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 ‘Trusts’ Category

The stadium curse

Posted by John Beech on December 3, 2012

The topics of the stadium which has become separated from its club in ownership terms, and the mixed blessing that a new stadium can bring, are ones that I have covered in previous postings (see postings passim).

The battle over Fratton Park is shortly to be resolved in court (1).  The twisted history of Portsmouth’s financial ills and, indeed, its ownership ills seem to be moving towards a denouement.  Certainly as a member of the Pompey Supporters Trust, and a strong advocate of fan ownership, I want the Trust to ‘win’ the case (they are not a directly participating party, hence the quotation marks).  The case for a much lower valuation is a strong one, and for once I’m optimistic that the result will, for once, go the right way.  If it doesn’t, it will almost certainly mean the liquidation of the club, and the fight to establish a resurrection club will begin in earnest no doubt.

Nearer to home, literally, as I live and work in Coventry, if not metaphorically, the issue of the ownership of the Ricoh is almost as prominent on my radar.

Its origins go back to the heady days when Coventry was enjoying a notably long and unbroken run in the top flight, dating back to 1967 and the managership of Jimmy Hill.  Its then stadium at Highfield Road dated from 1899, and, with a post-Taylor capacity of approximately 23,500, it lacked any of the facilities that a Premier League stadium needed to compete from a business point of view.  It was not a million miles from Fratton Park to be honest.

In 1997, under the Chairmanship of Bryan Richardson, grand plans were announced for an ultra-modern stadium to be built on a brown-field site on the northern edge of the city, close by Junction 3 of the M6 (and adjacent to the Coventry-Nuneaton railway line).  Arena 2000, as it was originally to be called, was to be the envy of many a self-respecting Premier League, with a retractable roof and a removable pitch, making it ideal for other revenue-generating activities such as pop concerts.  What could possibly go wrong?

Well, just about everything:

  • The brown-field site, which had been the site of Foleshill Gasworks, proved problematic.  Contamination of the site required two years of remedial work to make it reusable (2).
  • The club was being operated unsustainably.  By 2003 debts were at a level of £20 million (3) and continued to rise (4) and rise (5).
  • On the pitch, Gordon Strachan failed in the battle to keep the club up in 2001.
  • In 2002 it was only possible for the building project to continue with the formation of a new joint company, Arena Coventry Limited (6), 50% owned by Coventry City Council and 50% by the Alan Edward Higgs Charity, a wealthy local charity for children which has a strong sports interest.
  • Sponsorship of the stadium by local car manufacturer Jaguar, itself under financial pressure, fell through as production of their cars in Coventry ceased (7).

To cut a long and tortuous story short, the stadium was built, but to a significantly lower specification than originally planned (capacity was reduced to 32,500), Ricoh took on the sponsorship, and Championship Coventry played their first game there in 2005.  Not that this proved a particular turning point for the club.  In 2007 a potentially club-saving takeover by American consortium Manhattan Sports Capital Partners fell through (8).  Then, having come within twenty-five minutes of going into Administration, the club was acquired by venture capitalists SISU (9).

Although SISU planned to buy at least the 50% of the shares owned by the Alan Edward Higgs Charity, this has not happened, and the club continues to rent the stadium from Arena Coventry Limited.  From the club’s financial perspective, the stadium is thus a monthly liability rather than the major asset and revenue generator originally envisaged.

Relegation from the Championship to League 1 in 2011 exacerbated an already difficult situation.  Attendances and revenues were hit.  The agreed rent, reported to be £100,000 per month, became significantly unrealistic for a League 1 club to sustain.  Again cutting a long story short, the owners and club have been unable to agree a compromise rent that is realistic, and the club, SISU that is, started a ‘rent strike’ in March last year (10).  Obviously this is a situation that cannot run on indefinitely, and in the last few weeks matters have come to a head, with both sides apparently digging their heels in and maintaining collision course.  On the one hand, Deputy Conservative leader John Blundell says that ACL may have to seek a winding-up order over the unpaid arrears (11), while on the other Coventry City Chief Executive Tim Fisher accuses Arena Coventry Limited of pulling out of talks (12).  Whatever the rights and wrongs of the respective protagonists, some compromise needs to be reached, and rapidly.

As well as the two confrontational tales of Fratton Park and the Ricoh, there is a crumb of comfort on the stadium front at Stockport County’s Edgeley Park (13) where a deal has been announced that will see the club running the stadium at a reduced rent and retaining the revenues from it.  Let’s hope there will positive news to report shortly from both Coventry and Portsmouth.

Posted in Assets, Investors, Ownership, Stadium, Trusts | Tagged: , , , , | 7 Comments »

Pompey – the turning point?

Posted by John Beech on November 20, 2012

I’ve not blogged recently on the Pompey basket case.  Not because there wasn’t much happening, but rather because there has been almost too much happening to stop and take a coherent view.  In fact, the last time I posted was back in March 2011, when I commented “Portsmouth City Football Club Ltd. is dead – long live Portsmouth Football Club (2010) Ltd.!” (1), and it reads today like some historical piece, and at least a tad ironic to boot – the tagline was “Onward and upward at Portsmouth?

The announcement that a conditional sale to the Pompey Supporters Trust has been agreed (2) brings at least some sort of turning point.

That the alternative bid from Balram Chainrai was turned down by the Administrator can only be good news – just how many times can the same person ‘save’ a club?  Trevor Birch’s choice may or may not have been influenced by the blogs of Micah Hall (3), but certainly the lack of response to the questions Micah posed to Tavistock Communications, Portpin’s PR company, spoke volumes.  Micah’s digging deserves an award, and shows how far a fan can go in the bigger picture of financial decision-making.

