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! Football Finance

Posts Tagged ‘Assets’

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 »

Stadium developments (and redevelopments)

Posted by John Beech on October 24, 2011

In the last couple of weeks, stadiums, both those which are newly planned and those where there has been or will be redevelopment, have being popping up on my radar screen with surprising regularity.

The saga of what to do with the Olympic stadium shows no signs of reaching resolution.  Sadly we seem to be drifting into an Athens 2004 legacy situation.  When I visited last year, the lady from the company still tasked with the legacy management of the infrastructure told me, with refreshing honesty, “You will have read a lot of bad things in the press about our legacy issues.  All of them are true.  But there also some good things.

Basically the problem had been that everyone was too busy preparing the Games sites to worry about legacy until after the Games had taken place.  No one could accuse LOCOG of not thinking about legacy – it’s just that their thoughts have never quite got round to making decisions.

Two issues trouble me with our stadium:

  • Why is there still any question of any club other than Leyton Orient moving there?  For West Ham or Tottenham to move there would be a clear breach of Premier League or Football League rules (see previous posting).  Simply ignoring this most fundamental point does not in any way legitimise the situation.
  • What of the issue of public money being spent on installing a football club there, and the blatant prejudging of who is to go there by Bojo (1)?  If FIFA were in any way consistent in condemning political interference (and note my use of the subjunctive), we should be seeing the legendary FIFA gunboats heading up the Thames any day now.

Meanwhile, across London, Chelsea are faced with an unusual situation as they plan to move from Stamford Bridge – the way that the Stamford Bridge stadium ownership was tied up Ken Bates to prevent it being sold.  This was undoubtedly his greatest footballing contribution, although pedants might question my use of a superlative that implies he made three good footballing contributions.  This looks to be a saga in the making because of the failure to keep records up to date (2), and the club will face opposition from its fans (3), focused into the Say No CPO group.  The club management must have been off sick when Marketing101 was scheduled.

Close by, Fulham have announced plans to redevelop part of Craven Cottage (4).  This pursuit of the ‘Molineux model’ rather than following a high risk ‘new stadium’ strategy is to be commended.  The alternative is the infinitely depressing ‘Fossetts Farm model’ (see postings passim or Southend United’s own New Stadium webpage).

When planning turns to stadium development or redevelopment, much depends on the attitude of the local council.  Three current cases are:

  • Plymouth Argyle, where the local council has agreed to pay £1.6m for Home Park and rent it back to the club for £135,000 a year.  This will hopefully facilitate a last-ditch rescue, but it should be remembered that the club had bought the ground from the council for £2.7m in 2006 (5).
  • Swansea City, where the council-owned Liberty Stadium is rented to Swansea City and the Ospreys, and continues to be run at a loss (6).  Can any reader with a deeper local knowledge explain this unlikely scenario?
  • Doncaster, where the council-owned Keepmoat Stadium seems to be creating a worrying financial burden for Doncaster council tax payers (7).  Again, any deeper local insight would be appreciated.

What is disturbing in all of this is the reliance on the public purse.  Any talk of ‘rich clubs’ is a joke in the broader footballing context.  Mind you, mention of ‘rich clubs’ and the public purse must raise a reminder of the shockingly bad deal (from the perspective of Manchester council tax payers) struck between the local council and Manchester City.

Posted in Assets, Stadium | Tagged: , | 5 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 »

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 »

The trouble with new stadiums 4 (and final)

Posted by John Beech on August 10, 2010

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

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

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

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

Overall the situation in the Premier League

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

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

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

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

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

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

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

    The trouble with new stadiums 3

    Posted by John Beech on July 26, 2010

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

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

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

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

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

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

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

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

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

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

    The trouble with new stadiums 2

    Posted by John Beech on July 8, 2010

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

    The second case put for building a new stadium is:

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

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

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

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

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

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

    Next two to consider, of medium risk, are:

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

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

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

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

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

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

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

    Crystal Palace’s Park is its castle

    Posted by John Beech on June 2, 2010

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

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

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

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

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

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

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

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

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

    The generic lessons of this sorry sage are clear:

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

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

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

    The continuing Kettering saga

    Posted by John Beech on May 30, 2010

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

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

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

    IL: “I will chair board meetings.”

