing over the past year.  See also the first]

A couple of years ago Supporters Trusts seemed destined to be confined to clubs in the lower levels, notwithstanding that they had already proved their worth with, for example, the saving of Exeter City from oblivion and the master-minding of their return to League football.  The thought that they might however a role to play in Premier League clubs would probably have been laughed at.

Today they are active players in the battles for Manchester United and Newcastle (and, north of the border, Rangers).  Although not formed as conventional Supporters Trusts, two groups are involved with the battle for Liverpool – Share Liverpool FC, and Spirit of Shankly (originally called ‘Sons of Shankly’).

It’s the boldness in showing their willingness to tackle ownership that is indicative of the significant step forward that fandom is willing to take on today.  As Kevin Rye of Supporters Direct has pointed out “The two biggest myths in football – that fans don’t want to buy clubs and can’t afford to buy them – has been blown right out of the water” (1).  The exploding of the first myth has been demonstrated with the publication of a YouGov survey conducted for Co-operatives UK (2).  The latter myth has shown more resistance, but as Kevin’s colleague Dave Boyle puts it “The only thing stopping these great clubs being owned by fans is the belief that these clubs are just too big to turn into British Barcelonas. But the bigger the club, the bigger the fan base and this survey shows if fans can be united, they can make this happen.

There are different ways forward to raise the money needed, as the Trusts I have mentioned have shown.  Manchester United Supporters Trust have been talking with the Red Knights (3) and hopefully a multi-owner fan-engaged ownership model can replace the current one (which has put total power in the hands of a family with no historic connection to the club, and no obvious reason to show a long-term commitment).  There is no reason why the new model should not work.

Newcastle United Supporters Trust have promoted a scheme that could involve Trust members making significant investments through the freeing up of personal pensions.  By January they had pledges of the order of £50m (4).  On a less serious note, I wonder what impact this will have on the divorce rate in Northumbria though.

I find the situation in Liverpool more difficult to assess – is the existence of two organisations helpful?  Both ultimately aim for fan ownership of the club after all, and thus will meet one another more and more head-on if they are successful, which is clearly counterproductive.  They might take a leaf out of Pompey fans’ books, where the newish Pompey Supporters Trust [personal membership declared - JB] saw the coming together of twelve separate fans groups.

In God’s Ain Country too, Rangers Supporters Trust is engaging in attempted intermediation by talking to would be backers (5; see statement of 30 March).

What has emerged particularly over the past year is the realistic possibility of fan power, through Supporters Trusts, in even the largest (and thus most expensive to buy) clubs.  There is of course still a long way to go, and not every Premier League club actually has a corresponding Supporters Trust.  If your club falls into that category, time to get organising!

Posted in Ownership, Trusts | Tagged: , | 2 Comments »

 
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