The fly in the ointment of the sale is, of course, the issue of the value that Chainrai is trying to place on Fratton Park.  Unless he finally decides to bow out gracefully, accepting that he made a very bad business call, the matter will go to court.  With independent valuations at a much lower level, the Trust stands a very good chance of getting the desired result.

There is also the matter of a potential further ten points deduction on coming out of Administration.  Here I am less optimistic.  I fear it will be yet more evidence that the deduction of points is an entirely dysfunctional sanction, but let’s not burn our bridges before we come to them.

All-in-all, there does finally seem to be a light at the end of the tunnel, and this hopefully will prove a turning point in the club’s miserable fortunes.

In the bigger picture, it may well prove to be a turning point in the road to fan ownership of clubs.  It does need to be seen though as one of many turning points, as I’m sure Brentford. Chester, Exeter Wrexham, and Wimbledon fans, and that’s not a definitive list, would be quick to point out.  It’s significance will depend on how well the hybrid model involving High Net Worth Individuals will work in practice.  If it does work, it will doubtless encourage the Supporters Trusts at bigger clubs such as Liverpool, Manchester United and Newcastle.

As a member of the Pompey Supporters Trust, I feel considerably more confident regarding the future than I have for a very long time.  I’ve even put a bottle of bubbly in the fridge, but I’ll not actually open it though until Fratton Park is in the fans’ hands.  The only certainty is the debt of gratitude Pompey fans owe to the PST Board.  Let’s show our gratitude by uniting behind them.

Posted in Community, Fans, Insolvency, Ownership, Points deduction, Sanctions, Stadium, Trusts | Tagged: , , , , , , , | 3 Comments »

Round-up of Season 2011/12

Posted by John Beech on September 8, 2012

The 2011/12 season has been characterised by long-running sagas.  Normally I find myself in an annual review recounting a series of relatively self-contained accounts of the woes which have beset a number of clubs, but many of those listed below are far from resolved scenarios.

The selection is not systematic – it consists of the clubs who have found themselves on my radar screen; further suggestions are welcomed.

Ashford Town
For a club to have its two co-owners feuding (1) was always likely to lead to tears before bed-time.  Add to this a withdrawal from its league in 2010 (2) and there is a clear downward pattern.  This July HMRC issued a winding-up petition  (3).

Billingham Town
A long dispute with Hartlepool over who should pay for improvements to the Billingham stadium (4) had been resolved in December 2010, but in January this year Billingham sought to wind themselves up (5).  However, HMRC then stepped in with their own winding-up petition (6).  The former of the these two seems to have been granted in April (7), but nonetheless the club is still is playing.  Any insight into what has happened would be much appreciated.

Coventry City
Coventry City have faced financial problems since their relegation from the Premier League in 2001, not least because of the development of the Ricoh Arena, a less ambitious materialisation of what had originally been called Arena 2000, originally designed with a retractable roof and a removable pitch (8).  In 2007, in a moment of financial crisis with the club having announced its intention to go into Administration, it was bought by venture capitalists SISU.  Since then SISU has failed to inject enough money to buy back the Rich from the local council and a local charity.
SISU have struggled to find the right balance between economising and maintaining team performance, thus causing complaints from fans.  The financial struggle led to SISU stopping paying the rent for the stadium in April this year in an attempt to force a lower a rental.  The confrontation was resolved in court last month, but details have not been made public (9).

Croydon Athletic
The imprisonment of owner Mazher Majeed for his part in cricket’s ‘spot-fixing scandal’ last November (10) made the club unsustainable.  It was promptly fined and deducted 10 points (11), adding another straw to an already broken back.  Unable to find a new owner, the club withdrew from the Isthmian League, unable to fulfil its fixtures (12).  A resurrection club, AFC Croydon Athletic, has been formed however (13).

Darlington
A sorry tale of desperation and despair, covered in postings passim and on the TwoHundredPerCent website, but eventually one of hope.  In early May fans group Darlington 1883 finally succeeded in taking over the club (14), but at what a price – the club had been forced into exile (15 and 16), and demoted to the Northern League Division 1 (17).  Onwards and upwards!

Harlow Town
Another sorry tale, this time tied up with the owners’ divorce (18 and 19; note the dates).  The club entered a CVA back in September 2009 (20).  Last November the club faced a winding-up order from HMRC (21), but this was finally dismissed in February.  In the same month, new owners had taken over (22).  Any further insight from local readers would be appreciated.

Kettering Town
Not the ultimate car crash – that comes lower down the posting – but certainly one of the most dragged cases.  See postings passim and on the TwoHundredPerCent website.  The season just finished was yet another traumatic one.
Having started the season by going into exile at the former Rushden & Diamonds stadium in Irthlingborough, less than ten miles away, there seems to have been no synergy in attracting new fans, as is reflected in the appearance of fan-owned AFC Rushden & Diamonds, also in exile, at Wellingborough, ground-sharing with Wellingborough Town, less than five miles from Irthlingborough.
Debts built up, and in June the club had to enter a CVA, with debts reported to be £1.2m (23), and HMRC hot on the club’s heels (24).
Meanwhile, want-away owner Imran Ladak had handed over the reins to ‘acting Chairman’ George Rolls, at least, until he was suspended from football for five years by the FA (25).  Ritchie Jeunne took over as Chairman (26), albeit extremely briefly, and now, in a Chainraiesque twist, Ladak is back (27).  The long-suffering Poppies Trust continue to fight on doggedly (28) notwithstanding demotion and a 10 points penalty (29).

Neath
Chased over debts by HMRC and then Barclays (30), the Welsh Premier League club was wound up at the end of May (31).

