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 ‘Cashflow’ Category

So, is it really ‘goodbye Bluebirds, hello Red Dragons’?

Posted by John Beech on June 7, 2012

Like the old joke about anti-social behaviour in a lift, what is happening at Cardiff City is just plain wrong at so many levels.

The root causes of the problem lie in Sam Hammam’s decision to build a new stadium, the resulting deep financial difficulty that Cardiff got themselves into with Langston and the Damoclean debt hanging over the club as a result, and Peter Ridsdale’s decision to involve the club in what was, from the first, described as a ‘strategic marketing alliance’ with Malaysian investors (1).  As he said at the time, “It will be a long-term alliance.  It will include youth development, it will include the opportunity to explore the whole fan base.  It will certainly include sponsorship.  We are already talking to them about shirt sponsorship and stadium naming rights without any definite conclusions at this stage.  We are also talking about their assistance in trying to put this club on the sort of financial footing that we would have liked to dream of when I first arrived at this football club.

Needless to say, there was no public talk of the shirt sponsorship involving what has just been announced.

Indeed, as recently as 10 May Dato Chan Tien Ghee said, in an open letter to fans, wrote:

The new club crest and home colours which were being discussed were intended to demonstrate the symbolic fusion of Welsh and Asian cultures through the use of the colour red and the predominant featuring of a historical Welsh dragon under the Cardiff City FC name. This would have been a springboard for the successful commercialisation and promotion of the club and its brand, driving international revenues and allowing us to fund transfers and success locally, thereby giving the club the best chance of competing at the higher reaches of competition.

This was not meant as a slight in any way shape or form on the club’s traditions or history which we recognise are the lifeblood of any club. It was intended as a positive change to allow us to adapt and embrace the future. Notwithstanding a number of rumours there were no further plans to turn the stadium red or make other radical changes. ” (2)

His use of “were being discussed” and “would have been” must have suggested to many, including myself, that the rebranding of club with a change in shirt colour and change in logo were now a dead duck, a not unreasonable understanding as he continued In the light of the vociferous opposition by a number of the fans to the proposals being considered as expressed directly to our local management and through various media and other outlets, we will not proceed with the proposed change of colour and logo and the team will continue to play in blue at home for the next season with the current badge.

He kept his word for less than a month.

In his open letter he also alluded to the current instability in the club’s business model thus: “It is clear to all concerned that the club simply cannot continue to function and exist in its current state, effectively losing large amounts of money each month, while acquiring more and more debt.”  No one can reasonably disagree with view.

In the debate that has broken out in the last couple of days since the announcement of the decision to do a U-turn (3), or to use the language you might expect from someone engaged in a ‘strategic marketing alliance’ – “Following a comprehensive review of wider supporter feedback via email, letters, media coverage and polls run via the official Supporters Club and Media Wales and as a consequence of the above commitment, Cardiff City Football Club will also reactivate rebranding proposals with a view to exploiting and maximising its brand and commercial revenues in international markets” – attitudes seem to have become polarised into two camps.  On the one hand, what is happening is a Faustian pact which involves selling the soul of the club.  On the other, the club’s survival depends on a business plan that will result in untold wealth pouring in from new fans in the Far East.  As is so often the case, it is difficult to engage in debate regarding the relative merits of these two views because they are based on different meanings of the word ‘club’ (4).  The present attempt at debate assumes that these are two mutually exclusive and opposed views, and that there are no other possibilities, no room for overlap, and no possibility of compromise.  That certainly seems to be the view of the Malaysian investors.  Which raises a number of issues in itself.

It suggests that the future of the club hangs on the fickleness of future supporters in the Far East who a) would support a club in a red shirt but not one in a blue shirt, and that b) providing the club’s shirt is red and has a dragon on it they will support in sufficient numbers to pay off the rest of the ‘Langston debt’, reinvigorate the club’s fortunes (in both senses of the word), and allow the investors to see a return on their investment.  As to a), I think this is simplistic and over-stated.  As to b), I can understand the Malaysian investors looking to the marketing success of Manchester United, but they might better have a word with Balram Chainrai, or those behind the K&K Shonan Management Corporation (5), erstwhile ‘saviours’ of Plymouth Argyle.

