Tuesday 26th April, 2011last year, at the end of April
Mark Lawn asks us to believe the gloomy picture he presents
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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.
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First of all, an excellent article Jason that looks to have been thoroughly researched in regards to the finances.
It does seem to paint rather a bleak picture from certain aspects, as you say, but what I think is most worrying at the minute is this continued state of limbo, particularly for the supporters. I realise with affairs on the field that our hands may have been tied before any commitments could be made but it would be encouraging to now see what our plans are for next year now that safety has all but been guaranteed.
I think most fans will now accept that it is time for us to start living more within our means and not to go all out for promotion next year at the expense of our existence. We are a league two club, the last four seasons have told us this, we should instead focus on what Michael wrote about following the Accrington game and start to build a team, with a team spirit and a hunger to suceed for OUR club. You only have to look at Bury who have been promoted with a squad of around 14 players and had the players effectively managing the team for the last six games, to realise that team spirit gets you a long way in this division.
I am also not a huge fan, even though it may have shed some light on what is really going on, of airing the dispute/negotitiations about the stadium and premesis in public. As we haven’t heard a word publicly from Mr. Gibb for quite some time it seems unlikely that he’ll now rise to the bait of a public slagging match, what has he got to gain?
It will definitely be an interesting pre-season and I hope that our ambitions are realistic because then it might finally give us the chance to build up our fantastic club once more.
An excellent article.
In my job I look after the finances and property portfolio for a national retailer. It has been interesting to watch lawn’s tactics in recent weeks because they pretty much mirror what I have done to try to improve company profitability.
Firstly you try to protect ‘productive’ resources. In a football club these are the players wages, in my world this is product quality and brand marketing.
Then you look to make savings in ‘non-productive’ resources. The largest of these is often rent which is simply a payment to someone else. If you can negotiate a lower payment you win without impacting your brand, product or customer experience.
The problem with rent is that it is a ‘zero-sum’ game I.e. For you to win someone else has to lose. In addition you are usually tied into a long term contract that it is hard to break. In my world we would try to tackle these in the first instance by finding an alternative tenant for the landlord. Obviously this isn’t an option for city.
If this doesnt work you are left with either giving up or threatening the landlord and the only real threat you have is that the company will go bust and he will receive less cash then he would have done by simply accepting a lower rent deal in the first place. In the business world you can see JB sports currently negotiating exactly such a deal and this of course is what lawn is doing with the cva/odsal discussion.
Obviously you then try to lever up the emotional pressure on the landlord by talking about the number of jobs tha would be lost etc or in our case the potential death of the club.
None of this means that lawns tactics are wrong in fact quite the reverse – he is taking a well-trodden path to try and maximise the spend on players wages. However and the above article points this out very well – there is scope to reduce player wages if we have to – ultimately it’s the directors choice how much they spend. Thats true of every company inthe land be it a football club or a retailer.
I really hope lawn is successful as ultimately less rent means more and better players but I’m not losing any sleep over his tactics !
I love this web site! A great article from Jason and a very enlightening reply from you Rob that adds some understanding of real life tactics of the business world into the whys and wherefores of what is taking place at VP. It helps us ordinary folk to make more sense of it all by filling little a little bit more of the financial jigsaw puzzle.
“When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened.”
John M. Richardson, Jr.
Thaks for that Rob – I really enjoyed reading that.
Monday’s victory offers us a bit of breathing space. The combination of a potential relegation dog fight and the threat to Valley Parade was a perfect storm that could have engulfed the entire club. Events were beginning to gain a momentum of their own. We now have an opportunity to step back and pause for thought. Whatever our individual views on Mark Lawn, Julian Rhodes or Gordon Gibb, we have to try and think past the personality politics and consider the greater good of the club. I honestly do not believe that Mark Lawn wants to be remembered as the man who took City away from Valley Parade (I realise that his decision may be driven my other people’s actions, but history will link Mark and the loss of the ground). I hope, and expect, that he will explore every single avenue before an abandonment of our spiritual home is considered. It simply has to be the absolute last and final resort. If the entire survival of the club is at stake, I could accept a move. If it was engineered to give the club a larger wage bill then I would be implacably opposed.
For the moment we have to trust Mark Lawn and the other directors of the club to get this right. If they do manage to place the club on a firmer footing then they will deserve all the praise that will come their way, indeed if it is achieved I would expect many fans who have been either lukewarm (and I place myself in that camp) or outright opposed to the joint chairmanship of Mark Lawn and Julian Rhodes to re-evaluate their stance. However, if their efforts fail and we find ourselves at Odsal with a large points deduction then they surely know that in the short term they will face a torrent of criticism and in the long term history could be very unkind to their legacies. High stakes indeed, but if you take leadership of such a beloved local institution such as Bradford City it comes with the territory. There are few halfway houses in the world of professional football. How valuable was David Syers’ header? Over the coming weeks we will discover whether it was worth three points or something quite larger.