Northwich Victoria
Another depressing season for the clubs’ fans – evicted from their stadium (32), and then a crazy saga about where they could and couldn’t play (33), and expulsion from the Northern Premier League (34).  You couldn’t make it up.

Plymouth Argyle
It seems some time ago now, but the final chapter in the club’s survival was last October, and so within last season.  Mark Murphy has a neat summary of events here.

Port Vale
Yet another long-running saga – see postings passimandTwoHundredPerCentfor details.  Notable events and non-events during the 2011/12 season were the appointment of an Administrator in March (35), the lack of an attempt to take over by long-time suitor Mo Chaudry (36) and the Administrator’s misplaced faith in Keith Ryder as a potential owner (37).

Portsmouth
Here we go yet again.  The ‘club as company’ has been, more or less continuously, the basket case of English football for the past four decades, and this last season has proved no exception, with the arrest of the latest owners in November (38) and a now familiar drop into Administration in February.  I’m going to hold back in my lengthier comments for the moment as we seem to be on the point of either the start of a new chapter in the saga or dénouement.
Suffice it to say, in the red corner is Balram Chainrai, threatening to ‘save the club again’.  To me this is a bit like ‘giving up smoking’ – you can’t logically apply the phrase on more than one occasion.  In the blue corner is the Pompey Supporters Trust (vested interest declared – I have made a pledge to buy shares, and would urge all Pompey fans to do likewise here)

Prescot Cables
In an act all too rare in English football, the supporter-owned club took the difficult but realistic decision to return to amateur status (39).

Rossendale United
Effectively defunct at the end of the previous season, the club still appeared on my radar screen.  In March the club was still being chased for £37,000 by HMRC (40).  In January the defunct stadium had been gutted by fire (41), and the next month the owner, Andrew Connolly, had announced plans to redevelop the site with 50 new houses (42).  This forced the abandonment of plans for a resurrection club (43)

Rothwell Town
Which is, by the way, five miles from Kettering and thirteen from Irthlingborough.  In May 2010 the club had withdrawn from the Southern League due to financial difficulties (44), and a mooted rescue did not materialise (45).  Last October the club went into Administration (46), and in March the ground was put up for sale (47).  As far as I can make out, there have been no further substantive developments – again any local input would be appreciated.

Stockport County
Yet another season of uncertainty for County (see postings passim and TwoHundredPerCent).  The end of a ground-sharing agreement for Edgeley Park  with Sale Sharks will have added to the financial pressures (48).

Truro City
An interesting case of amazing success on the pitch, driven by a ‘benefactor’, which has proved unsustainable (49).  The club has been pursued by HMRC (50), struggled to play its players (51), and at the start of the current season has had to seek protection through Administration (52).  Two mysteries remain – the involvement of the Salisbury City Chairman, William Harrison-Allison (53), and the sale of the ground (54).  The timing of the latter will guarantee that this story has legs.

Widnes
The joker in this particular pack, destined to be an obscure name that only reappears occasionally in pub quizzes.  It marks an attempt by Steven Vaughan, he of Barrow, Chester and at one time allegedly Wrexham fame (see postings passim), through his son, to create a football club from scratch.  Originally to be called Widnes Town (55), it had to change its name on the not unreasonable grounds that Widens Town already existed (56).  Finding a ground to pay at proved challenging (57) and Stephen Vaughan seems to have opted to weave his own very particular brand of football magic in Malta instead (58).

Very roughly, the clubs involved fall into two groups.  First here are the League clubs.  Here there seems to be a continuing trend of slightly fewer clubs getting into financial difficulty, but those that do do so on a grand scale, and perhaps do so on a kind of cyclical basis – one crisis leads directly to the next one.

The second group, the non-League clubs, frequently display Benefactor  Withdrawal Syndrome (BWS).  The unsustainability of this business model becomes particularly problematic when the ‘benefactor’ has lifted the club up the pyramid to a level where his withdrawal makes survival especially difficult.  Clubs like Crawley Town and Fleetwood are surely vulnerable to BWS, not to mention the League and Premier League clubs of much longer standing who have become benefactor-dependent.

When I started preparing this posting, I did so with as close to a sense of cautious optimism as I manage.  With the natural exception of Portsmouth, surely things were beginning to look a little rosier in the football football finance garden.  Having completed it, I’ve fallen back to more usual mood of pessimism, wondering when club owners are going to get a grip and face reality (full marks to Prescot Cables as an exception).  Not that aren’t some good practice stories out there – Wrexham and Chester provide the most encouraging examples.

At least fifteen years ago I wondered ‘when the bubble was going to burst’.  This has obviously proved the wrong metaphor.  Suggestions for a more appropriate one are welcomed.

Posted in Benefactors, Debts, HMRC, Insolvency, Ownership, Resurrection, Trusts | Tagged: , , , , , , | Leave a Comment »

Deconstructing Peter Lorimer

Posted by John Beech on May 15, 2012

Peter Lorimer’s thoughts on fans being on the boards of football clubs (1) were, at least as reported by the BBC, somewhat confusing and even confused.

Certainly his assertion that he does not envisage a member of the Supporters Trust having a place on the Leeds United board is hardly a surprise given the way that Chairman Bates views fans (2).  In fact, it’s no more ‘news’ than would be David Cameron announcing that he could not envisage an Argentinean having a place on the Port Stanley Parish Council.

As Lorimer said, “People put a lot of money in and they’re entitled to run the club as they want.”  I was reminded of the Ingram brothers and their long-running confrontation with the Yeltz Supporters Trust (3).  To many on the owners’ side of football’s divide, legal ownership is simply about the right to control, and there is no recognition of the fans’ perspective of psychological ownership.  There are exceptions – most notably that at Arsenal, where the notion of being ‘custodian’ rather than ‘owner’ has a long history – but their numbers are few.

