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

Oldham (v. Spurs?!)

Posted by John Beech on November 10, 2009

When I blogged on Parallel Realities and Worcester City recently, contrasting the board’s full-blown optimism in pursuing a new stadium with the harsh reality of the club’s financial situation, I cited other examples – Portsmouth, Southend and, most notably, Darlington.  I might also have cited the case of Oldham, a particularly interesting case, as it seems the owners seem almost aware of the parallel realities (not the case in the other examples, at least not publicly), yet somehow can see no way of reconciling them.

Oldham went into Administration in August 2003 (Evening Standard, 19 August 2003), following the withdrawal of funding from ‘benefactor’ Chairman Chris Moore.  So desperate had he become to quit, just two years after taking over, and with the club losing £50,000 a week (1), he offered to write off a £4m loan to the club, and talked with Peter Ridsdale about the latter taking over.  Some might say fortunately, he sold instead to three London-born entrepreneurs who had made their fortunes in New York in real estate and the mobile phone business – Simon Blitz, Simon Corney and Danny Gazal (2).

On the stadium side, Boundary Park was beginning to exceed its sell-buy date and eventually a stand was closed for redevelopment.  In February 2006 the three owners revealed plans for an £80m ‘Oldham Arena’ regeneration project (4) to be built at the Boundary park site.   There problems getting planning permission, and the green light was only given in December 2007.  Things did no go smoothly however, and an effective local residents group continued to lobby against the scheme (5).   Demolition work began, but financial obstacles began to appear.

On the finance side, the three had had a baptism of fire.  As David Conn reported in The Independent:

To finance this dream, they funded the club for three months in administration, which cost them £522,500. The preferential creditors, the Inland Revenue and VAT, were owed £715,000 and were paid 32p in the pound: £237,000. “Football Creditors” – other clubs, players and the League’s pension deficit – are to be paid £428,000, while Blitz and Gazal paid £120,000 for Oldham’s office equipment and other assets. Unsecured creditors, the usual victims including a £30,000 policing bill, local family firms and £1,856.50 unpaid to St John Ambulance, got nothing. The club’s ongoing losses are estimated at £1m, and their shoring-up of the club adds up to £2.4m. They are paying £4.6m more for the ground and land, while guaranteeing that Boundary Park will still be a football ground in 10 years’ time.” (4)

Given that Oldham have played at the same level in the pyramid since 1997, the stability on the field might have been expected to allow a steady recovery in the club’s financial fortunes.

However, in June 2009 the club’s major sponsor Hillstone Development went into Administration (5).

By march this year this was talk of a mystery foreign investor (6), but he did not materialise.  The three owners hinted that might sell up to right person however.

In early July there was talk of a possible groundshare with Rochdale (7) or possibly Stockport, but at the end of the month a major shift in plans was announced – a major new development, a 12,000 seater-stadium at Failsworth (8).  Gates at Boundary Park have been hovering around the 6,000 mark for the past decade.

The rationale for the move was, in one respect apparently compelling (9).  As Corney put it, “In its current state Oldham Athletic is dying. Our revenue fell 20 per cent again last year and we’re now attracting attendances on a par with many League Two clubs. This new vision gives us an opportunity to provide a facility that will create new revenue streams to make the club financially viable and self-sustaining, whilst also giving supporters a superior matchday experience. We haven’t taken the decision to leave Boundary Park lightly – it was our preferred option to redevelop it – but the credit crunch means the land value and market conditions have diminished to an extent which makes that scheme no longer economically viable.

But if redevelopment of Boundary Park is no longer viable because of the credit crunch, how exactly can the club finance a much more grandiose scheme?  As Corney stated recently “We originally purchased the club for £5.4m and have spent say £1m a year for seven years. The new stadium will cost £14m to build. That’s before the price of the pitches we’re building. So let’s say that’s £26m. If we sold Boundary Park today we’d get £12m. It’s no wonder I don’t sleep at nights”  (10).  Given that the price tag on the Failsworth scheme is said to be £20m, that’s hardly surprising. Perhaps he would sleep more easily if he recognised that he is having a recurring nightmare, not a dream.

And is the club well positioned financially to fund a £20m scheme, which, incidentally, faces formidable local opposition and hence additional costs? today the club reported interim results for last year (11 and 12).  Highlights include the following:

  • Creditors are owed £3.1m, up from £2.7m last year;
  • Debts due after more than one year climbed 148 per cent from £145,000 to £359,000.
  • Although net losses are down from £537,000 last year, they are now still £414,000

Most worrying of all is this statement which is included in the accounts: “The company is dependant on its shareholders for financial support, which the directors are confident will continue for a period of at least another 12 months. The shareholders have indicated their present intention to provide adequate finance to enable the company to continue in operational existence”  No doubt intended to reassure, it might have done so if a period of prudence was being planned.  With a £20m plan being pushed hard, it has the opposite effect, not least because the figure of ‘at least 12 months’ is well short of the time required for a new stadium at Failsworth to be completed.

Still, there’s no harm in nightmaring dreaming is there?

And Spurs?  Well, they too have a grandiose scheme for a new 56,000-seat stadium, one which they would have no difficulty in filling (13).  They too announced their financial result today – record profits of £33.4m (14).

The differences between Oldham and Spurs have less to do with financial disparity up and down the football pyramid, and rather more to do with differences in financial health and in the sustainability of the clubs’ business models.

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