Great article Jason!
I’m usually an optimistic person but when it comes to Bradford City I’m a bit of a pessimist. Despite David Syers’ last minute winner against Aldershot Town, I still fear relegation to the non-league. Hopefully by 5pm this coming Saturday we will have preserved our league status following the away game at Hereford.
However, what I fear more is leaving Valley Parade and playing football elsewhere. Whatever you think about Mark Lawn, I don’t think that he’s lying about our current financial situation. I do hope that common sense prevails and we can sort out the situation with our ground. If we leave Valley Parade it will be so disrespectful to the 56 people who lost their lives on 11 May 1985.
Great article Jason.
The truth is I don’t know whether what Lawn says is the truth or just a sneaky call for help and money so he can get out.
We know its not in a good spot, so as a director its up to Lawn etc to look at a number of schemes to ease this. If this means each supporter who has bought a season ticket for next season needs to put £50 extra in then Ill do it. But tell the fans what you are doing other than negotiating the rent. we know this is the big issue, but lets look at other things we can do to make sure that we ease the burden.
Tell us the playing budget is reduced and to expect the juniors to come through next season, so we will have to settle for mid table. Tell us that players on big wages (Doc etc) will be shipped out without asking for a transfer fee. Tell us that each game will have 5,000 £1 tickets available on a first come first served basis (that’s over £100k if you get them all snapped up for each game).
If we asked each supporter to put an extra £1 in at each game they attended how much would we get? 11,000 average attendance over 23 games is 250k.
So there you go Lawn, there’s £350k for you right there.
Where are all the raffles the club used to do? Im sure the sponsors can put up some free prizes or something for the club to sell tickets on the turnstiles.
As a marketing person day in day out, I have hundreds of these ideas. There is no forum to add these to the pot though. I never see anything forward thinking coming from the club at all with regards to stuff like this. The £1 offer is great, but why not extend this to certain category matches (teams/games we know from past experience will have a lower attendance).
There is so much we can do to increase revenue into the club. But its always the same old story. Im really interested to see what Nike will do with the club shop next season.
Just sick of the running to the press – there are a number of supporters who have ideas like this so lets get them all together to see how we can bring £ into the club instead of moaning all the time!
Great ideas Steve, I hope someone at the club is reading this!
My understanding is that the football league set a cap on the number of promotional discount offers that can be made to home fans in any one season, so I’d be more than happy to make a larger contribution to the cost of my Season Ticket / on match days if it meant staying at VP. As you point out, across the fan base this doesn’t have to be huge amounts of money, just a few extra quid from everyone here and there.
I find even the idea of moving away from VP distressing and believe that we should do whatever it takes to stay. I acknowledge the remarks in the comment below about what has happened elsewhere, but just because other clubs have been forced to move doesn’t mean a precedent has been set in stone.
We have saved the entire club before (twice), so I see no reason why we can’t save the ground… if losing it really is at stake. At least, we should first try out the suggestions you make above and always see leaving VP as the very last resort.
Maine Road, Highbury, Ayresome Park, The Goldstone, and especially Burnden Park, where 33 people were killed in 1947; the worst disaster at any English football ground prior to 11th May 1985.
If Man City, Arsenal Middlesbrough, Brighton & Hove Albion and Bolton Wanders can all move, why not City? Any valid argument has to make it different to the above. What makes Valley so special?
With the exception of Brighton, the other clubs were on the up and needed a bigger\updated stadium to increase revenue\accommodate more fans.
In Brighton’s case the ground was sold to avoid bankruptcy or line a chairman’s pocket, I forget which.
Valley Parade IS special because of events 26 years ago. Burnden Park IS special because of events 50+ years ago.
Bolton chose to increase revenue and dine at the top table, fair enough.
We have the chance to play football at an outdated rugby league ground on the other side of the city, potentially with a points deficit.
Not really the same after all now is it?
I’d suggest Glyn that all of the above teams have moved to bigger, better and modern grounds. The sacrifice having been weighed up as worth it. The current talk of City moving to Odsal in its present antiquated ‘not fit for purpose’ (to quote a the buzz-phrase of the day) smaller seating capacity state from a bigger, better and modern ground would most definitely not be a sacrifice worth making.