In other words, Lorimer simply pointed out that current owners, be they ‘benefactors’ or investors, see Supporters Trusts as the natural enemy, because they want to take over the company running the club.  As Basil Fawlty once put it, a ‘statement of the bleeding obvious’.

What was confused and confusing with his comments were his attempts to add a rationale to the argument – one that doesn’t need to be there, and, in the case of his comments, is a flawed rationale.

He was quoted as saying with respect to having members of the Supporters Trust on the board of a club “For me it’s never worked at any club” and “I just don’t think it works on a whole scale. I’ve seen a number of occasions where fans have ended up running a club and it’s ended in disaster.”.

I can only think of one case that I would consider to have ended in disaster, which was that of Notts County, where the Supporters Trust was all but conned out of ownership (4 and postings passim).  Another case that was not an unmitigated success was that at Bournemouth, with the Supporters Trust having to give up control of the club as it continued to struggle financially (5).

Incidentally, while digging the last link out of my files, I came across the following snippet for The Independent of 12 January 1993.  I reproduce it without comment as it may be of interest to those who followed a recent unsuccessful prosecution:

A PAYMENT of £100,000 made to Harry Redknapp, West Ham’s assistant manager, when he left Bournemouth last summer was paid personally by the chairman of the south coast club. Norman Hayward gave Redknapp the gift when he left the club after nine years in charge. Bournemouth had been swamped with angry calls and letters from fans who threatened a boycott when it was made known how much Redknapp was receiving at a time when the club was fighting for survival with debts of £2.6m. Hayward said yesterday the payment came from his own ”personal funds”.

But I digress.

The Bournemouth case, at least in wider context, is typical of clubs when Supporters Trusts take over – they almost invariably do so in the direst of circumstances.  ‘Benefactors’ and investors take over in a variety of financial circumstances, so any comparison is automatically weighted against the Supporters Trusts being successful.

To be clear though, there are numerous examples of Supporters Trusts turning a club round.  It is easy to fail to appreciate the numbers involved, especially as many cases are further down the pyramid.  Recent data from Supporters Direct shows the following clubs with Supporters Trust shareholdings (%):

AFC Telford United 100
Chester FC 100
Enfield Town 100
FC United of Manchester 100
Gretna 100
Hendon 100
Merthyr Town FC 100
Runcorn 100
Scarborough 100
Fisher FC 100
Clydebank 99.99
Inverness Clachnacuddin 76
AFC Wimbledon 72
Exeter City 63
Brentford 60
Newport (IOW) 51
Chesham United 45
Aylesbury United 38
Clyde 32
Dundee 26
Carlisle United 25.37
Dover Athletic 25.1
Lincoln City 25
York City 25

etc. etc., including Swansea City.  In total, 95 English and Scottish football clubs are run by companies with Supporters Trust shareholders.  68 clubs have a Supporters’ Trust director on the board.  The following are fully supporter-owned: AFC Telford United; AFC Wimbledon; Brentford; Chesham United; Chester FC; Clyde; Clydebank; Crusaders (Northern Ireland); Enfield Town; Exeter City; FC United of Manchester; Fisher FC; Gretna; Hendon; Merthyr Town FC; Newark Town; Prescott Cables; Runcorn; Scarborough; Stenhousemuir; Stirling Albion; and most recently, Lewes and AFC Rushden and Diamonds.  There may well be more – please comment if I’ve missed any from these lists.

This hardly squares with Lorimer’s claim that “it’s never worked at any club”.  More to the point, I wonder whether he really believes that ‘benefactors’ or investors are more likely to make a success of running a club.  My list of clubs that have suffered events is littered with the failures of clubs that were NOT run by Supporters Trusts.

If Peter Lorimer really thinks that traditional owners make a better fist of running clubs than Supporters Trusts, I can only recommend that he starts reading a fascinating new series of postings by Ian King on the twohundredpercent website – The 100 Most Controversial Football Club Owners of All-Time.  It will open his eyes.

Posted in Benefactors, Investors, Ownership, Trusts | Tagged: , , , | 4 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 »

Of Dave and Goliath

Posted by John Beech on June 15, 2011

Watching Boylergate unfold still from the slight detachment of the Tirol is a singularly unedifying experience.

I should first make clear that I count Dave as one of my friends, and that I am also friends with a number of Supporters Direct employees whose jobs are now at risk.  I am not however a pre-move Wimbledon fan or an AFC Wimbledon fan.  I strongly disliked what happened, but I tend to see Sam Hammam and the local Council as the villans of the piece rather than Pete Winkleman.  I wish that the MK Dons would drop the ‘Dons’ part of their name, in the hope that all concerned would finally move on and adopt a more realpolitik approach.  That said, I find it fairly low down on the list of things that seriously bother me – it’s down there with Spennymoor Town, Livingston and Clyde (and maybe Kettering Town next), rather than up there with FIFA and corruption, for example.

The crisis, for that is what it is from a Supporters Direct perspective, seems to have issues at several different levels, the first and most immediate of which is the issue of what Dave Boyle tweeted (no click-through as Dave has deleted the particular comments which have had such drastic implications).

What he tweeted, he wrote in his personal capacity (it clearly states on his Twitter account “Comments reflect my views alone etc.“), but, of course, we can’t in practice ever disassociate ourselves from our employer that neatly (although I would argue the case for academic freedom if that employer happened to be a university!).  Dave seems to have recognised this, and resigned as CEO of Supporters Direct.  Why, it’s reasonable to ask, was that not an end to the matter?