What is happening at Cardiff is little short of seeing owners who view a club as a commodity which can have some brand value spray-painted onto it to make it stand out from the rest.  A simple question to Dato Chan Tien Ghee – if the key to your success lies in owning a red club, why didn’t you buy a red one?  If the answer is simply ‘Well, Peter hadn’t got a red one in his briefcase to show us’, God preserve us.

Others have tried this drastic rebranding, with some commercial success.  An obvious example is that of SV Austria Salzburg, which Red Bull bought and rebranded as FC Red Bull Salzburg in 2005, complete with change in club colours and logo.  The new club has enjoyed considerable success since the takeover, but the old club had also, and that is where the comparison begins to break down.  Red Bull bought an already successful club and turned it into an even more successful one.  But in doing so they alienated fans to such an extent they started a new club, which they called SV Austria Salzburg, and which has already climbed, Wimbledon and FC United of Manchester style, from the seventh tier of the Austrian football pyramid to the third tier.

I’ll leave my final thought to the SV Austria Salzburg fans who are reported as having raised this banner in the past few days.

Posted in Cashflow, Debts, Fans, Investors, Marketing, Merchandising, Ownership, Stadium, Strategy | Tagged: , , , , , , , , | 5 Comments »

Shares, not shirts!

Posted by John Beech on August 29, 2011

A couple of postings back (see Chester revisited) I threatened some more thoughts on my revisiting the Report of the Committee on Football, aka The Chester Report, published in 1968.  This is the first of two, and focuses on how the funding of clubs by fans has changed in the past 40+ years.

Today clubs have three main revenue streams – broadcasting rights (effectively non-existent in the sixties), commercial revenues through sponsorship (banned in the sixties, in spite of Jimmy Hill’s attempts to get the Talbot logo onto Coventry City’s shirts) and merchandising (then as unimaginable as being allowed to buy a School First Team or Prefect’s tie if you weren’t entitled to it – shirts were only fit to grace the backs of players), and direct revenues through ticketing, and to a lesser extent matchday programmes.  Among the direct revenues in those days were donations from supporters clubs – a to-a-large-extent, although certainly not entirely, forgotten form of fans financing clubs.

Chester was able to write back then:

The financial position of a club is determined by several factors: gate receipts in relation to operating expenses (players’ wages, administration etc.); contributions from supporters clubs, sweepstakes etc.; transfer fees; and distributions from the Football League and the Football Association.

The order in which the factors are listed is interesting, and to some extent implies their significance.  Under the heading ‘Miscellaneous Income (including Supporters’ Club contribution‘, the Chester Report states (and it’s worth quoting the full text):

Most clubs obtain a good deal of money from the operation of sweepstakes, bingo, raffles, and a variety of “gambling” devices [sic]. These are sometimes run by the club or a body directly under its control, but more often they are run by the Supporters’ club.  From the published accounts (which by no means tell the full story) income of this kind totalled £4¼ million and provided over 90 per cent of all additional funds to League clubs in 1963-1966.  Its significance varied in different leagues.  It was least important, absolutely and relatively, in the First Division.  In the Third Division, however, it compensated for some 80 per cent of gross operating deficits in 1963-1966 and for roughly two thirds of such deficits in the Fourth Division.  Indeed these two lower divisions, where team and administrative expenses and wages alone exceed total gate receipts, could not have been sustained without money from this source.  The total in the Third and Fourth Divisions during these three seasons alone was £2¼ million as against gate receipts of some £5 million.  In other words, Supporters’ clubs, bingo etc. contributed in the ratio of nearly £1 to every £2 taken at the gate.  In addition such clubs may make contributions to the well-being of their football clubs which do not appear in the accounts, e.g. the improving of terracing and ground facilities.

The importance of Supporters’ clubs for the financial survival of the lower division clubs , quite apart from their social role in canalising the deep attachment which many supporters feel for their local clubs, cannot be exaggerated.  It is most disturbing therefore, that these contributions were on a slightly declining trend in Divisions 2, 3 and 4 during 1963-66.  Should this trend ever become more pronounced, the financial viability of many of the lower clubs would be in serious doubt.

