Re: PLAY YOUR PART CAMPAIGN
Posted: Tue Dec 24, 2019 11:11 am
Becoming a shareholder in a company, especially a football club can be a bit of an eye opener. But its a great way to begin to understand how challenging sustaining a club even at this level can be. The £850k will be a bit of a jaw dropper for many and the request for additional investment may be a bit of a shock. But it probably shouldn't be.
The club has chosen to go squarely down the equity route to deal with the loss rather than convert it to debt. The equity may not be actually worth much practically speaking to you or me personally but debt remains debt and like death and taxes is pretty immutable. Conversion to equity "front-loads" the financial challenge but also means that you dont find interesting ways of deferring debt repayments that ultimately kill your club without some miracle materialising that delivers a huge windfall. So the key lesson demonstrated is that buying a 10% stake and maintaining it are two completely different things.
Its been pointed out that the loss represents a mixed bag of items and does not simply represent the on field cost of running the club. So I would be expecting the Trust as a minority shareholder to be able to distinguish between at least three components of the spend/loss i.e. those relating to accrued costs (passed over from the Casson era); those relating to infrastructure and development (keeping the ground fit for purpose) and then those relating to trading (income v wages essentially). The first two are probably one-offs the last one more reflective of current and future liabilities. If I read all the comments correctly, it is suggested that the trading loss should be both less than the operating loss and should diminish in future. Accordingly I would also expect the club to generating at least a medium term forecast of what that loss profile might look like if only as a means of informing the Trust and its members of what its likely future commitments might be. It also addresses those fears that it is wages spiralling out of control that's causing the loss, which is totally at odds with what is articulated about our budgetary control.
Only other comment would be that if this is a process that's going to repeat itself, then relying simply on the generosity of members to make personal donations for the bulk of these funds is over time a risky process. If the Trust is serious about maintaining its 10% stake, then either more structured planning and oversight is probably needed to deal with this particular issue or the core role of the Trust itself needs to shift to accommodate the challenge.
This is definitely not meant as a criticism or condemnation of the club or the Trust. Many of the things that we have seen going on at the club in the last twelve months have been about pulling the Club into the 21st Century and addressing its need to compete (e.g. the extension of player contracts beyond the current season). These should have longer term financial benefits that hopefully outweigh the short-term cost commitments. Moreover any idiot can see that what the club (with its supporters) is doing is working. I have never seen so much goodwill to the club. Lets harness it, bottle it and build on it.
The club has chosen to go squarely down the equity route to deal with the loss rather than convert it to debt. The equity may not be actually worth much practically speaking to you or me personally but debt remains debt and like death and taxes is pretty immutable. Conversion to equity "front-loads" the financial challenge but also means that you dont find interesting ways of deferring debt repayments that ultimately kill your club without some miracle materialising that delivers a huge windfall. So the key lesson demonstrated is that buying a 10% stake and maintaining it are two completely different things.
Its been pointed out that the loss represents a mixed bag of items and does not simply represent the on field cost of running the club. So I would be expecting the Trust as a minority shareholder to be able to distinguish between at least three components of the spend/loss i.e. those relating to accrued costs (passed over from the Casson era); those relating to infrastructure and development (keeping the ground fit for purpose) and then those relating to trading (income v wages essentially). The first two are probably one-offs the last one more reflective of current and future liabilities. If I read all the comments correctly, it is suggested that the trading loss should be both less than the operating loss and should diminish in future. Accordingly I would also expect the club to generating at least a medium term forecast of what that loss profile might look like if only as a means of informing the Trust and its members of what its likely future commitments might be. It also addresses those fears that it is wages spiralling out of control that's causing the loss, which is totally at odds with what is articulated about our budgetary control.
Only other comment would be that if this is a process that's going to repeat itself, then relying simply on the generosity of members to make personal donations for the bulk of these funds is over time a risky process. If the Trust is serious about maintaining its 10% stake, then either more structured planning and oversight is probably needed to deal with this particular issue or the core role of the Trust itself needs to shift to accommodate the challenge.
This is definitely not meant as a criticism or condemnation of the club or the Trust. Many of the things that we have seen going on at the club in the last twelve months have been about pulling the Club into the 21st Century and addressing its need to compete (e.g. the extension of player contracts beyond the current season). These should have longer term financial benefits that hopefully outweigh the short-term cost commitments. Moreover any idiot can see that what the club (with its supporters) is doing is working. I have never seen so much goodwill to the club. Lets harness it, bottle it and build on it.
check your junk mail, thats where mine initially went to