Well, as Glen Moore reported it (1) in The Independent:

When his tweets came to the notice of the FSIF they wrote to Dame Pauline Green, chair of SD, asking for her comments. She replied that Boyle had apologised and promised there would be no repeat. The trustees of the FSIF, who include the Football Association and the Government as well as the Premier League, took the view that someone in his position, even if tweeting in a personal capacity, could not make such statements in a public forum and merely be given a rap on the knuckles.

This line was taken in the context of a crackdown on abusive behaviour in the game, including the FA’s Respect campaign and the recent suspension imposed on Wayne Rooney for swearing into a TV camera after scoring against West Ham. The FSIF board subsequently released a statement saying they “no longer had confidence in Supporters Direct’s leadership and judgement”. Funding previously offered to the tune of £1.5m over three years, was withdrawn.

An interesting question, which I have not seen an answer to, is why this anonymous person brought the tweets  to the attention of the FSIF rather than complain directly to Supporters Direct.

The FSIF (the Football Stadia Improvement Fund) (2) is itself part of the Football Foundation which is funded as described.  The Fund’s role is to provide “grant aid to clubs in the Football League, the Conference and the National League System, down to step 7 and below, that want to improve their facilities for players, officials and spectators.”   The mission of the Football Foundation itself is “to improve facilities, create opportunities and build communities throughout England” (3).  It strikes me that the Trustees of the FSIF were not acting on behalf of the FSIF but rather in the interests of their parent bodies, and I’m unclear as to how the pulling of funding for Supporters Direct, and thus seriously threatening its existence, is in any way creating opportunities and building communities.

What comes across is the convoluted way that football is governed in the UK – by a farrago of committees where ‘conflict of interests’ is a phrase rarely heard.

Which takes us to the ultimate issue – how is Supporters Direct funded?  The case that we actually need such a body is more than adequately expressed in the wealth of evidence submitted to the House of Commons Select Committee on Football Governance (3).  With the clear exception of the Premier League, all in the football garden is not seen as rosy, and a very strong case indeed for the Supporters Trust movement is made.

The FSIF have made clear that “funding would still be available to individual trusts and they should apply directly on a case-by-case basis“, but this conveniently ignores the fact that a primary purpose of Supporters Direct is to help in establishing Supporters Trusts, and that, but for the work of Supporters Direct, many of the Trusts who can still apply for funding would not exist.

If there is a lesson in the whole sorry saga, it is that Supporters Direct needs to be funded not directly through a multi-stakeholder stadia improvement fund (???), or indeed the Premier League.  The Premier League funding Supporters Direct is at least partly like having the Countryside Alliance finance the League Against Cruel Sports in that their objectives are antithetical, and linking them in this way just sets up the likelihood of the car crash we find with Boylergate.

For this reason I am not entirely sympathetic to the Early Day Motion calling ultimately for the resumption of funding of Supporters Direct by the Premier League (4).  In the context of a House of Commons investigation into football governance, it would surely make more sense to move to a more stable funding basis for Supporters Direct, where the ‘hand on the tap’ is the FA, or better still the DCMS.

Posted in Governance, Trusts, Uncategorized | Tagged: , | 2 Comments »

Tears before bedtime at Plymouth?

Posted by John Beech on May 26, 2011

The announcement that Peter Ridsdale is expected to become the new owner of Plymouth Argyle (1) at a purchase price of £1 seems to have come as no surprise to anyone other than the Spinmeister himself apparently.  He says “This is not a transaction that I sought or contemplated but, if it is the only route to guarantee a future for Plymouth Argyle Football Club, it is a route that I am prepared to take.”  Very noble of him I’m sure.

The situation at Plymouth is undoubtedly dire, a word Ridsdale himself used back in January (2): “This situation is 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.”  A race in which he now appears to be the winner.

There are a number of general aspects to the situation which are a cause for concern.

The most immediate one in my book is that yet again property speculation by an, in effect, outside party has been the driver of the deal, and yet again a club has found itself no longer the owner of its ground.  Ask Rotherham or Leeds fans what they think of this.

There is a question of, if indeed, it is the only route to be taken.  It may well be that it is given the working parameters of the Administrator, who works within constraints that apply to any business, and which take no account of any specificity, to use the as-yet undefined EU term, of sport businesses.  It is in the crisis time of Administration that consideration needs to be given to the continuity not only of ‘club as company’ but also to continuity of ‘club as construct’ (see here if you are unsure of the distinction I am making, and here for an earlier posting on this theme).  There are a number of areas in which sports businesses can argue that they should have a particular legal status with exemptions (partial or total) from some pieces of legislation, and the area of insolvency law is one of the more obvious.

There is also the timing of Ridsdale’s likely ownership.  In case you have forgotten, he currently faces a number of charges: two offences under the Consumer Protection from Unfair Trading Regulations 2008 and another under the Fraud Act 2006, brought against him by Cardiff Council’s Trading Standards department (3).  These are:

  • Being knowingly or recklessly engaged in a commercial practice which contravenes the requirements of professional diligence under Regulation 33a of the Consumer Protection from Unfair Trading Regulations 2008. Materially distorted or was likely to materially distort the economic behaviour of the average consumer with regard to a product, namely season tickets, contrary to Regulation 8 and 13 of the Consumer Protection from Unfair Trading Regulations 2008
  • Being a trade engaged in a commercial practice which by omission was misleading under Regulation 6 of the Consumer Protection from Unfair Trading Regulations 2008 in that its factual context omitted material information, namely that they were subject to an embargo imposed by the Football Association on the registration of new players at the said Football Club and as a result caused or was likely to cause the average consumer to take a transactional decision he would not have taken otherwise, contrary to Regulation 10 and 13 of the Consumer Protection from Unfair Trading Regulations 2008
  • Committed fraud in that you dishonestly made a false representation, namely the sale of season tickets intending to make a gain, namely using revenue to purchase new players, contrary to Sections 1 and 2 of the Fraud Act 2006.