(To allow for inflation and look at these figures by today’s standards in terms of changes in average earnings, 1968 figures should be multiplied by a little over 25.)

The importance of donations from Supporters’ Clubs is echoed in another report from the same era.  The Political and Economic Planning (PEP) report English Professional Football of June 1966 notes: “Probably only four or five First Division clubs depend on [donations from Supporters Clubs] to a marked degree, yet in the lower divisions many clubs would be unable to exist unless these funds were forthcoming.  During 1964-5 in at least five League clubs, supporters’ donations represented some 60 per cent of the parent club’s total income.”  I find that staggering, especially when viewed from today’s perspective.  Unfortunately the report does not name the five clubs.

There are of course, especially in lower Leagues, some clubs today where the income directly from fans is a key element in the club’s budget.  What is different from the sixties though is that fans would not be prepared to simply subsidise a club owned by a ‘benefactor’ (or maybe in some cases they would and do) without some say in how the club was run.

Direct financial support of a club by a fan today includes the purchasing of endless variants of shirts.  Does it actually matter if this revenue stream has replaced donations through a Supporters’ Club?  I would argue very strongly that it does.  At least if the donation was through a Supporters’ Club, fans had a strong voice, if no significant power.  By seeing income shift from Supporter’s Club donations to the sale of shirts, the fans’ voice has been effectively individualised and thus virtually silenced.  Well-intentioned though recent boycotts of merchandising have been, they have had relatively little impact on club boards.

To regain a voice, and gain a say in how their club is run, fans need to gain stakeholder power through share ownership.  The next time you contemplate spending £40 on the new alternative away shirt, or for some reason feel embarrassed by wearing a shirt with last year’s sponsor’s logo (personally I’m embarassed at wearing any sponsor’s logo – remember, I’m a Pompey fan, and not so long ago we were, for some inexplicable reason, sponsored by Ty, the manufacturer of Beanie Babies), consider the option of instead donating £40 to your Supporters’ Trust war-chest!

Posted in Cashflow, History, Merchandising, Ownership, Trusts | Tagged: , , , , | 3 Comments »

Trouble at Rossendale United and Rothwell Town

Posted by John Beech on March 1, 2011

Those who are ‘fleet of ear’ will have picked up on Sunday’s 5 Live Investigates that Rossendale United and Rothwell Town (and, to pick up on Kevin Rye’s well-placed pass, not Runcorn Linnets!) have serious cause for concern.  Clubs in crisis as you go further down the pyramid tend to be less well reported.  These two clubs have come across my laptop screen this last week, but I would certainly not claim to have full knowledge of what is happening, and would welcome any corrections, updates or amplifications.

First up is Rossendale United.  The club faces expulsion from the  League for non-fulfillment of matches (1).  The immediate problem is that the club’s water supply has been turned off (2), which proved to be the last straw for the three fans who in effect had become the management team struggling to keep the club going (see also here, posting by David Hancock).

The club is suffering from a classic case of BWS - ‘Benefactor’ Withdrawal Syndrome.  The club had been ‘saved from financial ruin’ in 1999 by local ‘benefactor’ Andrew Connolly, who ironically is a demolition expert.  His long-term goal was – and here the dreaded ‘A’ word. ‘ambition’ inevitably creeps in – to take the club to the Conference (3).  As he put it at the time, “If it’s good enough for Manchester United, it’s good enough for Dale“.

Initially things went relatively well, with a grant for new floodlights (4) and the appointment of a Commercial Manager (5).  By 2003 Connolly and his wife Sandra were beginning to feel the pressure though, and a new Board was appointed (6).  Managers came and went (nothing out of the ordinary there then!), but in 2006 the Chairman, Declan Callan, who had been “hailed as the man who turned the club around” resigned (7).  Connolly expressed his continuing committment to the club, and pointed out “I have personally invested £370,000 into the club which has put enormous strain on my main business” (8).  Many a fan would have doubtless seen this as Rossendale United’s good fortune, but I would see it as the setting up of a business model that would clearly be unsustainable if Connolly was either unwilling or unable to continue this funding.  It would also see it as financial doping, the deliberate attempt to buy success and upset the competitive balance within the league.

