Issue Mark Lawn asks us to believe the gloomy picture he presents

As told by Jason Mckeown

Because if we get relegated, we will have to pay for it for the next ten years.

These words about Bradford City, spoken in September 1999 – a month into the Bantams’ first-ever Premier League season – read like a prophet of doom given how true they turned out to be. But when you consider whose mouth these words poured out of, the fact it was subsequently ignored is enough to make you cry in anguish.

For this quote came from then-City Chairman, Geoffrey Richmond, to FourFourTwo magazine almost 12 years ago. In fact, examine the full quote and see if your heart doesn’t sink.

I’m not prepared to have a situation whereby the club spends money that it doesn’t have and it all goes wrong. Because if we get relegated we’ll have to pay for it for the next ten years. I’ve seen it happen at other clubs and I’m not going to let it happen at Bradford.

This quote – from a magazine cutting which a friend recently passed to me – offer a new twist on the well-trodden tale of how Richmond steered the club into the mess it is still struggling to get out of. Such prophetic words of wisdom; but the fact Richmond was so understanding of the potential consequences of his six weeks of madness, but went ahead with it anyway, suggests a higher level of foolishness than even many of his fiercest critics would credit him for.

He really did appreciate the stakes involved in the reckless gambles he took.

Richmond – most noted for declaring he’d deliver Premier League football to the Bantams within five years, when he took over – perhaps has a new infamous quote to rival his “six weeks of madness” confession. Meanwhile we struggle on, wondering if we can ever put the past behind us.

The latest financial worries – is this really a crisis?

I wonder what quotes Mark Lawn will be remembered for? Having deliberately kept a low profile for a year, the current joint-Chairman has been regularly interviewed in recent weeks as he tries to bring landlords Gordon Gibb and Prupim to the negotiating table, over the possibility of reducing the rent.

On Saturday Lawn was in full flow again, this time declaring to us supporters that he is not playing games and this is a deadly serious situation. With a strange hint to those who bought season tickets last December (are we to be asked to contribute more, I wonder?) and a new revelation that City could move to a new home by the start of next season – potentially making the Crewe game a week Saturday the last-ever Valley Parade match for the Bantams – Lawn was determined to shoot down those who still doubt the Board’s true intentions.

One can understand the scepticism that prevails in many supporters. The financial information that has been put into the public arena, for example, does not suggest as bleak a picture that is now being portrayed – leaving many to question Lawn and City’s motives. City currently have to pay Gibb and Prupim around £370k per year, each, while the club’s wage budget for this season – £1.5 million – is twice what many League Two clubs operate on. As Lawn was keen to tell BfB in January, Dagenham & Redbridge was promoted last season on a £750k budget.

Perhaps instead of wasting money on a talented player like Tommy Doherty – who, BfB hears, refuses to play for City, despite being fit, and is happy to sit back and take a sizeable wage home each week – we could be using it on more important matters?

Whispers from within the club, meanwhile, suggest the £1.3 million annual running costs for Valley Parade are presently more or less covered by off the field sponsorship and income generated from renting out the offices. The season ticket money more or less covers the playing budget too. So a suspicion remains that a rental reduction is more aimed at providing a stronger wage budget, or making up for the fact previous playing budgets have been supplemented by loans from Lawn and Julian Rhodes, which won’t be the case this summer.

Behind the headline figures, City’s accounts paint a bleak picture

Bradford City’s 2009-10 financial accounts show City made a profit of around half a million – though this was only because of a near £1 million windfall from Leeds United selling Fabian Delph to Aston Villa. For the 2008-09 season City made a loss of £765,000. That came after City pushed out the wage bill to £1.9 million and – with this season’s playing budget at £1.5 million – we can intelligently assume the club will also make a loss this season.

BfB has, with the help of two people far more qualified on these matters, taken a look at City’s Abbreviated Accounts for the year ending 30 June 2010 (these accounts are publicly available for anyone to view). They paint a very troubling picture, in that the club has a net deficit on its assets. This means it has more liabilities (ie financial obligations, such as repaying loans) than assets (money owed to the club by other parties, etc). This is a terrible position for any company to be in, and some people – probably outside of the football industry – might even argue it should be wound up unless proof of future profit potential can be provided. A basic valuation technique would suggest Bradford City is worth approximately minus £500K. No wonder a rent reduction is being pursued so urgently.

The good news is that this net deficit position has improved compared to a year ago, by around £500k. The club’s cash balance assets has also grown considerably (from around £13k in 2009 to approximately £224k in 2010). However, this appears to be due to the windfall received from Delph – meaning the club’s net deficit could grow the wrong way again come the end of this season. The Delph money is a one-off bonus, rather than a sign the City are becoming financially stronger.