They are charges which he totally refutes, but ones which he will have to defend when the cases come to court – just the teeniest of distractions surely while he is weaving his traditional ‘magic’, as he did at Cardiff and Leeds, to turn Argyle round.  If he were found guilty, this too would be something of a distraction because of a subsequent ban on him being a director of a football club.

I would have to be honest and say that, on the evidence which is in the public domain, and in the specific circumstances, Brendan Guilfoyle, the Administrator, almost certainly was faced with no viable alternative.  More’s the pity.  At Wrexham, and of course at Exeter, we have seen the importance of a powerful Supporters Trust to present a viable alternative.  All power to the nascent and growing Argyle Fans’ Trust.  Their uphill battle should be a clarion call to the fans of other clubs who have not yet formed and developed a Supporters Trust – check here to see the situation for individual clubs.

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

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 »

‘Good Rangers’ v. ‘Evil Rovers’?

Posted by John Beech on December 21, 2010

The top of the Conference table intrigues me.  The top seven clubs come from right across the spectrum of football business models, from clubs whose fans can be rightly proud, through those that have been abused by boards past and/or present, through to clubs that engage in blatant financial doping and whose fans have seen the club become identified with a ‘benefactor’ rather than with a local community.

As I write, the top seven, in order, are

  • Wimbledon
    The exemplar of how fans can run a club successfully.  Their story is so well known it doesn’t need repeating.
  • Crawley Town
    Southern League champions in 2004, and since then they have managed to stay up in spite of several sets of points deductions.  Their recent history off the pitch has been one that you would reluctant to wish upon you deadliest rivals.  A brace of Administrations (in 1999 and 2006), being pursued in court by HMRC as recently as last July (1), and a string of owners.
    The most recent is Bruce Winfield, together with Susan Carter, who has produced a ‘war chest’ for the purchase of new players.  Manager Steve Evans was happily spending money throughout the summer transfer window on a scale virtually unprecedented at the Conference level.  One failed attempt to buy success was a cheeky knocked-back try at purchasing Wimbledon’s captain, Danny Kedwell (2).
    All in all a somewhat colourful history off the pitch.  The mystery surrounding the war chest, and who the investors are, to me puts a measure of uncertainty over the sustainability of their current business model.
  • Luton
    A club much abused by its previous owners.  The new ownership team inherited the massive points deduction, but things seem to have finally bottomed out, and it looks as if it will not be too long before it is back in the Football League.  Its home gates would not be out of place in League 2; in fact, they would be the second best!
  • Newport County
    Not the original club, which disappeared in 1989 thanks to the shenanigans of one Jerry Sherman.  The resurrection club has had to claw its way back up the pyramid, including a period in significant exile and an attempt to have them kicked out of the English pyramid.  The club is now roughly 20% owned by the Supporters Trust.
  • Fleetwood Town
    A club with a very chequered background, and many football fans will still be wondering ‘who?’.  The club is owned by Andy Pilley, also the owner of Commercial Power, who sponsor the club’s shirts.  Commercial Power has some interesting approaches to the conduct of its business – see (3) and (4).
    The club went full-time last summer and a £4m stadium redevelopment is under way. With home gates at just under an average of 1700 this season in spite of the club’s success on the pitch, I fear that, for fans, there may be tears before bedtime.  The financial doping may prove unsustainable.
  • Kidderminster Harriers
    A club in meltdown.  It was reported last month as having debts of £250,000 and has been in and out of court at HMRC’s behest for much of this year.  Although they had a winding-up petition dismissed earlier this month (5), its other debts are only sustainable through handouts from the owners (6), and there seems to be a shortage of those willing to pick up what has become a poisoned chalice (7).  Short of a new local millionaire suddenly riding to the club’s rescue, Administration is looking increasingly likely.
  • Wrexham
    A club which famously had to take its own Chairman to court to regain ownership of its ground.  Even today there are concerns over its future (8).
    There has been talk of the Supporters Trust taking over the club (9), but relations between owners and fans have not always been good.

By the end of the season we will of course have one club as champion and automatically promoted, and four into the playoffs.  The battle to be promoted will be fascinating to follow with its business model overtones, especially if these remain the seven clubs in contention.  Will ‘good’ triumph’ over ‘evil’?  That is of course oversimplifying, but I will find it difficult to remove considerations of their business models from deciding who I want to be promoted.

Posted in Benefactors, Ethics, History, Ownership, Trusts | Tagged: , , , , | 1 Comment »

More unexpected ‘benefactor’ behaviour

Posted by John Beech on September 17, 2010

Following my last posting, two stories have caught my eye – at Altrincham and at Accrington Stanley.

For those not familiar with Altrincham’s business model, it would only be fair to provide some context.  In July 2002 Geoff Goodwin became the Chairman.  This followed  a period of considerable instability – an ex-director had threatened to serve a winding up petition, for example – and rising debt, said to have reached a level of £500,000.  Goodwin became the majority shareholder in April 2005; however, in January 2007 he announced that he would relinquish the post in May 2008, but by the end of season 2007/08 he had decided to carry on (1).

Apart from that wobble, Goodwin had held firm in bringing Altrincham into a period of relative stability, managing to turn a small profit most years.  Certainly he had been under pressure over the period he had been in charge, notably with three consecutive ‘great escapes’ from relegation.  There have been indications of increasing pressure of late – in July there was a call for fresh backers to come forward (2), and at the beginning of this month there was at least a possibility that the squad might need rationalisation (3).

