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 the ‘Stadium’ Category

The joy that was, and may yet again be, the Abbey Stadium

Posted by John Beech on January 18, 2011

Perhaps not the obvious stadium to refer to as a ‘joy’, but it has a special place in my personal history.  My very first football-related memory is of being driven along the Newmarket Road as a child aged about 4 years and suddenly catching sight of this enticing building.  Yes, it was oddly enticing.  Frequent family visits to my grandmother’s in Cambridge had no doubt made me blasé about the wonders of mediaeval architecture.  Here though was a truly intriguing building – what could be its purpose?  I should perhaps mention that my earliest years were spent in the rural Surrey/Hampshire borders, and, to be honest, Haslemere Recreation Ground just didn’t cut it.

This must have been in the very early fifties, who knows, perhaps just even in the ‘Abbey United’ era.  Certainly they still played in the Eastern Counties League, and it was to be roughly twenty years before they followed in the path of Headington United (now known as Oxford United) to the heights of the Football League in 1970, replacing Bradford Park Avenue.

In 1992 they made it to 5th place in what is now the Championship, but the last decade has been less kind to the club.

One strength of the club was owning their stadium.  That is, until the fall to the Conference in 2005, alongside going into Administration, brought a not untypical sell-and-lease-back scenario for the Abbey (1), the sale being to Bideawhile, a company owned by one of the club’s directors.

In a less typical dimension to this, ten years ago the fans formed a Supporters Trust, Cambridge Fans United (2), and, by 2003, the Trust had raised £100,000 and was the club’s third largest shareholder (3).

In April 2005 the club, on the strength of a proposed loan from Dr Johnny Hon, a club director, made an offer of £2.2m to buy the Abbey back again, but Bideawhile, whose director John Howard was still Vice Chairman of the club, refused the offer (Bideawhile had bought the ground for £1.92m at the end of the previous November incidentally).  As Cambridge Fans United director Brian Attmore said at the time “This is a kick in the teeth for all our supporters.  It puts United’s future in the real jeopardy. It is for the whole board to determine what is right for the club and not for one individual with his own commercial agenda. This is precisely the conflict of interest we feared would happen.” (4)  Bideawhile ignored a petition signed by 3,000 fans (5), stating that they had “long term plans to help the U’s relocate to a new community stadium.“.  Ah, relocation.

Long term?  Well, 13 days later Bideawhile (what an ironic name) announced that “Football will be played at Abbey Stadium for 50 years, unless the directors and shareholders feel the best thing is to relocate. The ground is safe in the short-term, no matter what people may think.” (6)

Less than a week later the club filed for Administration (7).  Dr Johnny Hon had resigned as a director (8) a fortnight before

By November the club had managed to agree a CVA, but not without the involvement of then Sports Minister Richard Caborn (8).

The following month there was talk of a possible groundshare and even merger with Cambridge City (9), who had managed to climb as high as the Conference South in 2004, but most would agree were the junior of the two sides – perhaps a ‘Bristol Rovers’ to a ‘Bristol City’.  While no doubt this would have been anathema to both sets of fans, it would have made good economic sense.  I’ve advocated ‘thinking the unthinkable’ before, and Cambridge is, in my opinion, better served by one bigger rather than two smaller clubs .  Or perhaps that should, by then, be three – Histon were to win the Southern League that season, and who, as I write, are bottom of the Conference National.

August 2006 saw some shakedowns in the board room  (10), (11), (12).  The new Chairman, Lee Power, said the club would look at another attempt to buy the ground back from Bideawhile (13).  The pressure of having to pay rent was beginning to tell, and by December the club was turning to its directors who were guarantors (14).  In March a new (US) investor appeared on the scene (15).

Early in 2009 there was another flurry of activity with board room appointments (16) and (17).  ‘Stability’ remained the mantra if not the reality.  Finances remained a strain, and in July manager Gary Brabin left (18).  George Rolls, by then the Chairman, explained “There have been disagreements between Gary and myself which have festered over the summer. Gary has pressed the issue to sign more players, when we can’t.”  Brabin’s successor, Martin Ling, lasted roughly a week, having signed a three-year contract (19), the club citing “irreconcilable differences between Martin Ling and chairman George Rolls“.  The next day Rolls quit the club (20), as did Vice Chairman Terry Baker.  Rolls declared “Lots of fans won’t want to hear this but I’m sure I’ll be back one day owning the club. I made a lot of bad decisions but it hasn’t put me off. Yes it wasn’t good business and I had no other option but to stand down. I’ve got no regrets, just happy memories.  I’m not going to cry over anything.  I’ll be back there.” (21)  I suspect most fans would hope not.  Martin Ling would presumably hope not; he was promptly reappointed Manager (22).  Rolls meanwhile was firing off as if in an exit interview, warning of a £900,000 shortfall in revenues:”They have to start living within their means. It’s a sad day for me if the club wants to keep gambling all the time. I kept forewarning the fans cuts would have to take place. If it meant upsetting managers along the way because they were over budget and trying to sign people, I’ll take that, I interfered. But I’m sure the fans would rather have me interfere than six months’ time the club go into administration.” (23)

In a surprise turn of events (well, to me at least!) this time last year, who should come on board at the Abbey Stadium but Gareth Baldwin, late of Histon! (24)  Showing a multiplicity of ’till I die’ approaches is of course the norm for players, but such a switch at board level between two local rivals is somewhat rarer.  In this case it turns out, he ‘admitted’ “a lifelong love of United” (25).  Gosh, he must have been tortured during his time at Histon.  Shortly his wife became Secretary at Cambridge United, a role she had previously held at, where else, Histon (26).

A bombshell at the end of February was the news that Bideawhile – remember, the company owned by United’s then Vice Chairman John Howard who had bought the stadium for £1.92m in December 2004 had sold the ground to Grosvenor Estates for, wait for it, £3.5m (27).  And no, that’s not a typo.  Be warned – there’s a name to watch out for if appointed as a director in a club near you: J-O-H-N H-O-W-A-R-D.  The Supporters’ Trust were, to be fair, given the opportunity to match the £3.5m bid, in a time frame of, er, 18 days! (28).  John Howard had finally stepped down, at the request of the rest of the board, because of his blatant conflict of interests in August 2006 (29).

Sadly, if not unsurprisingly, they failed to manage that, but they did raise over £1m in that very short period (30).

[Definitely a new paragraph, just to give you time to let that sink in...]

That brings us more or less up to date, save for the news at the beginning of this month that Cambridge United itself is up for sale (31).  Baldwin has expressed an interest in buying the club (32), as have those mythical beasties (forgive my cynicism, but I am a Pompey fan) ‘foreign investors’ (33).

Last night Cambridge Fans United decided they too would seek to buy the club (my source for this is Twitter – I’ll post a link in ‘Comments’ once the minutes of the meeting are online).  Present at the meeting was Kevin Rye of Supporters Direct.  He offered me the following thoughts:

Cambridge United fans need to recognise that they’re at something of a crossroads.

“To my mind they have three choices:

  • they could either take the chance with the same, tired model of ownership where a small group of directors including CFU continue to keep the ship afloat every year but basically manage long-term decline; this hasn’t worked already, despite the best efforts of those concerned;
  • or they could wait for the mythical white knight to appear – the less said about that the better;
  • the final, and only real option left on the table, is community and supporter ownership; yes, it seems scary to some people, but the chance to create a vibrant, outward looking club, harnessing the energies, talent, collective wisdom – and finances – of the several thousand CUFC fans out there is surely too good an opportunity to turn down.

Cambridge Fans United certainly are in with a chance. They have existed for ten years and have recently raised £1m at very short notice.  May joy yet again be found at the Abbey Stadium.

