Generic clubs in financial crisis Thread

[Ian Royal]

Probably £12-14m. £12m is about average in the Chump isn't it?

[Svlad Cjelli]

And the money received by each club from the FL isn't split equally - Championship clubs get £2.2m per season, League One clubs get £325,000 per season.

[papereyes]

Southampton have just posted a £7.7m loss for the year to 30th June 2010. Their wage bill is a £10.9m - astounding for Tier 3.

I think the FL programme last Saturday said they had spent a lot to get out of League 1 this season and two of their strikers cost more than a million. (Lambert and..?) Madness. Hope they fail. Those wages are ridiculous.

Lambert and Barnard.
Pardew followed his Reading pattern of buying the top goalscorers at the lower level Butler and Cureton) and if you can afford to buy the best strikers around you have a great chance of promotion.
If Saints were to sell Oxlade-Chamberlain then all of that loss would be made up immediately.
What is our wage bill this season on lower gates than Southampton?

Surely selling O-C would just be a one off chunk of current debt loss? From the wage bill, they're also going to be running a pretty large year on year deficit - removing the wages of a relatively young asset is not going to affect that.

[TFF]

http://news.bbc.co.uk/sport1/hi/football/9450671.stm

Two of English football's top-four clubs could be excluded from European competition in future as they fail Uefa rules that are about to be introduced.

The Financial Fair Play Regulations do not come into force until 1 June and will not really bite until 2013.

However, a study of recent accounts by BBC Sport shows Chelsea and Manchester City would fall well short of the rules if they were being applied today.

City were £110m in the red while Chelsea showed a deficit of over £50m.

Uefa's rules allow clubs to run up losses of £65m over the first five years.

Financial fair play has been introduced by European football's governing body Uefa to try and level the playing field between clubs funded by the super rich and those less fortunate.

In simple terms, teams cannot spend more than they generate from the football side of their business.

Will it happen?

[TFF]

And back to Watford

The Watford Observer has been keen to discuss a number of concerns with the Hornets' new major shareholder Laurence Bassini for several weeks but the man behind Watford FC Limited has been reluctant to answer our questions until the takeover offer was 'wholly unconditional'. That happened last Friday but unfortunately Mr Bassini has now declined to meet before the new board is formulated, so, here is an open letter...

Dear Laurence,

We are writing to you today as after months of speculation and rumour surrounding your takeover of Watford, we feel now is the time for answers.

We appreciate you have not been in charge of the club long and were reluctant to discuss certain issues before because of Plc rules, but for several weeks now there have been important questions surrounding yourself and the takeover by your company Watford FC Limited (WFCL) which has caused great concern among the supporters.

Your decision not to speak out further until the offer became ‘wholly unconditional’ was understandable but after the formal acceptance from most of the major shareholders last Friday, which effectively gave you control of the club, we expected some of the fans’ concerns to be addressed this week.

Much was promised from the long-awaited Offer Document, which was released last week, but in fact it left most of the questions unanswered and actually raised a few more.

However, information which has subsequently come to light and the lack of detail in the Offer Document has worried a large majority of supporters.

One of the main concerns is the lack of information to prove your business pedigree.

Several well-known businessmen have filed for bankruptcy and gone on to be hugely successful so that in itself is not a major issue. But while you have been linked with several companies which have been dissolved, there has been no information provided to illustrate where you have been successful.

This in itself also raises one of the most pressing concerns for the supporters we have spoken to in recent months – where has the money for the takeover come from and how much is there?

Until evidence or an explanation is put into the public domain, the query of ‘how does someone who was bankrupt less than four years ago now have enough money to buy a Championship football club?’ will continue to be discussed in homes and pubs across Hertfordshire.

If some sort of brief business history is not provided the rumours will continue.

The idea of there being unknown financial backers has been mentioned in several discussions as a way of explaining it. Is that the case?

The issue of finance is not restricted to your past either.

As part of the takeover, your company, WFCL, will be providing the £3.5m needed to tie the club over until the summer and without it, the Hornets could be in serious trouble.

But this money is seemingly just a loan, as are the rest of the funds being provided.

So apart from the initial £440,000 being used to buy the current shares, will the rest of the money WFCL is using to pay the bills and bonds be loans, and therefore be debt which is passed on to the club? Or will you personally, via the newly-created company, be investing your own money into Watford?