By the end of that year, Connolly was becoming understandably exasperated.  He said he would pay the bills “for the very last time” (9).  This is how he saw the situation:

I am lost for ideas for the club. No local businesses want to get involved but we are now probably in the highest position that we have ever been.

‘My company has put £40,000 in since January and I am totally disillusioned. There are around 67,000 people in Rossendale and we get around 0.05 per cent of them watching the football. Nobody is bothered. I cannot force people to watch or get involved and I will probably be putting the club up for sale. Few other businesses have supported the club and close friends have asked me what I am doing? I am not going to cut the wage bill but I am doing a lot of soul-searching and something has to change rapidly.”

By March 2007, the wage bill had been planned for a cut of probably 70% (10), and in April there were reports of unpaid wages (11). The following month a supporters group was reported as having taken over the running of the club (12), and Connolly had agreed nonetheless to settle the clubs debts. Sponsorship deals were negotiated (13 and 14), and the following summer the club acquired a major new sponsor (15).

In November 2009 Connolly announced the club was up for sale (16). He was “seeking a new investor to take the club forward“. Connolly announced “Any investor who wants to come here can invest straight into the club and not worry about any debts, because it’s all paid off” (17). No investor seems to have rushed forward, and in February 2010 Connolly brought in Nolan Redshaw to market the sale of the club (18).

The resignation of the then volunteer management committee (19) seems to have marked the beginning of the present crisis, although this appears to have been much more an outcome of the situation rather than a cause. The true extent of the crisis was revealed in a statement at the end of February (20). Connolly made a statement which was published on 25 February in the Manchester Evening News (I can’t find it on their website, but I have it from a newspaper database) in which he said:

“After taking stock of the situation at Rossendale United it is now clear that the club has been left in a perilous financial situation.

Over two years ago the club was debt free, it is now in considerable debt.

After 12 years of being involved and ploughing a considerable amount of personal monies, time and effort in it now seems the club is exactly where it was then.

This I believe is due to lack of support and generally a total lack of interest from the Valley.

I now feel that without this interest or investment the club will cease to exist.”

Latest news from the North West Counties Football League is that the club will be suspended if they fail to play their next home game, due on 5th March (21). Their away games at Squires Gate last Saturday and at Ramsbottom United this evening had already been cancelled. The end, it would seem, is nigh.

Rossendale United are of course far from being alone as sufferers from BWS. At Weymouth (see postings passim) ‘benefactor’ George Rolls has just announced that he has quit (22).

At Rothwell Town there is a less clear picture of events.  There is a report that the club has sold its ground, that the money raised is insufficient to cover its debts, and that the club has gone into Administration (23).  I blogged on Rothwell last May, when Imraan Ladack of Kettering Town had flirted, unsuccessfully, with them over a possible groundshare.  Anyone closer to the club who has more (sourceable) information is invited to add it in the comments section.

Posted in Benefactors, Cashflow, Debts, Financial doping, Ownership | Tagged: , , , , | 3 Comments »

A fish rots from the head down

Posted by John Beech on February 4, 2011

Watching the transfer window lurch to its conclusion has not been an edifying experience – I didn’t have high expectations mind you, and my thoughts were possibly coloured by the constantly breaking internet connection at the hotel in Central Europe where I am staying.

Certainly I was slightly surprised to read last Friday, from my position of intermittent ignorance, that Premier League spending had been “restrained” (1) according to Deloitte.  This of course was before the surreal outbreak of activity which saw Torres transferred to Chelsea for some opaque figure, possibly with as high a valuation as £70m (2), and Carroll transferred to Liverpool for £35m (3).  These transfers certainly helped to restore the inflationary trend of the past few years (4).  While an argument can be made in defence of Liverpool’s position, it is not encouraging to find Alan Pardew ‘vowing’ (I hate the word, but am clearly out of line with most journalists) to spend all the money on new players (5).  Much less encouraging was the report in The Times of India that the Torres transfer had been personally funded by Roman Abramovich (6), this at a club that is ‘strong’ despite losses of £70m (7).