Food for thought there for Plymouth Argyle fans…  And indeed for fans at any club that hasn’t yet established a Supporters’ Trust.  Plymouth fans have now done so (34), I appreciate, and good luck to the Argyle Fans’ Trust, but how different their position might have been with ten year’s experience behind them.

 

Posted in Assets, Benefactors, Insolvency, Investors, Ownership, Stadium, Trusts | Tagged: , , , , , , | 6 Comments »

Lessons from Plymouth

Posted by John Beech on January 3, 2011

The car crash that Plymouth Argyle is on the verge of turning into is a strange case, yet many a club might well think that there but for the grace of god go they.

At the beginning of the nineties Dan McCauley had become Chairman, with his predecessor Peter Bloom becoming Vice Chairman.  While the club did not have a particularly stable decade on the pitch (three relegations in eight years; seven managers), the club was run reasonably stably, if unsustainably, on a traditional benefactor model.  Shortly before McCauley finally stood down in 2001, debts were reported to be £2.7m, with £1.8m owed to McCauley’s Rotolok Holdings.  He was also advocating a new stadium, the capacity of which was wound in from 23,000 to 18,000, but with scope to increase capacity.  As McCauley explained “An 18,000 all-seater stadium should be sufficient for us in the short-term. But it’s important to have flexibility in the design to cater for success when Plymouth Argyle move up through the leagues.”  ‘Sufficient’ is an odd choice of word – average seasonal attendances throughout the decade had peaked at just over 9,000 in 1994, but had fallen to around the 5,300 mark.  The sort of figure McCauley was speaking of had not been seen at Home Park on a regular basis since the fifties (1).

Reaching the age of 65 in 2001, McCauley found buyers he felt would be good for the club.  The new board was led by local businessmen Paul Stapleton and Peter Jones, and included the local MP Michael Foot, and two London-based businessmen, Nick Warren and Phil Gill, all Pilgrim fans.

[Sources for the above paragraphs are newspapers, mainly the Western Daily Herald, and are unavailable on the internet]

Under the new regime, stadium redevelopment proceeded, but hit a snag when the Council declined to carry on funding it (2).  Having already spent £2.6m, it felt that it was difficult to justify further expenditure.  Argyle Vice Chairman Peter Jones rather ungraciously argued “People should not forget the council are the freeholder of the stadium. Given the fact that a revamped stadium will bring in more people, more income and more rent, they should be prepared to put in a proportion of the £5m we need.

From a business perspective the early years of the noughties were a success.  In 2004 they announced a profit for the third year running (3), and by 2005 the seasonal average attendance had reached almost 16,500, following a return to Tier 2 for the first time since 1992.  The ground was purchased from the Council in December for £2.7m (4).

How then did things start to go wrong?  The management of players proved problematic. with continuing changes in who was manager.  The club managed to maintain their status in the Championship (until last summer, that is), but the fans started to drift away, attendances falling to just over the 10,000 mark on average.

In February 2008 the club recorded a record annual loss of £715,000 (5).  Not only were revenues down, but the club had locked itself into some rather expensive player contracts.  The wages/revenues ratio, which in 2001/02 had been at a very healthy 43.1%, had by 2007/08 risen to a rather unhealthy 74.4%.

In April 2008 the club announced a surprise new investor – Japan’s K&K Shonan Management Corporation, headed by Yasuaki Kagami who joined the Argyle board (6).

Argyle chairman Paul Stapleton, said: “We are excited about the future possible revenue streams from the Far East in particular and expanding the horizons of Plymouth Argyle. While this agreement has only just been concluded, it demonstrates the considerable appeal that Plymouth Argyle and our region has for companies with a global reach.”  I suspect that few outside Plymouth shared this optimism.

Japanese involvement increased when Yasuhiko Okudera was appointed Argyle’s President (7), and there was talk of Japanese players coming to Home Park (8).

By the summer of 2008 things were beginning to crumble; the transfer budget was reported as overspent (9).  By March 2009 non-playing jobs were at risk (10).

By the summer of that year there was talk of not only further investment from Japan but also of a takeover (11). Phill Gill sold his shares to Kagami (12), and by July Kagami held 38% of the shares, and his colleagues Sir Roy Gardner and Keith Todd joined the board with holdings of 13%, the trio thus holding a small majority.  The appearance of Gardner in particular, a former Chairman of Manchester United, raised hopes for some stabilisation.  Paul Stapleton said of Gardner “He’s going to bring a no-nonsense, common sense approach, and a business attitude to everything we do” (13).  The challenge was certainly there though – they had, for example, inherited a squad of over 30 players (14).

There was to be no magic wand.  In December that year the club was placed under a transfer embargo (15) for what the club dismissed as historic debts, and Kagami rode to the rescue with a loan [sic] of £1.5m (16).  Kagami was meantime being sued for £84,000 by former director Gill (17).

2010 opened badly, with the first of a series of winding-up petitions from HMRC (18).  In March there was the announcement that the club was to ‘sell off the family silverware’, the only recently acquired Home Park (19).  A ‘New World’ was heralded nevertheless (20), involving a 46,000 2018 World Cup stadium – rather than repeat my thoughts on this, see a posting I made at the time called Are we going stark stadium bonkers?.  The year’s financial figures, which featured a loss of £2.9m, were described by Gardner, with the kind of understatement that football club Chairmen specialise in, as ‘disappointing‘ (21).

The relegation to League 1 was a bitter pill to swallow given the already worrying state of finances.  Gardner however insisted that the new stadium was the way forward: “A new stadium is an essential part of our forward-planning and reflects the scale of ambition at the club” (22).  Oh dear, the A-word (ambition).  Perhaps the R-word (reality) might have been more appropriate.

The scale of ambition was certainly enormous – last August the board announced plans for a £150m redevelopment of Home Park (23)!  The following day, it emerged that the club had not paid their long-serving announcer since late in the previous season (24).

Things have just progressed from bad to worse since then, and I will assume that any reader who reached this point is already familiar with the failed 2018 bid, the further winding-up petitions from HMRC, and the worrying appearance of Peter Ridsdale.  I will spare you a repetition of his experiences at Leeds United and at Cardiff City (but see here if you want to read my previous postings on the Spinmeister).  Less well remembered are his days at Barnsley – he took over in October 2003 (25); when he left fourteen months later, new Chairman Gordon Stewart explained Ridsdale’s departure “The club was running into a financial position that was less than comfortable and it was clear cash had to be injected” (26).

For the Spinmeister himself to declare the situation at Plymouth as ‘dire and I can’t even find the words to put into context how bad it is. It is probably worse than you can imagine. This is a race against time‘ (27), one can only assume the situation is considerably worse than dire.

With the exception of bringing in Ridsdale as a ‘saviour’ – all I can offer as hope to the Green Army here is the thought that this might just be a case of fourth time lucky, although I don’t think it actually will be ;-(  – the situation at Argyle is one that could have happened at too many clubs – ‘benefactors’ who couldn’t or wouldn’t stay the course, overpaid players, cashflow insufficient to pay all staff on time, a high turnover of managers, a serious case of ‘stadium envy’, a casual attitude to paying HMRC, absentee investors, an absence of fan power…  It encapsulates most of what is wrong with English football, and offers a very depressing start to 2011.

Posted in 2018, Assets, Benefactors, Cashflow, Debts, History, HMRC, Insolvency, Investors, Ownership, Stadium | Tagged: , , , , , , , , , | 14 Comments »

Another fan rescue

Posted by John Beech on December 24, 2010

Following on from my posting yesterday, it is interesting to note that another ‘fan rescue’ has taken place this week, and one which may well have seen a club survive rather than fold, thanks to the generosity of one (or possibly  more than one) fan.

