[Archived] BRFCS Podcast #52

[Guest Wen Y Hu]

In Podcast 52 Wen Y Hu is joined by accountants Andy Neil (FernhurstRover), chair of the Fans Forum, and Dan Grabko, the Rovers Trust finance officer, to discuss the Rovers accounts, the financial aspects of the Rovers Trust and the role of the Fans Forum.

The podcast is published to the front page here.

It is also available via the following link. Just paste the link into your browser address bar.

http://brfcs-podcast.brfcs.com/BRFCS-052.mp3

[Guest Wen Y Hu]

A big thanks to Andy and Dan for presenting such a clear discussion of the accounts and also for taking the time to tell us about the Rovers Trust and Fans Forum. They are both more than willing to answer questions and discuss individual issues, but this would be better off in the threads for those purposes as follows:

Accounts thread: Venkys London Limited - Accounts

Rovers Trust thread: Rovers Trust

Fans Forum thread: Fans Forum pre-meet

[Wayne Wild]

To add detail to some of the questions raised by Andrew....

£1000 is a lot of money to ask for purchase of 1 share, however owning a share of a football club is an extremely expensive operation so the share cost has to be quite high. In order to reach a 'target' goal of £10m capital the share price has been discussed and debated in great detail. Individuals can also form together in order to purchase a share.

We have worked hard to build a relationship with Jubilee Credit Union in which they will load £750 of the £1000 at low interest rates.

To be clear, the ultimate goal of Rovers Trust is to own a share of the club, however large or small that percentage may be. That is the fundamental goal of the government backed Supporters Direct which supports Rovers Trust. This is the only way that supporters can have a real voice and influence in the club they support.

Rovers Trust want Blackburn Rovers to be a successful football club and want to share in this success. We are willing to work with the current or any future owners in order to facilitate a strong future.

Wen asked a direct question about how the Trust could fund a club in the championship without large TV income. Dan answered this well. The new Financial Fair Play rules mean that wealthy owners cannot bank roll football clubs in the future. Successful clubs will be the ones that have a well run and financially sound business model that ultimately is fed from income. Therefore we need a thriving paying fan base and good commercial income from sponsorship and advertising partners.

[Wayne Wild]

BRFC earned £40m in TV revenue last season, full details can be found at http://www.sportingintelligence.com/2012/06/19/premier-league-tv-rights-qa-including-where-the-money-goes-and-what-next-190601/

This season and next BRFC will receive £16m per annum in parachute payments plus £2-£4m in TV revenue. Added to that the massively reduced income from gate receipts and commercial activities means a 50% reduction in income. We don't need to be chartered accountants to understand what this means. We guess at the current cost base of running the club but all estimates are of a large monthly operational loss.

IF the owners are willing to underpin these losses from parent group funds then there is no problem. Hence why Paul asked Shebby quite strongly for a statement from the owners to confirm this. The 2 week time period is almost up. IF the owners underpin then there is no problem, if they don't then there is a catastrophic problem.

What we do need is some clear communication from the owners telling us all directly and clearly what the financial position is so we can all concentrate on following the teams progress and not worrying about the financial future.

[Amo]

Unfortunately, Dan, shifting high-earners isn't quite that simple - otherwise every club in the country would do it.

[Mercer]

Listened for the first 30 odd minutes or so until you reached the discussion about the Trust.

Some observations:

• Surprised that it was said on more than one occasion that Philipl overstated the problem. IMO, that is ridiculous - we are in the deepest of the proverbial and no disrepect to you guys, but Philipl sounded a tad closer to the numbers and more comfortable in his understanding than you did
• Dan spoke about renegotiating down contracts - this is the world of football and whilst the wages are being paid, not a chance !
• Andy spoke about Boardroom savings offsetting player costs - chicken sh1t numbers that will hardly cause a ripple in the scheme of things

IMO, our Finances are dire, you can get as many people on Podcast to talk about them but the problem can't or shouldn't be disguised.

[AggyBlue]

To add detail to some of the questions raised by Andrew.... £1000 is a lot of money to ask for purchase of 1 share, however owning a share of a football club is an extremely expensive operation so the share cost has to be quite high

If shares in the football club were offered for sale by the Venky's, would they not set the share price?

[Wayne Wild]

If shares in the football club were offered for sale by the Venky's, would they not set the share price?

£1000 shares are in the CBS scheme. The total value of all the sold £1000 shares are then used to buy shares in BRFC. The share price would obviously be agreed with the owners.

[Daniel Louis Grabko (Dan)]

Unfortunately, Dan, shifting high-earners isn't quite that simple - otherwise every club in the country would do it.

Listened for the first 30 odd minutes or so until you reached the discussion about the Trust.

Some observations:

• Surprised that it was said on more than one occasion that Philipl overstated the problem. IMO, that is ridiculous - we are in the deepest of the proverbial and no disrepect to you guys, but Philipl sounded a tad closer to the numbers and more comfortable in his understanding than you did

• Dan spoke about renegotiating down contracts - this is the world of football and whilst the wages are being paid, not a chance !

• Andy spoke about Boardroom savings offsetting player costs - chicken sh1t numbers that will hardly cause a ripple in the scheme of things

IMO, our Finances are dire, you can get as many people on Podcast to talk about them but the problem can't or shouldn't be disguised.