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

    Another classic exchange in the interview was:

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

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

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

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

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

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

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

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

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

    Warring at Walsall

    Posted by John Beech on May 16, 2010

    Rising up the pyramid when there are larger iconic clubs geographically close to you is always going to be difficult, because the size of potential fan base is constrained.  In the case of Walsall (League 1), within ten miles they have West Bromwich Albion (Premier League next season), Wolves (Premier League), Aston Villa (Premier League), and Birmingham City (Premier League).  That is not to suggest that Walsall is not capable of having a committed set of ultra-loyal fans; rather, it is to suggest that when ambition for the club is mentioned, it needs to be tempered with some realism.

    The club was an early mover into a modern stadium, the Bescot opening in 1990.  It has a capacity of over 11,000, and conference facilities, allowing non-matchday revenue streams.  Its form in modern times has seen it fairly stably around its current level in the pyramid.  The size of the stadium has not really been a constraint, and of late it has not been well filled.

    After a period of considerable turbulence, the club was taken over in 1988 by a consortium led by Maurice Miller, who appointed two directors, Ray Clift and Jeff Bonser.  Within ten years, Bonser was Chairman, a position he still holds, and owner of the stadium.  (For more on this turbulent period and the early years of this regime, a particularly useful source was a series called The Long Road to Bescot published on the Walsall-Mad website, but now seemingly taken down.*)

    Given the continuity of ownership and the relative stability of the club within the period over the last decade, one might expect to see at least the emergence of a financially healthy club.  The accounts for the period available to me (1999/00 to 2008/09) make interesting reading.

    • Apart for the three years from 2002/03 to 2004/05, a profit has been achieved.  Losses were so great in that period however, a loss of just over £1m in 2002/03 in particular, that the average has been a loss of £137,000 a year.
    • Turnover grew to a peak of almost £8m in 2001/02, with a ten-year average of just under £6m – which is almost exactly the figure for 2008/09.
    • The wages/turnover ratio peaked at almost 73% in 2002/03, but in the past few years has been held at below 50%, a level which is unusually low for an English football club.  It is this figure that no doubt drives the complaints from fans of a lack of ambition.
    • Long-term liabilities leapt in 2003/04 by £1m to £1.4m.  By 2008/09 they had grown to £2.2m.
    • Directors’ remuneration has grown, for 2008/09 being £134,000.
    • There is nothing obvious in the version of the accounts I have seen to substantiate claims that the club is paying Jeff Bonser over £1,000 a day as rental for the stadium.  That said, there is no alternative figure explicitly stated either.

    The overall picture is much what one might expect at a club owned by a ‘benefactor’ who is trying to run the club as a business.

    The one football source of revenue over which a board does have a major control is matchday receipts.  Average gates at Bescot Park grew at the start of the decade, reaching a peak of just under 8,000 in 2003/04, a season in which the club was relegated from the Championship.  In the season just finished they had fallen 11.9% on the previous season to just over 4,000, putting only Hartlepool with a lower average in League 1, which overall averaged over 9,000 (although it should be remembered that the average is pulled up by the presence of Leeds United, Norwich City, Southampton and Charlton Athletic).

    Whether you see a football club as a business, and fans are your ‘customers’, or you see it as a sports organisation which is a focal point of the local community, and your fans are, well, fans, it would not make sense to alienate them and drive away the one source of revenue which have some control over.  Here too there has been a stability in Bonser’s approach.  Consider this quote from him: “I have no intention to justify to anyone how I invest personal money. I have always viewed any personal investment I have made into commercial enterprises as the only way of securing the long-term future of league football for Walsall.”  This is from a statement he made in March 1998, reported in the Sports Argus as he threatened to sell the club.

    The same report included the following:

    Ken Morrall, chairman of the Supporters Club, who once spent a year on the Walsall FC board as the fans’ representative, hopes any new owner will talk to them.

    He said: “Problems started when we asked the football club in 1995 if we could have a little breathing space from paying our £1,000 a month donations while we sorted out our finances.

    “We just needed a couple of months, but the next thing we had been served with a writ claiming we had contravened the licence by letting in people who were not members.”

    The supporters club claim that over the years they have handed over about £750,000 to help the football club stay in business.

    Twelve years on, are relations between board and fans any better?  In a word, no.

    Protest is not tolerated at Walsall under Bonser and Chief Executive Roy Whalley.  Banners recently raised against Bonser and manager Chris Hutchings provoked bans (1).  Predictably enough there were further protests at the next home game (2), resulting in more bans.  According to Whalley, the protestors would drive attendances down (3), an interesting example of cognitive dissonance.

    At the final home game there was a protest in the form of a sit-in (4).  One fan unfurled a banner, and was ejected by stewards who showed a remarkable failure to notice the irony that the banner read ‘Freedom of Speech’.