The matter had become public back in March, when Hartlepool United (singular since 1968 when the two boroughs of Hartlepool and West Hartlepool amalgamated, in case you’re wondering) raised a winding up petition against Billingham Town (1), who play in the Northern League Division 1.  The connection between the two clubs is that Hartlepool reserves play at Billingham’s Bedford Terrace ground.

As an outsider it’s quite difficult to get a sense of right and wrong in the dispute, and the two parties themselves do not agree on the facts.  Hartlepool have been seeking a sum of £10,443.97, and Billingham have been, and continue to be, seeking to distance themselves from the debt, saying it had been incurred by the ‘previous regime’.

According to the Billingham website, Hartlelepool had invested in the redevelopment of Bedford Terrace, but “in 2009 things turned sour with Hartlepool and [sic] when they took away the goalposts prior to Town’s first game of the season. Town’s committee hurriedly obtained some temporary posts and the game against Bishop Auckland took place.” (2)

Hartlepool responded to the story breaking with a detailed statement here.  One thing which seems indisputable is that the dispute between the clubs had been simmering for some time.

It has been in and out of court over most of the last year, and in October Billingham turned down the offer from an anonymous fan to pay off the debt (3).  The situation is complicated by the fact that Stockton Council own the freehold to the ground.

Matters came to a head this week.  The money has now been paid, and according to Billingham, “Hartlepool United have apparently found ‘a third party willing to make payment in full of all sums claimed under the winding up petition’. This was nothing to do with us and we do not even known the identity of that third party.” (4).  The Hartlepool version of events (5) refers to “third parties who did not want to see [Billingham Town FC] wound-up“.

My take on all of this is not to take sides – I don’t know enough of the facts – but rather to wonder how a customer, or customers, (i.e. fan, or fans) should step in to save a business (i.e. Billingham).  It just doesn’t happen in other business sectors.  It certainly doesn’t surprise me that a fan or fans should feel that strongly about their club.  What strikes me though is how again the fan proves to be the crucial stakeholder in the survival of the business, something which many a board should take note of.  Too many boards show a depressing indifference towards fans, an attitude which I find strange on business grounds alone.

~       ~       ~       ~       ~       ~       ~

A very merry Christmas and a happy New Year to all the blog’s readers.  Postings may be a tad patchy over the next week, but normal service will be resumed very early in the New Year.

Posted in Debts, Fans, Stadium | Tagged: , , | 5 Comments »

HMRC’s Christmas party

Posted by John Beech on December 20, 2010

I’m guessing that there will be dancing in the corridors at HMRC’s office party this Christmas.  They’ve had a good run in the courts over the last month against various football clubs.  So far this run has not included a single outcome of the club going into Administration (the last case was Dundee in October; see 1).  This might suggest a shift in attitude by football clubs towards HMRC, but I’m not so optimistic.  The evidence varies considerably across the clubs involved:

  • Hull City
    Hull have been skating on thin financial ice for some time now.  As the crunch match against HMRC approached, their bacon was saved by the expediency of new owners, the Allam brothers (2 ).  The £1m tax bill they are reported to have paid off needs to be seen in the context of debts of £5m to Barclays Bank and a further £7m in outstanding transfer fees (3).  A more recent report has the Allams paying a further £20m on taking over the club officially last week (4).  This is all good news for the club’s fans in the short term, with the immediate pressure off the club, but there will have to be drastic changes in the club’s business model if the haemorrhaging of money is to be stopped.
  • Plymouth Argyle
    As things stand currently, the club has just started a 63-day reprieve from the winding-up petition served by HMRC over a total of £700,000 in unpaid taxes (5).   As with Hull, a major change in business model is essential, probably achievable only through new ownership.  One piece of good news is that the spinmeister, Peter Ridsdale, is now longer involved in a possible takeover bid (6 and oh so many postings passim).  Hopefully the suicidal idea of a World Cup stadium will now finally die a death (see previous posting Are we going stark stadium bonkers?).
    The current board has appointed a financial adviser to help them (7), but fans might not feel greatly relieved as his background is at Southampton.
    The winding-up petition from HMRC has been adjourned until early February, but, with the prospect of cashflow problems because of the weather (8), things are not looking good.
  • Sheffield
    That’s not as in ‘Wednesday‘ or ‘United‘, but as in ‘Sheffield F.C. The Oldest Football Club In The World Est 1857 Ltd‘ as the company is known, who play in the Northern Premier League First Division South.  Trading on their (debatable) heritage hasn’t worked for them, and they were up in court against HMRC last week (9) – petition dismissed as the club had paid up.
    The club are planning a new ground (oh dear) and museum (well, maybe).  Like Plymouth they had hoped to piggy back 2018WC, but the club has a Plan B which they hope will still go ahead.  Time for a less ambitious Plan C perhaps
  • Sheffield Wednesday
    Matter here seem to have resolved themselves for the short and even mid term through a takeover and bail out by Milan Mandaric (10), who has cleared the £1.1m tax debt HMRC were pursuing.
    The only worry I would have as a Wednesday supporter would be his sense of long-term commitment – this is not his strong point, as fans at St Louis Storm, FC Lika, San Jose Earthquakes, Charleroi, Nice, Portsmouth and Leicester City can attest.
  • Welling United
    Welling, who play in , have been facing along term battle to pay off their debts, which had been as high as £90,000, to HMRC (11).  The club was back in court again at the beginning of this month (12), and given a further fourteen days to come up with the outstanding £60,000.
    The debt has been cleared through a very effective campaign of seeking loans (13).  This does not of course clear the debt, and the underlying financial problems are not resolved.
  • Windsor & Eton
    Up in court earlier this month, the club was granted a 56-day adjournment (14).  Hopes are pinned on negotiating a CVA and a possible new owner.
    A disputed figure of £48,000 tax debt has been quoted (15), dating back over five years.  Other debts of £87,000 were reported in October (16).
    What is likely to happen next remains unclear, but a small bet on the appearance of an Arab billionaire who doesn’t actually exist might be worth a punt.  ;-)

Plymouth and Welling in particular have not really resolved the issue of insufficient cashflow, and must be worried by the weather forecast (see Jack Frost and the threat to club finances).

My records show that historically the incidence of a club going into Administration rises during the season to reach a small peak in November, falls back slightly, but then rises steadily from January to a high in May.  Again, perhaps time for a modest wager here.  ;-)

To round off by returning to the HMRC perspective, during December they were also active pursuing two clubs in Northern Ireland – Newry reached an agreement with HMRC (17), and Glentoran have until mid-January to resolve tax debts reported to be around £300,000 (18).

As we are entering the period of mandatory jollification, I thought a competition might be in order (as my Christmas motto is ‘Bah Humbug’, there will be no prizes though).  So the challenge is to suggest the most appropriate song to be played at the HMRC office party for its staff working on football club cases…

Posted in Debts, HMRC, Insolvency, Stadium | Tagged: , , , | 4 Comments »

The trouble with new stadiums 4 (and final)

Posted by John Beech on August 10, 2010

[See also The trouble with new stadiums 1, which looked at the argument that "We’re a club with ambition and we need more seats to reflect that ambition", The trouble with new stadiums 2, which looked at the argument that "We’ve got the wrong sort of stadium.  We need one better suited to maximising our revenue streams.", and The trouble with new stadiums 3 which looked at the argument "There’s this amazing property deal we can do. We’ll sell the old stadium for redevelopment and there’ll be loads of money to build the new one.".]

This final posting in the series looks at whether there are cases where a new stadium can be justified, and begins with a look at Premier League clubs, for it is at this level one might expect to find any evidence that a new stadium has been a successful strategy – it is these clubs which have the highest revenues and which should thus be in the strongest financial position to finance a new stadium.