And why is it that you are loaning your own company the money, and not just investing it, if you are the only financial backer? Equally, why is Panos Thomas the only shareholder of WFCL when you are putting the money in and why did you not want a place on the Watford Leisure Plc board?

These are all issues which need to be addressed if the club is to move forward and away from all the speculation and rumour.

But while your past and the structure of the deal has raised serious questions, it is what the future holds which will be of utmost importance to the Watford faithful.

When the bond issue was completed last summer, it was hoped a new investor or owner would pay off the bonds, activate all the warrants and use the money raised to pay off the club’s debt so it could move forward debt free.

However, that is no longer the case as the bond repayments have been rescheduled, so how do you plan to pay off the debt over the next five years as the company continues to make a loss each year despite several cuts?

Player sales are a must for a club of Watford’s size and means, that is no secret, but that money is needed for running costs as well, so unless an Ashley Young-like situation arises, it is difficult to see how Malky Mackay can continue the excellent work he is doing and develop a competitive Championship side if he needs to sell two or three of his most valuable players each year.

It would be unreasonable for our paper or the fans to expect you to come out and divulge all of your ideas for the business but an indication of how you plan to develop the club may help allay some supporters’ fears.

You have expressed a desire to develop the Vicarage Road Stadium, which is what everyone connected with the Hornets wants, but in the Offer Document it states the timing and the method of financing the work is unknown. It even goes on to state that the work may not take place at all.

Why is the funding unclear if you have a clear intention to develop the three areas?

One would expect these crucial aspects to be considered as part of the takeover discussions.

As for the East Stand, surely the method of funding would need to be known before you could make any plans as it will dictate the very nature of the structure and the capacity.

Wanting to re-lay the pitch, finish the South-West corner and build a new East Stand is great, we all want that, but without some kind of detail then many will see the claims as empty pledges which will only happen if Watford are promoted to the Premier League.

Actions speak louder than words and with time you could win the hearts of the Watford faiuthful, especially if Vicarage Road Stadium is developed considerably and the Hornets have a squad which is challenging at the top of the Championship. But until that point and until fans receive the reassurances they need, then there will continue to be serious questions surrounding your ownership of the club among the supporters.

Running a football club is unlike any other business, there are thousands of Watford fans who have an almost unconditional bond with the club – many have a relationship stretching back decades.

And for the Hornets in particular, the relationship with the supporters and the community as a whole is what makes Watford such a special club. It defines Watford Football Club.

We understand there is a meeting with the current and future board members today [Friday] so hopefully a lot of these issues will be discussed then.

But the fans also deserve to know who is in charge of their beloved club and whether Watford can look forward to a bright future, or another few years of severe cuts and player sales.

Peter Wilson-Leary,

Group Editor

http://www.watfordobserver.co.uk/sport/ ... o_Bassini/

[Svlad Cjelli]

Good letter!

[Mr Angry]

Unlikely to get a response though, at least, not one that answers all the questions.

Its a good question though - So apart from the initial £440,000 being used to buy the current shares, will the rest of the money WFCL is using to pay the bills and bonds be loans, and therefore be debt which is passed on to the club? Or will you personally, via the newly-created company, be investing your own money into Watford?

This practice (its a smaller version of what the Glazers did to buy Man Utd iirc) has to be made illegal, as it means anybody with barely enough dosh to buy the current shares of a football club can then use the club as an asset to borrow the money to loan to the club..... how many other clubs have fallen foul of individuals trying to make a quick buck this way?

[Bucks Dave]

Not sure the assets of the club can be used as collateral for further loans. Their total assets are £2.5M less than their debts so they are in negative equity. It's like trying to get a second mortgage when your first mortgage is more than the value of your house.

The next question is "can they service further debt" even if they have negative equity.In other words, can they afford the interest? They have just announced a Leeds like deal with a ticket agency for an advance of £1.5M against next year's season ticket sales (not yet made). This is for "cash flow purposes". In other words, since their biggest cost is wages (last year's accounts show 99% of their revenues went on wages) they are dipping into next year's till to keep the pay packets going this year.They made a full year loss last year of £4M and have just announced a further half year loss of £2.5M on top of that.

Their attendances and season ticket sales are down, Saracens are deserting them and the playoffs are a distant memory.

The difference between a fantasist and a conman is that the conman makes money. Bassini doesn't seem to have any successful business ventures behind him. Fantasists and conmen have one thing in common, they are both very convincing.