    Tempers may cool over the summer, but the underlying issues will simply fester.  At the very least, Bonser and Whalley might like to think a little about the advantages of good public relations – they seem to have been off the morning that was covered.  Unless there is some movement in the opposing sides, the club is in danger of ripping itself apart.  For a club with a modern stadium with good facilities for non-football revenue streams, a good measure of stability in terms of where they play in the pyramid, a loyal core fan base and a very clear sense of local identity, this would be just plain ridiculous.  ‘Dialogue not warfare’ would be my choice of banner.  I’m not optimistic though.

    [In the light of problems with comments encountered by my friends at Twohundredpercent, I have decided to allow comments, but moderation is likely to take longer than usual for comments from readers unknown to me.]

    * Andrew Van-Hagen has kindly contacted me to say that this excellent ‘The Long Road to Bescot’ five-part series, written by ‘Sadlad’, is now available as part of a Memory Lane section on his Walsall Web-Fans Forum: (A), (B), (C), (D) and (E).  Strongly recommended.

    Posted in Assets, Benefactors, Censorship, Community, Fans, Identity, Ownership, Public relations, Stadium | Tagged: , , , , , , , , | 4 Comments »

    Developments at Wrexham

    Posted by John Beech on March 30, 2010

    Readers may recall that I have blogged on the farcical attempts of Wrexham’s owners to paralyse legitimate (as well as objectionable) discussion on the RedPassion message board (see RedPassion muzzled).  Excellent news – Gamlins, the solicitors acting for Geoffrey Moss, have now been “instructed to unequivocally withdraw all legal threats” to the board Moderator on fulfillment of two conditions (see 1 for an agreed statement).  The two conditions had already been agreed by the message board’s Moderator a few weeks ago.  Good to see common sense prevail, with hopefully the positive outcome of improved communication from the club.

    In an entirely unrelated event, previous owners of the club, Mark Gutterman and Alex Hamilton, faced a private action in court today (2) brought by the Department of Business, Innovation and Skills (BIS).  Gutterman has agreed to being disqualified from becoming the director of any company for a period of seven years (3), and thus automatically fails the Fit and Proper Person Test.  Hamilton is however fighting the action, so ‘watch this space’ for further news.

    Gutterman and Hamilton had taken over the club in 2002 “with the sole intention of making as much money as possible for themselves from the land on which the Racecourse Ground stands” (4).  Their plans to sell off the club’s ground for supermarket development failed, but not before the club had been placed in Administration, with the unfortunate distinction of being the first club to be docked 10 points for this.

    A double dose of good news for a change!

    Posted in Assets, Ethics, Fit and Proper Person tests, Stadium | 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 »

    The West Ham ‘takeover’

    Posted by John Beech on January 20, 2010

    Barely was the ink dry on the agreement for David Sullivan and David Gold to ‘take over’ (I’ll come back to the reason for single quotes in a minute) than the messiness which had characterised the build up to the event started to re-emerge.

    CB Holding, owners through the collapse of the Icelandic bank Straumur, had long made clear that, on the one hand, they were looking to sell, but, on the other, they would not be rushed into a fire sale.  In spite of the general lack of appetite for the purchase of fellow Premier League clubs such as Portsmouth and Hull, a number of wannabe owners did appear.

    First out of the blocks was one Ali Al Faraj (1).  Rapidly however he was off to under-invest in another club, the said Portsmouth.

    By early October Eggert Magnusson was said to be ‘plotting his return’ (I’m not making that up – click through here if you don’t believe me!); also interested were investors from the USA (who turned out to be Intermarket) and from Asia (who turned out to be Malaysian Tony Fernandes, of Lotus F1 fame).  Definitely not interested at this time was David Sullivan after selling his shares in Birmingham City.

    A week later however it was reported elsewhere that a bid from David Sullivan had been firmly rejected (2), only for him to team up with David Gold in a new bid.

    By 18 November no formal bid had actually materialised (3), and the club “still envisage the sale will be a medium to long-term initiative.”  Media reports continued to suggest there were a number of potential purchasers, but on 23 December the club insisted “Our shareholder CB Holding has made it clear it would like to find new owners for the club in the next three years and that is still the case. In recent months we have had a number of approaches from parties interested in investing in West Ham United. The club have held a number of discussions with those parties and the talks are ongoing. CB Holding is not under pressure to conclude an agreement in the immediate future, but the club will keep supporters informed of any developments when appropriate.” (4).

    A late entrant in the form of Massimo Cellino joined the race (5).  Cellino had been convicted of deceiving the EU and the Italian Ministry for Agriculture out of £7.5m in 1996, and in 2001 had been given a 15-month suspended sentence for false accounting at Cagliari, the Serie A club he controls.