First, the big 4.  Of these, only Arsenal have opted for a new stadium, Chelsea and Manchester United having opted for stadium redevelopment, and in Manchester United’s case considerable expansion of seating capacity.  Arsenal have made a reasonable success of the new stadium, the only significant qualification being the downturn in the property market which has hindered the redevelopment of the old Highbury site.  Liverpool have opted for a new stadium policy – they could certainly justify an expansion of capacity – but their financial situation, with debts of £350m, doesn’t augur well for the timing of such a strategy.

Three of the big 4 have particular local rivals.  Manchester City are a rare example of “If it seems too good to be true, it may actually still be true“.  The financial deal that Manchester Council offered them was definitely a very attractive one, and they would have been fools not to have accepted.  Everton are in a similar situation to Liverpool – the sound business case for a new stadium is rather weakened by the debt level they try to go forward from.  Tottenham’s plans for a new stadium next door to the current one have got bogged down in the planning process – the government’s advisor on architecture, urban design and public space, the Commission for Architecture and the Built Environment, have objected that “an overall masterplan for the site is not evident: the three components – the stadium, supermarket, and housing – feel like very separate projects without convincing spatial relationships between them” (2).

Overall the situation in the Premier League

  • The clubs with new stadiums: Arsenal, Bolton Wanderers, Manchester City, Stoke City, Sunderland and Wigan Athletic, a total of six.  Of these, only Wigan has ‘shown ambition’, built a new stadium, and risen up the pyramid.  Notwithstanding the professed objection of their Chairman, Dave Whelan, to a ‘debt culture’ (3), the club has only once turned a profit in the last eleven years, and in its most recent accounts has long-term liabilities of just under £48m – it’s dependent on its benefactor for its continued existence.
  • Those with new stadium plans of varying seriousness and immediacy: Birmingham City, Everton, Liverpool, Tottenham Hotspur and West Ham United, a total of five.  West Ham would have fallen into the next group but for the exceptional possibility of ‘doing a Manchester City’ at the 2012 stadium.
  • The rest, who have in varying degrees redeveloped or plan to redevelop their existing stadiums: Aston Villa, Blackburn Rovers,  Blackpool, Chelsea, Everton, Manchester United, Newcastle United, West Bromwich Albion and Wolverhampton Wanderers, a total of nine.

    The evidence that building a new stadium is a sensible strategy is thus not strong even where you might expect to find it.

    In the Championship, Cardiff City, Coventry City, Hull and Preston North End have all paid a high price in opting for a new stadium.  Middlesbrough and Reading have survived a new stadium through the benefaction of Steve Gibson and John Madejski respectively.

    The decision to opt for a new stadium rather than redevelopment is of course a leap, with no in-between option.  The scale of cost does however vary.  From my own data, I estimate that the cost per seat can vary by a factor of over 10, so there may be some scope for restraint at the planning stage in order to make a planned new stadium more viable.

    Now, most fans will be tempted to put a case that their club is an exception.  “The current stadium is particularly awful/inappropriate/decrepit” (remember, I’m a Pompey fan) is a frequent lament.  I would argue that only in one group of clubs are there exceptional circumstances – clubs in exile or with a lease which cannot be renewed – but even in this case the danger is that optimism overrides realism.  It would be mean-spirited to do other than wish, for example, Brighton and Hove Albion well in the new Falmer Stadium when it opens next year, but the project does carry with it the assumption that Tony Bloom’s benefaction and committment are long-term.  I’m certainly not suggesting that there is any reason to think otherwise, merely pointing out that there is a risk associated with the development.

    There may even be a case for a very small group of clubs who may reasonably expect to be on a longer-term ascendancy through the pyramid AFC Wimbledon and FC United of Manchester are the obvious ones that spring to mind.  Even at the lower levels of the pyramid there is no reason in principle why a club on the ascendancy should not develop a realistic model to develop a new stadium.  A club to watch in this context is Runcorn Linnets, who offer a different approach to building a stadium by virtue of the fact that they are owned and operated by a Supporters Trust.  Perhaps it is the case that fans are only really realistic when they have chosen not to follow the broken benefactor model of ownership.

    Posted in Assets, Costs, Debts, Stadium | Tagged: , , , | 13 Comments »

    In another High Court move, ‘Watford v. Gillingham’

    Posted by John Beech on August 4, 2010

    I’m currently on leave, but huddled over my laptop following HMRC v. Portsmouth, courtesy of Portsmouth Evening News and Dan Roan on Twitter.  Latest news is that the court has adjourned for the day, and at least an executive summary of Mr Justice Mann’s judgement can be expected later on tomorrow afternoon.

    In the fairly lengthy gaps between anything happening which is interesting enough to transmit, I came across this rather intriguing story (1).  It seems that Valley Grown Foods, a company owned by the Russo brothers, who were directors of Watford, is suing Paul Scally, chairman of Gillingham, over the non-repayment of a loan of £250,000, made in December 2007 (the second such commercial loan).

    The Russo brothers have a history of play-making.  In December 2008 during a fairly turbulent period of the club’s history, the Russo brothers placed a motion of no confidence at a Watford EGM.  One outcome of the meeting was the resignation of Chairman Graham Simpson.  Shortly afterwards Chief Executive Mark Ashton resigned (2), to be replaced by Graham Taylor (3).  In March Jimmy Russo succeeded Graham Simpson as Chairman (4), and a few weeks later Sir Elton John returned as Honorary Life President (5).

    In May 2009 Jimmy Russo was reported to own 30% of the shares (6) of the financially stretched club.  In November it was reported that Valley Grown Foods had, by then, lent the club a total of £3.7m (7), and by the end of the month they had lent the club a further £1m (8) as the club faced severe and immediate cashflow problems.  These loans were secured against Vicarage Road (9).  On 15 December the Russo brothers and one other director resigned from the board (10), seeking the return of the various loans (11).  Jimmy Russo refused to defer repayment and threatened to put the club into Administration (12).  Lord Ashcroft stepped forward to save the club, but on terms unacceptable to the Russo brothers (13).  However, fortunately for the club, a deal was thrashed out (14), but not before Graham Taylor had called Jimmy Russo a ‘bad man’ (15).

    None of this can make for terribly comfortable reading for Paul Scally then.

    The timing of the loan – 5 December 2007 according to the writ – to Scally is particularly interesting.  The day before (4th), the BBC website reported that Scally was proposing to sell Gillingham’s Priestfield stadium and lease it back, in order to ease the club’s debt (16).  The day after (6th), they reported “Scally reveals Gills stadium plan:  Gillingham FC’s chairman has proposed selling the Priestfield Stadium to a company of which he would be sole owner – and then leasing it back to the club” (17).

    UPDATE – 8 August 2010

    Paul Scally has assured Gillingham fans that the debt dispute has nothing to do with the club (A).  With respect to any connection with the purchase of the stadium by Prestfield Developments Ltd. he said “It’s completely unconnected. I don’t know what the timing of it was and I don’t know where that’s come from. It’s got absolutely nothing to do with Priestfield Developments.

    UPDATE – 1 March 2011

    Jimmy Russo has won the court case (B).  It was revealed that Gillingham are now £13.5m ‘in the red’.

    Posted in Debts, Ownership, Stadium | Tagged: , , | 1 Comment »

    The trouble with new stadiums 3

    Posted by John Beech on July 26, 2010

    [See also The trouble with new stadiums 1, which looked at the argument that "We’re a club with ambition and we need more seats to reflect that ambition", and The trouble with new stadiums 2, which looked at the argument that "We’ve got the wrong sort of stadium.  We need one better suited to maximising our revenue streams."]