So, it was not completely unexpected when Goodwin announced that he would be standing down as both Chairman and as a director (4).   He gave two reasons for his decision.  First, the fairly standard reason that ‘benefactors’ offer, that of ‘mounting pressures at work‘.  This is all too often the case as ‘benefactors’ do have higher priorities associated with their day jobs (an inherent weakness of the benefactor model is that the club cannot be their number one priority; you can’t after all seriously expect them to ignore their day job).

What was unexpected, at least to me, was his second reason: ‘his involvement with his son’s karting activities‘.  His 13-year old son is beginning to make a bit of a name for himself in karting circles apparently, and like any parent he wants to be supportive.  But on the other hand, he was a self-appointed benefactor of a football club.  The fact that his son’s karting comes first is perhaps understandable at a human level, but it makes a mockery of any notion that ‘benefaction’ offers a sustainable business model.  If your club is run by a ‘benefactor’, you will always be worried that his son is suddenly going to divert your interest and time through the discovery of some unusual talent.

The other announcement that , again to me, was unexpected was over at Accrington (see postings passim).  The club had almost been wound-up last year, and had only been saved by a dramatic last-minute accommodation between the intransigent old guard and wannabe owner Ilyas Khan.  Khan has made a great deal of being pro-Supporters Trust in his battle to gain control, but, as Ian King of TwoHundredPerCent pointed out at the time (5), “The white knight on the horizon at Stanley continues to be the Accrington Stanley Supporters Fund, which was recently formed by a group of fans and backed by Stanley shareholder Ilyas Khan. Khan has been trying to wrest control of the club for some considerable time now, and is said to have put £250,000 into the Fund, although the club is unlikely to see very much of this money unless Khan takes control of the club, a situation which the current owners are loathe to to agree to. Despite the name, ASSF is not a Supporters Trust, rather a vehicle for Mr Khan to take control of the club. Whether this is a completely desirable or not may not be known until he takes control of the club, if he takes control of it but, for most supporters, this seems like their only option.

In fact Khan seemed to back away from the Supporters Trust once he had got his feet under the boardroom table.  But wait!  Battle seems to have been resumed, according to a report yesterday: “Chief executive Rob Heys has called for an end to the war of words raging behind the scenes at Accrington Stanley FC. Non-executive chairman Ilyas Khan and managing director David O’Neill have had a long-running difference of opinion on how the club should be run, following the £308,000 tax debts last November that almost forced the club to be wound up.” (6)  The report also tells us that Khan “is now in talks with the Accrington Stanley fans to set up a Community Trust to run the club.”  What can this all mean?  Is this a regression to Plan A? There are more details of his new attempts to woo the fans here.

Apparently the club’s spin on events is “Following the recent public discussions involving Accrington Stanley Football Club Ltd, the club are now looking to internally resolve the many issues that have arisen over the past couple of weeks.  It is the club’s full intention to issue a detailed press release outlining the situation in its entirety, as soon as all outstanding matters have been legally resolved. During this time, Robert Heys will continue in his role as chief executive officer while continuing to work alongside managing director David O’Neill who will concentrate on the legal matters that have arisen.  The club has been instructed by its shareholders to call an AGM as early as possible in October and will announce this to all shareholders once the date is set.”  No doubt all will become clear in the fullness of time, but if any Accrington activists can cast some light in the meantime I would be pleased to hear from them.

What becomes ever clearer in the bigger picture is that the supporter-based co-operative model not only wins over the benefactor model because the committment to the club is ever-so-sustainable, but also because it avoids focussing all the power in the hands of just one individual.

Posted in Benefactors, Ownership, Trusts | Tagged: , , | Leave a Comment »

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 »

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 »

The times they are a-changin’ 2

Posted by John Beech on April 1, 2010

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

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

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

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

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

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

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

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

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

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

Close shave for Forest Green

Posted by John Beech on March 29, 2010

According to a statement on their club website (1) “Forest Green Rovers Football Club Limited has reached an agreement with the Inland Revenue [sic] over an historic tax liability amounting to £45k“.

On 8th March the club issued a statement indicating that a financial crisis was imminent (2).  It warned “Everyone needs to recognise that the stadium complex, which opened in 2006, required additional funds to complete its construction and fitting out. These had in part to be financed from commercial loans, and the Board had ensured that these  were serviced. One plus side of the fall in interest rates was that the capital on those loans has reduced much quicker than anticipated. However, other activities in the company have had to be supported by the directors through personal loans. This could not carry on indefinitely and now the company needs to search for new investment.”  The immediate situation of a cancelled Chester City game and multiple postponements because of bad weather was hardly helping.

Much of Forest Green’s history had been one of obscurity.  The club had emerged from the Gloucestershire County League, reaching the Conference in 1998.  Comparisons with Histon are tempting – Forest Green being a small village just outside Stroud (so small that it is not even listed on the AA’s route finder).  Stroud however has no ‘United’ or ‘City’, but both Cheltenham and Gloucester are roughly ten miles away.

Their rise up the pyramid had two direct consequences.  First of these was the building of the New Lawn stadium.  This had been a subject of controversy as the land used included portions of the playing field of a local school (3).  Planning permission was finally granted in August 2004 (4), as was outline planning permission for 66 homes on the site of the old stadium.

The stadium, with a capacity of just over 5,000, opened in the summer of 2006.  The best gate to date has been one of 4,836, but current average is 869 (5).  Revenues from the stadium were boosted in 2007/08 by a ground-sharing agreement with Gloucester City (6).