However, I make no allegations against Bassini (British libel laws are notorious). The next few months will be very interesting ones for Watford.

[Super_horns]

A replay of sorts has come bac...not that is says very much expect for "wait and see"

http://www.watfordobserver.co.uk/sport/ ... _Observer/

Better than nothing but leave fans still in the dark.

Like Dave says we'll probably know more this time next year...a bad season (unlike this) and even more lost revenue would probably lead to ruin (again)...

[roadrunner]

SSN yesterday reported Pompey are about to be bought out by a Russian 'business man'..

Another tale of woe or have those cretins got lucky?

[Tony Le Mesmer]

http://news.bbc.co.uk/sport1/hi/football/13285496.stm

"On Friday, Plymouth Argyle's creditors will vote on the administrator's proposed solution to the club's debt crisis that will see those owed money receive less than a penny in every pound."

[Royal Rother]

Generally speaking these days an offer needs to be 20p in the £ to stand much chance of being approved. 1p seems a tad unlikely to get through.

[Who Moved The Goalposts?]

Generally speaking these days an offer needs to be 20p in the £ to stand much chance of being approved. 1p seems a tad unlikely to get through.

In any case, why would anyone vote for this? It's as good as writing off the money, and saying no would at least give the creditor the satisfaction that it wouldn't happen again. Offering this amount is a joke. The sooner a club is made to face the real consequences of their actions, the better.

[Royal Rother]

I suppose it is a bit of a joke but all the Administrators can do is work with the money that potential buyers are prepared to put in.

[Ian Royal]

I suppose it is a bit of a joke but all the Administrators can do is work with the money that potential buyers are prepared to put in.

They may as well just sack it off and wind up the club if there's less than 1p in the £ to give to creditors though.

The order of preference for paying debts should be HMRC-> Publically owned bodies -> Charities -> Small Businesses -> anyone else.

[Sarah Star]

Just heard Rushden & Diamonds are in financial trouble, get barely 1000 fans to their games and may not even exist next season. They can't be the only ones left in a sticky situation at the end of this season.

[Royal Rother]

I suppose it is a bit of a joke but all the Administrators can do is work with the money that potential buyers are prepared to put in.

They may as well just sack it off and wind up the club if there's less than 1p in the £ to give to creditors though.

The order of preference for paying debts should be HMRC-> Publically owned bodies -> Charities -> Small Businesses -> anyone else.

Whereas in fact I believe it's the costs of the administration / winding up that comes first, followed by creditors with a fixed charge, then unpaid wages to employees, then floating charge holders and finally unsecured / non-preferential creditors which, since 2003, includes HMRC.

[Royal Rother]

Just heard Rushden & Diamonds are in financial trouble, get barely 1000 fans to their games and may not even exist next season. They can't be the only ones left in a sticky situation at the end of this season.

The end is nigh for many clubs in their current form. Non-league is going to be badly hit in the next year or so and, although it gets a bit boring saying the same thing year after year, I still believe that, unless mad benefactors are still around, several League clubs are going to go to the wall. Reading won't be one of them.

[Svlad Cjelli]

I suppose it is a bit of a joke but all the Administrators can do is work with the money that potential buyers are prepared to put in.

They may as well just sack it off and wind up the club if there's less than 1p in the £ to give to creditors though.

The order of preference for paying debts should be HMRC-> Publically owned bodies -> Charities -> Small Businesses -> anyone else.

Whereas in fact I believe it's the costs of the administration / winding up that comes first, followed by creditors with a fixed charge, then unpaid wages to employees, then floating charge holders and finally unsecured / non-preferential creditors which, since 2003, includes HMRC.

And don't forget that Football creditors are counted sas creditors with a fixed-chharge, which HMRC is challenging. This comes to court on Nov 28th.

http://www.independent.co.uk/news/uk/home-news/high-court-to-rule-on-football-debts-2279579.html

[Cobi]

Just heard Rushden & Diamonds are in financial trouble, get barely 1000 fans to their games and may not even exist next season. They can't be the only ones left in a sticky situation at the end of this season.

Rushden & Diamonds to Rubbish & Dustbins. That's a shame if it's true. It's a nice little club, tidy ground too. I don't know a lot of these smaller clubs get by any more. TV money is very minimal at that level and attendances in the 1000-4000's in a lot of cases.