    The third argument that is often put for building a new stadium is:

    • There’s this amazing property deal we can do. We’ll sell the old stadium for redevelopment and there’ll be loads of money to build the new one.

    My first reaction to this is, I would have to admit, intuitive.  I’m a believer in the maxim that, if something looks too good to be true, then it probably is too good to be true.

    On the basis of evidence however, I would argue that in far too many cases two problems arise when this argument is out forward.

    Firstly, there may well be concerns as to who exactly ‘we’ refers to.  Does it refer to the club as ‘construct’, or to the club as ‘company’?  In other words, who will see the benefit financially – the club itself or the owners?  Or in the case of Southend United, the Chairman and his family (1).  The core issue is as much one of transparency as one of the rights and wrongs of who benefits.  Unless who precisely benefits is made clear from the beginning, fans may well end up feeling they have been misled.

    The second problem is the understandable euphoria that the announcement of plans for a new stadium brings.  It also tends to bring a lack of realism on both the potential costs and the potential for delays resulting from, for example, planning problems.  In the latter case, it never ceases to amaze me that clubs do not anticipate that planning to build in a green belt area might just invoke some opposition.  Even having the local council ‘onside’ is no guarantee that there will be no problems – an election can mean going back to square on.

    What tends to happen as costs escalate and planning battles rage on is that any Plan B becomes forgotten, and the club’s board become obsessed with pushing through their Plan A as a matter of dogma.  All too often it is not just a case of dogma; it’s a case of having become embroiled with developers.  The board have manoeuvred the club into a position where they cannot back out – the new supermarket rather than the new stadium is what it is then all about.  Which takes me back to the exception I mentioned in my previous posting – if the owner’s expertise lies in property development it may become difficult to keep focus on the best interests of the club.

    I suspect, if you have now read all three of my postings, that you may well have gathered that I am not a fan of the ‘new stadium’.  To be fair, I have been arguing my case as a generalised one.  There are cases where there are exceptional circumstances which mitigate strongly towards building a new stadium, and I’ll turn to these shortly in a fourth and final posting in this series.

    Posted in Assets, Stadium | Tagged: , | 3 Comments »

    HMRC v. Sheffield Wednesday

    Posted by John Beech on July 24, 2010

    Sheffield Wednesday are the latest club to face a winding-up petition from HMRC (1), over a PAYE debt of £550,000.

    But Sheffield Wednesday is not your average club.  A founder member of the Premier League, its playing performance has been somewhat variable since.  Relegated in 2000, it faced a further drop to League 1 in 2003, bounced back to the Championship in 2005, only to be relegated again this summer.

    In spite of this yoying, which makes financial control a particular change, the club had managed to turn a profit before tax in 2006/07 of £1.5m and in 2007/08 of £2.2m, although worryingly the most recent figures, for 2008/09, show a loss of £3.7m.  Also worrying for the club is that the all important salaries/wages ratio, which for four consecutive seasons had been below the ‘good practice’ mark of 60%, leapt up to 73% on 2008/09.

    In the annual report for 2008/09 Chairman Lee Strafford said “…Sheffield Wednesday is a good long-term opportunity for investors who are focused upon developing the strategy that has now been put in place.  There are a number of possible investors looking at the plans and assessing the potential, but your board has drawn up these plans with a view that the continuing support of the Co-operative Bank and the other debt holders the club can be taken forward with or without investment.  This is a credit to the longer-serving and former directors who have ensured that the club continued to remain within its agreed banking facilities, which have been renewed until 31 December 2010.  The Group’s net debt has been reduced by a further £0.3m during the year from cash generated from operating activities and player trading in the prior year.”  This might be decoded as “We want out.  We are beholden to the goodwill of our bank.

    And that goodwill is being stretched.  The most recent data I have indicates that the club’s debt to the Co-operative Bank is just over £24m, consisting of an overdraft of over £9m, a loan for the training ground of over £9m, and parked debt of over £5m.  I read reports on fans’ forums that the club’s overall debt is over £30m.  For a club dropping to League 1 this is a very high level.  My research shows that clubs in League 1 generally begin to get into trouble when debt levels reach £1m, and even for those in the Championship the corresponding level is £3m.

    If the club fails to pay HMRC before 11 August, the date the winding-up petition is due to be heard, and it is far from clear at this stage that they will manage to, the prospect of Voluntary Administration hoves into view, with the prospect of new owners looking for a bargain price.  Prospective owners there have certainly been of late, the most recent being a long-running and ultimately unsuccessful attempt by Geoff Sheard and a ‘London-based international consortium’ (2).

    Key in negotiations is the 10% holding of Wednesdayite, the Sheffield Wednesday Supporters Society (see here), which is good news from the fans’ perspective.  However, if the club were in Administration, this hardly puts them in a position of strength.

    The implications of failing to beat, ironically enough, Crystal Palace on the last day of the season, thus being relegated, may prove far-reaching.

    One thing I have not mentioned so far is that last October the club won approval for an expansion of Hillsborough from 39,000 to 45,000 seats, due for completion by the end of 2013 and at cost of, wait for it, £22m.  For the record, the average attendance last season when still in the Championship, was just above 23,000.  Comment is superfluous.

    Posted in 2018, Debts, HMRC, Pyramid movement, Stadium, Trusts | Tagged: , , , , , | 2 Comments »

    Self-destruction at Ashford Town (Kent)?

    Posted by John Beech on July 21, 2010

    The announcement yesterday (1) by Chairman Don Crosbie that the club was to be placed into Administration might be interpreted as a case of too much dogma and too little karma.  Already reported to be facing a winding-up petition from HMRC (2) and banned from football activity by the FA (3), he had earlier in the day withdrawn the club from the Isthmian League (4).  The club is seeking to join the Kent League (5), but faces a race against time, and may disappear through lack of a league to play in.

    This is all a far cry from the heady days when Don Crosbie and Tony Betteridge took over the club in April 2007 and, as the club website put it “instantly set about transforming things” (6).

    The first obvious sign of trouble at the club was in March 2009 when Crosbie revealed that plans for a new ‘sporting village’ (that’s a new super-stadium in old money) were in tatters as the club faced a massive bill from HMRC and that he and Betteridge had fallen out massively (7 and 8).  Crosbie said “I have personally been responsible for a number of bills; both leading up to and during this current season. I paid for the ground repairs and pitch improvements. I have also been responsible for the wages and bills for the club since early October.”  Why ‘financial doping’ should be seen not only as acceptable but actually admirable at this level in football escapes me.  It is the scourge of the game at higher levels and UEFA at least is trying to eradicate it.

    Betteridge responded that Crosbie’s statement was “full of inaccuracies“, which, if nothing else, implicitly confirmed a massive falling out.

    Confusingly, in early April Crosbie claimed that the sporting village plan was back on track, and that he had agreed a deal with Betteridge to buy the latter out (9).

    The following month the club was charged by the FA in connection with a failure top pay players’ wages (10).

    The transfer of Betteridge’s shares to Crosbie did not take place, and in last month Betteridge began winding-up proceedings against the club (11).  Betteridge, it should be noted, holds the freehold to the club’s ironically named Homelands ground (12).

    Throw in a major bust up, the subject of possible legal proceedings, with Maidstone United, who are in exile at the Homelands, but have been told by Crosby that the ground-sharing agreement has been revoked (13).

    All in all, not a textbook example of good business practice.  It seems to be a case of, if one benefactor is bad news for your club, then two who fall out are considerably more than twice as bad.  Food for thought there for fans at other clubs with two benefactors – no names, no pack-drill.

    ASHFORD TOWN (K) UPDATE21 July 2010

    The hearing for the club’s application to go into Administration is set for Thursday (A), and it looks set to be a Crosbie v. Betteridge blockbuster.  The debt to HMRC is reported as £150,000, so no doubt they will be following the hearing with interest.