Clearly this financial situation cannot be sustained in the medium to longer-term; and so Lawn’s comments that the Bantams won’t exist in two years time under the current status quo actually do seem credible. Given the club has made no public comment over its accounts, it’s no surprise people are currently doubting Lawn’s bleak assessment over the future of the club. However, the financial picture that is emerging from City’s books would suggest that the Telegraph & Argus’ insistence of labelling the current situation a “crisis” isn’t the tabloid sensationalism it might appear.

But what about those liabilities? The loans to Lawn and Rhodes

One unresolved question is the situation regarding those loans that Lawn and Rhodes have put into the club over the last few years. BfB has seen documentation of a loan Lawn made to the club on 15th March 2009, which states interest will be charged annually (payments due monthly) at 9% above the Bank of England Base Rate (which means it is 9.5% at present, and would increase when, as financial analysts expect, interest rates begin to climb again over the next couple of years).

This interest rate certainly jumps off the page in terms of questioning how good a deal this really is for Bradford City. A business looking to undertake a loan would typically find much more favourable terms from a bank than 9% above Base Rate. However, it would be questionable whether a bank would loan the sum of money Lawn has in the current economic climate, especially to a football club viewed financially as a risky investment.

So 9% above Base Rate could therefore be justified on the basis that the risk factor for Lawn is significantly high. Were City to go into administration or even bust, Lawn would find himself towards the bottom of a pile of people to receive money back from any surplus cash. Football rules on this deem that football creditors must be paid first – so Doherty, for example, would come before Lawn in getting what they are owed. It’s more likely that Lawn would be asked to accept a percentage of the money he is owed in a Creditors Voluntary Agreement, along with other creditors.

Nevertheless, on paper this looks like a potentially lucrative deal for Lawn. Though away from the black and white facts of the documentation, this writer has every faith Lawn is – and will continue to – act in the best interests of the club.

Is this all a smokescreen so Lawn and Rhodes can sell the club?

As much as Lawn wants to stress the grimness of the situation, for supporters, because there are a number of knowledge gaps, speculation and doubt has been allowed to fill in. We’ve all asked ourselves whether it’s a matter of Lawn needing to convince us supporters of the severity of the situation, in order to convince Gibb and Prupim. Are our emotions being put through the mill in order to stir some emotion inside these two parties? And is there anything we can do to help? (Trip to Flamingoland, anyone?)

Some argue Lawn is looking to offload the club and be paid back his loans. And so he is trying to make City a more attractive investment proposition by reducing the overheads, such as by moving to a new stadium with more favourable terms. However it’s dubious whether the revenue streams of moving to Odsal or wherever would be as rewarding to an investor as they are at Valley Parade.

Sponsorship, merchandise, corporate hospitality – all still likely to be generated in a stadium elsewhere, but arguably not to the same level because other parties may get a cut of it. Unless, for example, someone was prepared to switch all the advertising boards back and forth between when City and the Bradford Bulls play at Odsal, joint advertising deals might need to be negotiated – which may not be as viable for local businesses in these difficult economic times. A stadium also cannot realistically have two different names, in terms of sponsors, so City could lose the annual revenue from Coral Windows.

Lawn and Rhodes have always stated they would be willing to step aside if someone credible wanted to take over the club, and perhaps the pair feel that they are unable to prop up this club financially anymore. Any outside investor would be looking to make a profit from owning Bradford City, plain and simple. So if reducing the overheads could attract a responsible investor, the joint Chairman may feel this is the best course of action for the long-term good of the club.

Lawn’s legacy could rest on the result of these negotiations

There is so much that we supporters don’t know about the situation for us to easily fall in line with all of Lawn’s words and place our full faith and confidence that the Board’s actions will provide the best solution for Bradford City Football Club. As such, Lawn and Rhodes have to accept their words will be disputed by some, put up with some criticism and face their reputation taking a hit if these talks don’t go the way it’s hoped. Notwithstanding, the threat of moving to Osdal would appear to be much more serious than many of us give credit – the club may really not have a choice on this unless the landlords are willing to help.

In a season where we supporters can argue the players have let us down badly and the manager messed up, we hope and pray that the Board – through these talks – can deliver an outstanding performance that safeguards the future of the club for generations to come.

And if Richmond’s quote in 1999 defines his time for all the wrong reasons, let us hope Lawn’s words to us in January this year characterises him for all the right ones:

But what I can say to Bradford City fans is that I will make sure this club always stays alive, and that is one thing that I will always do. But to do that it means I can’t be throwing money around and we’ve got to live within our means.