At the start of the current season, the club decided to switch from being a limited company by guarantees of its members to a limited company guaranteed by its shareholders (the second consequence) (7).   The declared intention of this change was to seek a further £100,000 investment by the issue of new shares. Early this month it was announced that this figure had nearly been reached, but further investment was needed (8).  It quickly emerged that he need for further investment was because of a pressing tax bill of £42,000 (9).  As Chairman Trevor Horsely put it, “We are in dire straits – we’ve had one or two hiccups over the last couple of years and things have come to a head now. We’re struggling to meet the debts we’ve incurred on the new stadium and we need to put an appeal out to the local community. The Inland Revenue want answers by Monday. It’s a historical debt – we’ve made some mistakes on players’ expenses and managerial expenses and didn’t pay VAT on the gym when it first opened because we didn’t think we had to. We’ve got it down to £42,000, having lost three (home) fixtures. The best option for me is to sell the club to a majority shareholder.”

He added “The problem with Administration is that we’ve got four key directors who’ve put in loans of over £80,000 and I don’t think it’s fair on them. It’s always a possibility but it’s not the shareholders’ wishes.

In another report he said “We’ve had two of these orders [from HMRC] in the past three months but have managed to fight them off.  We need to find £200,000 to £300,000.  We need about £100,000 immediately for the Revenue and wages and the other £200,000 by the middle of the summer for the other creditors.” (10)

Hmmm.  A rather large problem then, and one that could not have crept up quite as suddenly as information fed to the press would lead you to believe.

The statement on the club website which I began by quoting continues “Though this removes the immediate threat of any legal winding up action, their Chairman – Trevor Horsley states “the club is a long way from being safe” although it is “business as usual” .” I wouldn’t dispute that the club is a long way from being safe, but can ‘business as usual’ really be a way out of the impending crisis? At least the Supporters Trust seem to be taking a more realistic view – see their statement here.

What I see is a club led by benefactors with the best of intentions who have inadvertently led the club into an unsustainable position, with pockets insufficiently deep to see their dreams come true.  Sadly this is an all too common scenario.

Posted in Benefactors, HMRC, Insolvency, Ownership, Stadium, Trusts | Tagged: , , , , , | Leave a Comment »

The times they are a-changin’ 1

Posted by John Beech on March 19, 2010

Those expecting the usual dose of ‘Beech’s Bile’ are in for a disappointment with this posting, I’m afraid. While my overall perception of the English football management scene will no doubt trigger many more postings coloured with cynicism and sarcasm, I do sense a more positive zeitgeist beginning to emerge.  It’s early days yet, but let’s hope the positive signs of change grow from the current acorns.  In this, the first of a few semi-regular postings, I pick on a single news story that is, in my opinion, symptomatic of the beginning of significant change.  There’s a long way to go yet, but this story is one it would have been hard to imagine even a year ago.

Cambridge United has had a colourful history.  Back in 1970 they were new kids on the Football League block, but, having made the breakthrough to senior football, they have found it difficult to find a natural level (see here for a fine graphic).  They have enjoyed six promotions since then, but suffered seven relegations, and now find themselves back in the Conference.  The highest they reached was 5th in the old Division 2.

The lack of stability in the pyramid took its toll off the pitch, with the inevitable difficulty it created in financial planning.  Plans for a new stadium were approved ten years ago (1) and shortly afterwards a grant from the Football Foundation was approved (2).  This was not to be as the club slipped into debt (3), needing to take out a loan of £585,000 in 2003.  Just over a year later a sell-and-lease-back plan reared its ugly head (4).  Not surprisingly perhaps a Supporters Trust emerged, and by May 2003 were the club’s third largest shareholder (5).

Without this Trust, the club would have been in dire straits.  In January 2004 a record annual loss of £704,000 was reported (6), and by the end of the year selling the family silver became the only way forward (7) – the Abbey was sold to Cambridge United director John Howard’s company Bideawhile for just over £1.9m, and a minimum 50-year-leaseback at the Abbey at an annual rent of £200,000 agreed.  You can do the maths yourself.

The following month Cambridge Fans United announced plans to  buy the stadium back (8).

In April 2005 Bideawhile refused an offer of £2.2 million from the club (9), with the funding to have come through a loan from club director Johnny Hon.  By the end of that month, the club was set to drop to the Conference and had filed for Administration (10) with debts of £900,000.  A CVA was agreed in June, with creditors receiving 19p in the pound (11).

By the end of the year, there was talk of ground-sharing with local rivals City, and even merger (12).

In August 2006 new Chairman Lee Power again raised the subject of buying their stadium back (13).  By January 2007 the spectre of loan guarantors having to step in was on the agenda (14).  By March, new investors had appeared (15).

Since then, to cut a long story short, there have been frequent changes in the composition of the Board, and little movement on resolving the stadium situation.  More recently George Rolls became Chairman (16), only to depart and reappear at Weymouth.  There has also been a high turnover in club Managers, joining, leaving, and even rejoining.

This almost Maoist state of perpetual cultural revolution at Board level recently took a back seat for Cambridge United watchers, when Bideawhile announced that they were considering selling the Abbey to property group Grosvenor Estates (17), triggering a race against time for Cambridge Fans United to raise £350,000 and show proof of access to the remaining £3.15m needed to buy the stadium themselves.

What might at the outset have looked a hopeless cause has proved very much the opposite.  Within four days, pledges of £750,000 had been made  (18), and that figure has now passed the million mark (19).  The race is now on to raise the £350,000 (20).  More details are available on the Supporters Direct website, and watch the CFU website for the latest news.

Whether they succeed or not is, of course, a matter that only time will shortly tell.  But what to me is significant is the sheer speed and scale of gathering pledges – this is at a Conference club in a city with effectively two other clubs, City and Histon, remember.  With supporters like United’s, the future of English football begins to look just a tad more rosy.

Posted in Assets, Fans, Stadium, Trusts | Tagged: , , , | 7 Comments »

 
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