    Posted in Benefactors, Debts, HMRC, Insolvency, Ownership, Stadium | Tagged: , , , , , | 1 Comment »

    The trouble with new stadiums 2

    Posted by John Beech on July 8, 2010

    [See also The trouble with new stadiums 1, which looked at the argument that "We’re a club with ambition and we need more seats to reflect that ambition".]

    The second case put for building a new stadium is:

    • We’ve got the wrong sort of stadium.  We need one better suited to maximising our revenue streams.

    The first part of this argument I have no real problem with.  Virtually all English football stadiums are either ‘new’ (less than twenty years old) or ‘old’ (from the Victorian era), and, if your club’s stadium is in the latter category, then it is almost certainly suboptimal for players, fans and revenue generation.  Remember, I’m a Pompey fan, and Fratton Park was a disgrace for a Premier League stadium.

    ‘We need a better one’ in these circumstances can then seem perfectly reasonable.  However, there are two key questions a club needs to ask itself: a) Can we afford it? and b) Is this the most effective way of maximising revenue streams?

    I suspect that in 99 cases out 100 the answer to the first question is a resounding ‘No!’.  Show me the clubs which already have the financial reserves to consider spending on a new stadium!  The new stadium will have to be financed, and if the club is worried about failing to maximise its revenue streams it needs to have a cast iron case that new revenue streams will be sufficient to even cover the cost of the loans needed to finance the new stadium.  Of course there will be exceptions, but it is worth bearing mind that even Arsenal, with a clear need for a bigger stadium and a sound business plan to finance it, have struggled because of the drop in house prices, and the subsequent difficulty in selling the houses on the stadium site.

    If you want to maximise your revenue streams, the basic strategy model which is used for deciding the best way to grow your business is one called Ansoff’s Matrix.  This model considers whether to look at existing or new customers, and existing or new markets.  (There is a useful visual representation here which makes it much easier to follow.)  The 2×2 nature of the matrix results in four possible strategies, each with differing levels of risk.

    The safest is ‘market penetration‘ – developing the sales of existing products to existing customers.  In other words, the simplest and most effective growth strategy for the vast majority of clubs, which have empty seats on a match day, is to try and get more bums on seats.  Clubs like FC United of Manchester have tried interesting tactics with pricing to achieve this, such as varying the price that fans pay to get a season ticket (see 1 for a discussion of imaginative ticket pricing, and 2 for FCUM’s approach).  Experimenting with different pricing strategies, such as BOGOF (buy-one-get-one-free), is quick, easy, low risk, and provides a useful indication of whether growth is possible – if you can’t get more bums on seats with this kind of approach, where’s the rationale for a new, bigger stadium?

    Next two to consider, of medium risk, are:

    • Product development - developing new products for existing customers
      In other words you find new goods or services to sell to your existing fans.  I’ve blogged before (see On clubs and club shops) on what I see as an unimaginitive range of merchandising that club shops offer, and clubs could do a lot more with this medium-risk strategy that does not require vast capital investment.
    • Market development – developing finding new markets for the existing products
      In other words you recruit new fans.  Clubs do make efforts here, trying to encourage whole families to attend games for example.  More could be done, and again without vast capital investment.

    The final strategy is the one with the highest risk – Diversification, in other words, moving into to some other area to find new customers to buy new products.  It’s here that the new stadium certainly raises it’s ugly head – without a new stadium we don’t have the right facilities to be able to do this, the proponents moan.  Of course, they are right, but they fail to recognise the attendant problems.  The problems with this case are twofold.

    The first is the obvious argument that it is the highest risk strategy, and comes at the highest cost.  It simply does not make sense to attempt it until all the lower risk, lower cost strategies have been tried.

    The second problem arises with what exactly the new products to be sold to new customers are.  A good rule of thumb is that the nearer the ‘fit’ with the existing product – in our case, football matches – and the nearer the fit withthe market – in our case, football fans – the better, the lower the new risk.  Why, oh why, then, do clubs who pursue this strategy look to build a new stadium complex with a hotel, restaurants or shops?  Could it just be that they think they are already in these businesses through their experience in ‘hospitality’?  I would suggest that there is a gulf of blue water between ‘pies & bovril’ and even prawn sandwiches, and I know I’m not alone in this view!  Similarly they see themselves as involved in ‘events management’ and see a connection between operating on match days and running conferences.  As someone who attends both, I would again argue that there is deep blue water between attending a football match and attending a four-day conference – they are world apart in terms of customers and the service these customers are looking for.  I would argue that the poorness of fit is every bit as big as it is with running a supermarket.  In a nutshell, building the new stadium with a conference centre attached is as sensible as an existing conference centre which is in poor financial shape deciding to build a new conference centre with a football stadium attached to ‘maximise revenue streams’.  Even if you sub-contract the running of the new business ventures, you’ve set up two poorly fitting businesses on the same site – not a recipe for success.

    I’m sure you realise, and I readily, that I am generalising (and I’ll be looking at some exceptions in a later posting).  There is one way of lowering the risk in a diversification strategy, and that is to diversify into something which, for example, the owner is experienced, an area in which he made his fortune which is he is in danger of turning into a small fortune.  That is, with one major exception, which I will be looking at in my next posting in this series.  To give a wee hint as to what I see as the one exception that does not reduce the club’s risk, I’ll just remind you of the third case that is put when a new stadium is proposed:

    • There’s this amazing property deal we can do.  We’ll sell the old stadium for redevelopment and there’ll be loads of money to build the new one.

    Posted in Assets, Marketing, Merchandising, Revenues, Stadium | Tagged: , , , , | 2 Comments »

    HMRC v. Bradford Park Avenue

    Posted by John Beech on July 5, 2010

    Latest club (joining Grays Athletic, Ilkeston Town, Preston North End and Southend United) to receiving a winding-up petition from HMRC is Northern Premier League club Bradford Park Avenue (1).  The club is a resurrection club, having been formed in 1977 following the demise of the eponymous erstwhile Football League club in 1974.  At the time of writing, there has been no acknowledgement, let alone comment, on the club website (2).

    I have to admit that my file on ‘The Avenue’ is a pretty thin one.  Certainly over recent years they have had a distinct lack of continuity in their managers, which suggests at least some tensions.  In 2008 Chief Executive announced plans for a new stadium with a capacity of 20,000 (see The trouble with new stadiums – recent attendances have generally been below the 500 mark [3] although the Horsfall stadium has 1800 seats and a capacity of 5,000).

    Any informed insight from readers would be much appreciated.

    BRADFORD PARK AVENUE UPDATE – 6 July 2010

    The debt in question is a four-figure sum (A).  Director Kevin Hainsworth says “Somebody told [HMRC] in all good faith that the tax bill would be paid by a certain date and it went beyond that.  Even though I had spoken to HMRC and told them it would be delayed by a couple of weeks, they just went ahead with this petition.”  Whatever next! ;-)

    Posted in Debts, HMRC, Insolvency, Stadium | Tagged: , , , | 3 Comments »

    The trouble with new stadiums 1

    Posted by John Beech on June 27, 2010

    You may have noticed – I am not a fan of the new stadium.  At the Supporters Direct Conference I spoke briefly about ‘the myth of the new stadium’, and over a couple of postings I’ll  elaborate on why I don’t, in general, rate them.

    Broadly, there are three lines of argument that are trotted out by the boards of clubs when the subject is raised:

    • We’re a club with ambition and we need more seats to reflect that ambition.
    • We’ve got the wrong sort of stadium.  We need one better suited to maximising our revenue streams.
    • There’s this amazing property deal we can do.  We’ll sell the old stadium for redevelopment and there’ll be loads of money to build the new one.