Where does all this leave Financial Fair Play and an end to financial doping?  Well, UEFA apparently seem unconcerned, stating that they have “full confidence that the clubs are increasingly aware of the nature of the financial fair play rules, which aim to encourage clubs to balance their incomes and expenses over a period of time covering 4-6 transfer windows” (8).  I can’t honestly say that I share that level of confidence.  It seems to me that some clubs are pushing spending to the limit and are making no attempt to keep the spirit of financial fair play.

The continuing lack of restraint the top of the pyramid simply continues to stretch the vertical integrity of the football pyramid.  The guaranteed payments by the respective leagues show the increasing distortion.  A Premier League club is guaranteed a payment of at least £41m, a Championship club receives just under £5m, and a League 1 club £1m.  No wonder that ‘ambition’ pushes lower level clubs to unsustainable levels of expenditure.  Breaking point has been reached in some cases and is nearby in others.  A cull through my intermittent bookmarks of the last ten days highlights a few cases:

  • Clevedon Town
    The club is facing a mass exodus of players because of their worrying financial situation (9), exacerbated by Jack Frost.
  • Histon
    The club was recently visited by the bailiffs, although was apparently “all just a misunderstanding” (10).
  • Kidderminster Harriers
    An on/off deal to save the club is, as I write, off, and players are unpaid (11).
  • Leyton FC
    The club has been forced to withdraw from the Isthmian League Division 1 North mid-season (12).
  • Plymouth Argyle
    The club is now dependent on survival on funding finally turning up from its absentee Japanese investors (13).  Under threat from HMRC and with other debts, the future of the club is by no means certain.
  • Welling United
    The club has faced allegations that players wages have not been paid on time (14).
  • Windsor and Eton
    A sad case this – the club was in no position to contest a winding up petition from HMRC (15) and is now no more (although there is talk already of a resurrection club).  Whatever criticism may be levelled at the club’s directors, it is difficult to disagree with President Barry Davies’s assertion that “Not enough money in football these days filters down.

It’s the minnows that are really suffering, and will continue to suffer until the highest level of football gets itself in order.

[Normal service should be resumed when I return to the comfort zone of my own wifi system in the early hours of Sunday morning.  This posting is thanks to the University of Applied Sciences in Kufstein, Tirol, Austria.]

Posted in Cashflow, Governance, HMRC, Insolvency, Premier League, Resurrection, Transfers, UEFA | Tagged: , , , , , , , | 7 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 »

Jack Frost and the threat to club finances

Posted by John Beech on December 9, 2010

Last Saturday’s football programme was considerably more than decimated (1, and then follow the ‘see also’ too), at least to a language purist.  Although the Premier League and Championship programmes were largely maintained, very little football was played lower in the pyramid.  The impact of this financially should not be underestimated.

Even though games will postponed rather than cancelled, clubs can expect a reduction in revenues as most games will be moved from a Saturday fixture to a mid-week fixture.   This leads to a lower level of attendance by non-season ticket holders and corporate hospitality users, and hence a reduction in revenues.

If the bad weather keeps up, we can expect to see more clubs revealing their financial weakness.

More critically for some clubs is the immediate financial hit on cashflow.  Clubs that are living day-to-day financially may well be depending on Saturday’s gate money to settle pressing debts, or at least to keep pressing creditors such as HMRC sweet.  Among the clubs I would rate currently as under financial pressure are Plymouth Argyle (1), Sheffield Wednesday (2), Welling United (3), and Windsor & Eton (4).  Their situations will hopefully resolve themselves, in varying degrees, with the finalisation of takeovers or the further injection of cash by current owners, but the longer this takes the more critical the postponement of games will be.  Any club in a CVA is likely to be on a tight budget too, and hence vulnerable to the volatility of cashflow.

I’ve seen few estimates of how long individual English clubs are likely to suffer (and it’s obviously a function of upcoming weather too), but I did not that Morton, up in Greater Glasgow, is concerned about the possibility of a two-month delay before resuming their published fixtures (5).

If the bad weather keeps up, expect more clubs to reveal their financial fragility.

UPDATE – 13 December

Histon can be added to the list of clubs with serious cashflow problems (A).

Posted in Cashflow, Debts, HMRC | Tagged: , , | 6 Comments »

 
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