    Although Fernades and Sullivan were seen as the two front runners, it actually emerged that only two formal bids were tabled, a Sullivan and Gold offer for 50% of the club at £50m, and a mischievous bid by a Hammers fan for £351 (6).  CB Holding’s choice was unsurprising.

    What was surprising, and what led me to use single quotes, was the notion that buying 50% constituted a takeover – it’s oxymoronic in my book.  In one report (7) they will “have operational and commercial control of the club with immediate effect“; according to another, they will have “the final say on all matters at the club” (8); a third has that Sullivan “cannot make any significant financial investments without the approval of Straumur” (9).  There is certainly ambiguity there, which, given that neither Sullivan nor Gold might expect to win any prizes for diplomacy, will only lead to confrontation.

    Apart from these potential problems, there is the immediate problem of the club’s debts.  A number of recent reports ‘reveal’ that the debts can be £110 million, and, according to a City insider, ‘spiralling’ (10).  The figure would come as no surprise to any one who had read the East London Advertiser last September (11).  Surely it could not be that Sullivan and Gold had failed to conduct due diligence properly – after all, they had been so scathing about Carlson Yeung.  Sullivan had said shortly after his departure from Birmingham, with Yeung deeply angry with what he had found since taking over, “It’s a bit like me buying a house and failing to conduct a survey and then moaning when the damn thing collapses. The bottom line is that he’s a former hairdresser from Hong Kong who seems to think that he can buy favour with the supporters by consistently having digs at the former board” (12).  If it were, ‘hairdresser from Hong Kong’ would have to be changed to ‘local pornographic magazine publisher’.  It’s surprising how apt it would be to throw the quote back to them as Sullivan has said in a press conference when referring to Eggert Magnusson, West Ham’s former Chairman, “Clearly Mr Eggbertson, I can’t remember what his name is, Magnusson, Egghead, clearly Mr Egghead thought the owner would subsidise it and he was wrong.” (13)

    The last part of this quote suggests that, notwithstanding all the publicity he has generated as being ‘West Ham till I die’ etc., Sullivan is against the benefactor model.  Yet he has brought Karren Brady in as Vice Chairman with himself and Gold paying her salary for the next year (14).

    So that’s clear – benefactor when it suits, but tough love when that suits.

    If their approach is confusing, they have at least set out a clearer business strategy.  According to one report (15) they have pledged to:

    • Cut West Ham’s crippling £110m debt
    • Back boss Gianfranco Zola
    • Not sell the club’s star players
    • Keep the Hammers in the Premier League
    • Open the door for other investors to join their Upton Park revolution
    • Target a move into London’s brand-new Olympic Stadium after 2012
    • Set a seven-year goal to qualify for the Champions League
    • Stay with the club until “they die”

    Open the door to other investors?  How thoughtful and democratic. Or it is just essential?

    It seems to me that they are not a million miles from the underlying business model of the very same Ali Al Faraj who transferred his not-enough backing from West Ham to Portsmouth back in September.  If I were a Hammers fan, I think I would be just a tad worried that it will lead to the same situation.

    Mind you, Messrs Sullivan and Gold have of course a trump card that Al Faraj hasn’t – the backing of Boris Johnson for a move into the 2012 Olympic stadium.  I wonder just what they have in mind for Upton Park…  It’s just that there doesn’t seem to have been any mention of the disposal of the club’s major asset.

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

    The Southend Stadium Saga continues

    Posted by John Beech on January 1, 2010

    First of all, a very Happy New Year to all readers, although I would have to point out that to fans of most clubs I wish this more in hope than expectation.

    Regular readers will know that Southend has appeared in these postings before (see postings passim) and, in particular, I referred to Chairman Ron’s Little Blue Blog.

    Southend United Chairman Ron Martin, following the brinkmanship over an HMRC winding-up petition, had, on 20th November, announced:

    …please accept my apologies for not keeping you in the loop which I plan to rectify over the next few days [sic] now that I am able to turn my attention to other Club matters.

    I shall, next week, be issuing a series of blogs to cover such subjects as:
    • HMRC – how did the position arise
    • How was the debt paid
    • The “consortium”
    • My thoughts about the current squad size
    • The future

    The first of this series actually appeared on 26th November (1), giving his views on ‘how the position arose’, and making the interesting claim that ‘Some could argue that Southend could easily have escaped the £2m owed to the Revenue but that is not my way…’ Exactly who the ‘some’ are was not made clear, nor was what he meant by the word ‘escape’.