    In this first posting, I’ll look at the first of these not entirely mutually exclusive issues.  It’s an important one not only with respect to the case for a new stadium, but also for the all important issue of the proposed size of the new stadium.  I have yet to come across a case where the proposed new stadium is actually the same size as the existing one, let alone smaller.

    The recently published Deloitte report National Interest: Annual review of Football Finance [which is based on accounts, and hence on financial years, but is in effect covering the 2008/09 season] reveals some very interesting data on both stadium capacity and attendances, from which load factor (the percentage of seats occupied) can be calculated).  The reduction in capacity caused by compulsory seating and the seeming popularity increase in football may lead one to assume that stadiums are bursting at the seams every other Saturday.  This is certainly not the case.

    Here is the summary of the data for the ‘average’ club in each of the top 4 tiers:

    • Premier League: Capacity 38,593; load factor 92%
    • Championship: Capacity 25,437; load factor 70%
    • League 1: Capacity 14,424; load factor 52%
    • League 2: Capacity 11,622; load factor 36%

    If you assume 95% load factor is getting on for a full house and a point at which you might seriously consider the need for a bigger stadium, then it’s only really in the Premier League that this is the case.  Of course this is data for the average club, and we need to look at individual clubs.  The only clubs which achieved 95% load factor were:

    • Premier League: all clubs except Aston Villa (93%), Blackburn Rovers (75%), Bolton Wanderers (81%), Everton (89%), Manchester City (90%), Middlesbrough (81%), Newcastle United (91%), Sunderland (82%) and Wigan Athletic (73%).  Some of these lower load factors reflect the fact that the club has already built a newer, larger stadium.
    • Championship: none – the closest was Norwich City with 94%, followed by Cardiff City [then at the old ground] on 89% and Derby County on 88%.
    • League 1: none – highest was Northampton Town on 71%.
    • League 2: none – highest was Luton Town on 59%, followed by Shrewsbury Town on 57% and Exeter City on 56%.

    On this basis then, the only clubs with a sound argument for building a new, larger stadium are a handful of Premier League clubs and Norwich City (although in their case the blip in League 1 might have given them cause for thought, but not for long; sensibly they are planning an increase to the capacity of Carrow Road rather than a new stadium [1]).  Least in need of a larger stadium was, unsurprisingly, Darlington on 12%, followed by Rotherham on 14% (but they were already in exile in the 25,000 seater Don Valley stadium) and Notts County on 22%.

    The ambition or need argument simply does not wash for the vast majority of clubs.  ‘Ah’, you cry, ‘but what about the other two arguments?  Surely you’ve only confirmed the need to develop other revenue streams, which justifies a new stadium!’

    Erm, actually no.   Watch this space for upcoming postings!

    Posted in Stadium | Tagged: | 7 Comments »

    Crystal Palace’s Park is its castle

    Posted by John Beech on June 2, 2010

    Yesterday provided a good example of the potential power of social media in reporting breaking news.  Sadly the Twitterati were more concerned with reporting from Theo Walcott’s golf club than from the meeting where Crystal Palace would ‘do or die’.  As we now know, they have, thankfully, lived to fight another day.

    At the heart of yesterday’s crisis meeting was the terms of any future sale of Selhurst Park.  The CPFC 2010 consortium, prospective new owners, were at crunch point in the negotiations to buy the club, from one Administrator, and the stadium, from a second Administrator.  Their desire to reunite club and stadium makes sense from every point of view and is a sign of a healthier future.

    Club and stadium had first become separated in 1998 when then owner Ron Noades sold the club to Mark Goldberg, but retained ownership of Selhurst Park.  The club was then struggling financially, but a ten-year lease was agreed.  Goldberg appears to have been under-funded as a benefactor, and in 2000 Simon Jordan acquired the club.

    In 2006 Jordan claimed that he had acquired the freehold on Selhurst Park (1), but it transpired that Nodes had in fact sold the ground to a company owned by 60% by Paul Kemsley and 40% by HBOS (the ‘BOS’ being Bank of Scotland [now 40% itself owned by the UK government], not the Royal Bank of Scotland [an entirely different bank, now owned 84% by the UK government]).  Jordan however persisted in claiming that he was de facto owner of the ground (2), although also claiming that he had a 25-year lease.  The actual ownership has been a complex saga, a detailed account being published by David Conn in The Guardian in October 2008 (3).

    To cut a long story short, the recent history of both the club and the stadium has been deeply troubled financially, and Simon Jordan has become increasingly demotivated.  In June 2009, Rock Investments, the Kemsley company which then owned Selhurst Park, went into Administration (4).  By August 2009, the club was hit with a transfer embargo following a dispute over unpaid bonuses and signing-on fees from last season (5).  Jordan pumped a further £5m into the club (6), but in January this year, under a second transfer embargo, the club was forced into Administration by property company Agilo, who had been supporting the club with loans (7).

    A credible rescue attempt, taking over both club and stadium, would thus necessitate complex negotiations with not one but two different negotiators.  Again for the sake of brevity, we reached the situation where the CPFC 2010 consortium had reached agreement in principle to buy the club, but negotiations for the purchase of the stadium were in stalemate.  The problem was over the rather oddly termed ‘anti-embarrassment’ clause that Lloyds, owners of HBOS, and the major creditor of the stadium, were seeking to impose.

    This ‘anti-embarrassment’ clause covered the situation if the new owner subsequently sold the stadium for a profit.  This might seem an academic point given Croydon Councils stated policy regarding the use of Selhurst Park for football, but Lloyds appear to have agreed a price that was less than might have achieved had they chosen to press for a change in policy and then sell Selhurst for property redevelopment.  Not surprisingly then, they were not prepared to see the CPFC 2010 consortium possibly make a profit at their expense at some time in the future.  The CPFC 2010 consortium felt that, in the unlikely event, they would not be prepared to see Lloyds profit from any investment they (the consortium) had subsequently made in developing the infrastructure at Selhurst Park, which would presumably bolster any resale price.  Academic, yes, but, given the figures involved, a matter which needed to be resolved before pens were put to paper.

    A complication in the negotiation of the sale of the club to the CPFC 2010 consortium had been Simon Jordan’s agreement to the proposed CVA.  As a ‘benefactor’ who had pumped his personal money into the club, it is perhaps not surprising that he was reluctant to lose both ownership of the club and a considerable amount of money.  The proposed figure of 1p in the pound to be paid to creditors was hardly an enticing offer.

    Fortunately common sense seems to have prevailed all round (I’m tempted to say ‘for once’) and agreement has been reached for both sales to the consortium.  For once, the future for Crystal Palace looks brighter, if not yet rosy.

    The generic lessons of this sorry sage are clear:

    • The separation of ownership of club and stadium is a dangerous road to go down, even if a lengthy sell-and-lease-back arrangement is agreed.  In fact, the longer the period, the greater the exposure to risk of being unable to pay the lease, let alone invoke a buy-back clause.  Think Leeds United.
    • The generosity of a ‘benefactor’ is really stretched when he faces losing both ownership and his money.  The latter presupposes the former after all.

    Clear lessons to be learned for far too many club.  will they have been universally learned?  Frankly, it seems unlikely.

    Posted in Assets, Benefactors, Debts, Insolvency, Ownership, Stadium, Transfer embargo | Tagged: , , , , , , | 1 Comment »

    The continuing Kettering saga

    Posted by John Beech on May 30, 2010

    The descent of Grays Athletic must have struck a worrying chord with Kettering fans.  Back in January I blogged on their tribulations (under Kettering Town and the Enigmatic Imraan Ladack) in finding somewhere to play as the lease on their stadium comes to a conclusion, and will not be renewed.  He had at that point become disillusioned following a protracted confrontation with the Football Association, and announced that he was standing down as Kettering’s Chairman.

    Last month he paid the fine he owed the FA and resumed the role of Kettering’s Chairman (1).  Not only was he back, he was back at his enigmatic best.  Consider this exchange in an interview with Jon Dunham of the local Evening Telegraph (2):

    JD: “Do we still call you the ‘owner’ or will you be returning as chairman, as was stated on the website when it said you would be resuming your duties as chairman?”

    IL: “I will chair board meetings.”

    So, presumably he is Chairman again, but was rather less committal on whether he remains owner.

    Another classic exchange in the interview was:

    JD: “Can you either confirm or deny the popular rumour about Kettering Town and Rothwell Town merging?”

    IL: “I can deny this is a popular rumour.”

    I would have to admit that I not only find his answer enigmatic, but also devoid of meaning.

    Rothwell Town, which is just over four miles from Kettering and the AA website suggests a driving time of 10 minutes between the stadiums, play in the Southern League Division 1 Midlands, and are in financial difficulty, with debts reported to be £350,000 (3).  Things have reached a point that the club has now been forced to withdraw from the Southern League for the coming season (4).

    One option would be to sell their social club and car park land, but, from what I can gather, using the social club is probably a more popular activity than attending football matches.  It would also seem that the it is the social club which is at the root of the debts.

    A second option would be to find a new benefactor, and at least one name is in the frame – Pino Colonna, already a director of Rothwell Town (5).  Before his name appeared as a would-be saviour, another benefactor had come forward – one Imraan Ladack (6), offering to pay off Rothwell town’s debts.  Precisely what he and Kettering Town might get out of such a deal remains unstated, if open to obvious speculation.  However, Ladack has subsequently withdrawn his offer to Rothwell (7).

    His focus now seems to be back at Kettering Town’s Rockingham Road.  Options he is likely to be exploring are purchase of the ground from the landlord and/or negotiating a new lease.  Perhaps he is even trying to rebuild bridges with Kettering Borough Council so that alternative sites for a new stadium in Kettering can be explored.  Time is running out though – the club’s lease (which it first acquired on a sale-and-lease-back basis in the eighties) expires in 2012.  The pressure is on Ladack to avoid following the path of Grays Athletic.

    [Does anyone have any news on what is happening at Cromer Town, where the lease on their ground is also due to expire in 2012?]

    Posted in Assets, Benefactors, Ownership, Stadium | Tagged: , , , | 2 Comments »

    The descent of Grays Athletic

    Posted by John Beech on May 28, 2010

    As I said in my last blog post Appendix E: Tough Love for Salisbury City?, Grays Athletic face a rather worse fate rather than straightforward relegation to the Conference South.  It’s a depressing tale, and one can’t help feeling it was an accident waiting to happen to a club.

    The club had faced and survived a crisis at the beginning of the eighties.  In 1981 they seemed to have achieved a significant measure of stability when, as it still says on the club website (1 ) as I write, “the Club Patron, Mr. Ron Billings, ensured the future of Grays Athletic at the Rec by purchasing the ground“.  What it doesn’t mention is that Ron Billings and his family were  property developers (oh dear, you can almost guess at this point the way this is going to go).

    Shortly after this, new management came in, and the club started to make progress.  In 1983 however, a fire destroyed the main stand, but again benefactor Ron Billings stepped in, building the Ball Court Complex which included Dressing Rooms, Club Room and Bar (2).

    In 1990 a new 20-year lease was signed and all still looked well, but it is the coming to an end of this lease that has precipitated the current crisis.  It needs pointing out though that the club has had twenty years to prepare a ‘plan B’ in case the lease was not renewed.

    Ten years ago Micky Woodward appeared on the scene.  He’s a difficult man to summarise – ‘eccentric’ springs to mind, as does ‘inconsistent’.  For example, in 2003 he tried to buy Peterborough United (3), but, having failed, turned Grays into the first club beyond the Conference to be full-time (4).

    As Chairman/Director of Football Woodward has had, well, unusual relationships with his managers.  At the end of May 2006 Woodward recruited Frank Gray as manager (5), only to sack him five months later (6) and to take on the managerial role himself (7).  “Why pay someone else to run the club when I can do it?” as he put it.  Three weeks later he seemed to have found the answer to this rhetorical question, appointing Andy King as manager (8).

    By the end of 2006 Woodward had started to address the issue of a stadium lease due to run out in 2010.  It was reported that Woodward had an option to buy the New rec from the Billings family, and would sell it fund a new 5,000 capacity stadium nine miles away (9).  Given the density of football clubs, all with strong local identities, it is perhaps not surprising that reaction was at best mixed.  In preparing these plans, Woodward felt that Thurrock Council had not been very supportive (10).

    Shortly afterwards Woodward appointed manager Gary Hill as Director of Football (11), only to announce three hours later that Hill had changed his mind (12).  A few days later he had to admit that in fact he had withdrawn the offer to Hill rather than Hill withdrawing his acceptance of the post (13).

    Woodward has over the last few years faced opposition and abuse from fans, never courting cheap popularity.  These confrontations led on one occasion to Woodward even threatening to take the club back to the Essex Senior League (14), a threat which has unfortunate resonances today.

    By November 2007, sites were still under consideration for a new stadium, but there was talk of temporary ground-sharing (15) as the clock ticked on.

    In February 2008 it was again ‘goodbye’ to a manager (Justin Edinburgh this time) and Woodward, obviously forgetting the answer to his previous rhetorical question, took over again as manager (16), even planning a long stay in the post (17).  In September he again reacted to criticism from fans, announcing that he was putting the club up for sale (18).

    At the start of the following season players were forced to take a pay cut following the withdrawal of sponsorship (19), and players were allowed to leave (20).   Woodward was reported as saying the club  “would have ceased to exist within six months without drastic financial cutbacks” (21).  Following a succesful Cup run, the wages were however paid (22).  As the season progressed, players were nonetheless released (23).

    At the start of this season Woodward stepped down as Chairman and Chief Executive, but remained a director (24), again citing fan abuse, although not offering a considered analysis of the causes of the abuse.  Since then there have been a number of changes at board level, Andy Swallow being progressively described as Deputy Chairman, Chairman and most recently owner.

    Attempts at interim ground-sharing all seem to have come to nought, and the club has found itself facing the drop not into the Conference South, and not even into Isthmian League, the Football Association declining to allocate the club a place there.

    What will happen remains distinctly unclear.  An appeal has been launched with the FA against the decision to place them in Step 5 (25), but without a ground there seems a very real possibility that no team will be turning out season.  A newly formed Supporters Trust, GAFC 1890, has weighed into the battle, but they have arrived late and face an almighty upward battle.  The Billings family had previously offered to put £700,000 towards the cost of new ground, but time is running out.

    Grays Athletic offers not only evidence of the flaws in the benefactor model, but also the dangers of the separation of stadium ownership from club ownership.  Let us hope lessons are learned, and, with a will, and a massive dash of luck, they will not have been learned to late at Grays.

    [The situation at Grays is complex and apparently subject to rapid change.  It has not been widely reported other than in the local press.  Any factual input as comments from informed observers on developments would be appreciated.]


    GRAYS UPDATE – 18 June 2010

    Mixed news for Grays. They have won their appeal against effective demotion to the Essex Premier League, and should now start in the Isthmian Premier League (1). While this solves one problem, it complicates the issue of where they will groundshare (2).

    The bad news is that the club has been served with a winding-up petition by HMRC (3).

    Posted in Benefactors, Football Association, Football Conference, Governance, Pyramid movement, Relegation, Stadium, Trusts | Tagged: , , , , , , , | 1 Comment »

     
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