    His next ‘blog’ did not appear until 23rd December (2), when he did make some attempt to address the issues he himself had defined.  The debt was paid by “Roots Hall Ltd which was one of my Group companies I set up at the time of acquiring Delancey’s 50% shareholding in March 2006 and is the UK company managing and undertaking the relocation plans“.

    A further ‘blog’ appeared on 30th December (3) in which he said “in preparation for the new Stadium and general advancement I have suggested the Trust’s Football Board representation becomes effective at the end of the next financial year“.  Before rushing to accept this offer, the Shrimpers Trust might want to contact the Bedford Eagles Supporters Trust (B.E.S.T.), who earlier this month expressed their concerns about their similar Football Management Committee – a question of responsibility without authority having arisen (4).

    As I write, Southend United’s website’s Press Talk (5) has yet to mention an article by John Geoghegan in yesterday’s Echo (6 to see the article), which casts a different light on the payment of the HMRC debt. He reveals that the day before the court hearing Sainsbury’s, who plan to redevelop the club’s current Roots Hall site, made a substantial loan, the security for which is £304,000 worth of shares in the club.  Should the loan not be repaid, there would be the interesting prospect of a supermarket actually owning a substantial slice of a club whose stadium they were actively seeking to redevelop.

    Adding further risk to the already thin ice on which one is skating does not strike me a particularly desirable strategy for a club to pursue.

    Posted in Assets, Benefactors, Chutzpah, Debts, HMRC, Insolvency, Stadium, Trusts | Tagged: , , , , , , , | Leave a Comment »

    Fisher Athletic and the Brothers Muduroglu

    Posted by John Beech on May 13, 2009

    Brothers and football club ownership have, for reasons I readily admit that I cannot fathom, had a poor track record in English football. In the early eighties the publicity-shy Bhatti brothers led recent FA Cup semi-finalists and League Cup winners Wolves from the old Division 1 to Division 4 with three consecutive relegations, not to mention insolvency. In the three years from 1989 the Kumar brothers took Birmingham City into insolvency with the collapse of their other business interests.

    More recently Crawley Town went into Administration in 2006 with debts of £1.1m under the guidance of the Majeed brothers. This particular saga hit the news again earlier last month when Azwar Majeed was jailed for three and a half years for cheating the revenue, contrary to common law, failure to keep sufficient accounting records and concealing criminal property, contrary to the Proceeds of Crime Act (1).

    Latest manifestation of this ‘brothers phenomenon’ is at the Champion Hill stadium in East Dulwich. The stadium is home not only to Dulwich Hamlet FC of the Isthmian League Division 1 South but is also temporary home to Fisher Athletic, who are just about to depart the Football Conference South after a disastrous season on the pitch – their goal difference ending up at -78.

    Fisher have been owned by the Muduroglu family since 2004 (2). Brother Eren is Chairman but plays a rather hands-off role as he is normally resident in Turin (3) and brother Sami is Eren’s spokesperson and club manager, although you would not know this from the club’s website, as there are ‘currently no staff profiles in our database’ (4). Sami was disqualified from acting as a company director for a period of 5 years in February 2005 (5).

    At first all went well for Fisher under the Murduroglu family. In consecutive seasons they rose from the Southern league Eastern Division through the the Isthmian League Premier League to the Conference South.

    Things started to go wrong for the club when the Muduoglus produced plans for a new stadium (6), with three possible options, the most expensive with a cost of £35m. This £35m option would have resulted in a 10,000 seater stadium with expressed hopes of it being used in London 2012. Well and good, except that the average home gate for Fisher this season has been 240, and that wouild only fall as Fisher were relegated. Very nearby Millwall, in League 1, have averaged 8461, for the record.

    In November 2008 Eren Muduroglu suspended his financial backing, players started to leave, and player payments stopped (7). There followed a brief transfer embargo. As if these weren’t problems enough, in January HMRC started to seek a winding-up order over unpaid taxes, reported to be for £250k although the Muduroglus dispute the amount (8). Fisher earned a little breathing space at the end of April (9), but what was looking increasingly inevitable finally happened at the High Court today – Fisher were wound up (10).

    What will become of the club remains unclear (although a resurrectionist ‘AFC’ has been mooted [11]), and equally uncertain is the future of the club’s now abandoned Surrey Docks Stadium, which is located not a million miles from the Surrey Quays Shopping Centre, part of a major regeneration project by the London Docklands Development Corporation.

    Posted in Assets, Insolvency, Ownership, Stadium | Tagged: , , | 1 Comment »

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