Unfortunately, Dan, shifting high-earners isn't quite that simple - otherwise every club in the country would do it.

That is absolutely correct, Mercerman - reducing the directors' wage bill is a futile exercise in comparison to the wages paid to even the middling player salary on our books at the moment. You only have to be making £5k a week to be making double the highest paid director.

All I was trying to say is that there are several options to trying to get rid or reduce those wages for the high earners. I didn't mean to imply that it was easy, and I wasn't trying to suggest that putting players on long term high wages contracts when in the position the club is in is a good idea. It is a very bad idea.

The finances ARE dire. However, when put in relation to a vast number of other clubs, it is almost normal. This is the point I never really got to. The entire game has this problem. The fact that we are sitting with debt that is either at comparable levels or less than many clubs around us, just illustrates this.

The most worrying thing about the books is the debt that is now owned by the owners, which could cause massive problems when they decide they've had enough, and the massive player wage bill, which as you and Topman have rightly pointed out, are definitely not easy to reduce.

My estimate of our operating loss in simple terms is this:

Turnover: £24-27m from parachutes plus Championship TV & League money plus matchday and commercial.

Expenses: Wages: £38-45m, Other Operating: £10-12m, Total: £48-57m

Operating Loss: £24-30m

Per month: £2-2.5m

It is EXTREMELY worrying.

[Mercer]

That is absolutely correct, Mercerman - reducing the directors' wage bill is a futile exercise in comparison to the wages paid to even the middling player salary on our books at the moment. You only have to be making £5k a week to be making double the highest paid director.

All I was trying to say is that there are several options to trying to get rid or reduce those wages for the high earners. I didn't mean to imply that it was easy, and I wasn't trying to suggest that putting players on long term high wages contracts when in the position the club is in is a good idea. It is a very bad idea.

The finances ARE dire. However, when put in relation to a vast number of other clubs, it is almost normal. This is the point I never really got to. The entire game has this problem. The fact that we are sitting with debt that is either at comparable levels or less than many clubs around us, just illustrates this.

The most worrying thing about the books is the debt that is now owned by the owners, which could cause massive problems when they decide they've had enough, and the massive player wage bill, which as you and Topman have rightly pointed out, are definitely not easy to reduce.

My estimate of our operating loss in simple terms is this:

Turnover: £24-27m from parachutes plus Championship TV & League money plus matchday and commercial.

Expenses: Wages: £38-45m, Other Operating: £10-12m, Total: £48-57m

Operating Loss: £24-30m

Per month: £2-2.5m

It is EXTREMELY worrying.

What also concerns me, and a number of others, is the feeling of complacency amongst some of our supporters and it is confirmed by some of the comments on this MB - 'things can't be that bad' and 'isn't it the same for other football clubs'.

Take your point about some commonality across clubs re finances, however, the dynamics of clubs are all different. For example, yes, we did have debt under the Trust but it was controlled and managed efficiently in marked contrast to the, IMO, shambolic ownership / operational management of Rovers now.

I think the more supporters who have an understanding of just how dire our financial position is then the better.

[AndyC]

To add detail to some of the questions raised by Andrew.... £1000 is a lot of money to ask for purchase of 1 share, however owning a share of a football club is an extremely expensive operation so the share cost has to be quite high. In order to reach a 'target' goal of £10m capital the share price has been discussed and debated in great detail. Individuals can also form together in order to purchase a share. We have worked hard to build a relationship with Jubilee Credit Union in which they will load £750 of the £1000 at low interest rates. To be clear, the ultimate goal of Rovers Trust is to own a share of the club, however large or small that percentage may be. That is the fundamental goal of the government backed Supporters Direct which supports Rovers Trust. This is the only way that supporters can have a real voice and influence in the club they support. Rovers Trust want Blackburn Rovers to be a successful football club and want to share in this success. We are willing to work with the current or any future owners in order to facilitate a strong future. Wen asked a direct question about how the Trust could fund a club in the championship without large TV income. Dan answered this well. The new Financial Fair Play rules mean that wealthy owners cannot bank roll football clubs in the future. Successful clubs will be the ones that have a well run and financially sound business model that ultimately is fed from income. Therefore we need a thriving paying fan base and good commercial income from sponsorship and advertising partners.

And therein lies the major problem. Rovers have never done well commercially compared to the other clubs & have always been at the bottom of the scale. There is too much local choice for the corporate boxes / tables. Our kit deals are tiny because our support is small & our catchment is very limited due to there being such a hotbed of quality football clubs all around us.

It's great that the club currently owns the stadium and brockhall, but if the club goes tits up because we don't get promoted, brockhall will be sold, leaving us with almost no assets.

question - what do you think good commercial income to be for rovers in the championship (ex TV)

[Wayne Wild]

When you say we have never done well commercially you are comparing us to the very big boys, which is obvious. However to other clubs at our level we were comparative and above the other local northern towns in the football league.

Only 2 years ago we had c25,000 average crowds, a £1.5m per annum shirt/club sponsor and a number of stand sponsors. We had box holders and full commercial lounges. The previous 10 years accounts were more or less break even. This is while clubs around us, Bolton, Wigan etc among others were making heavy losses. Therefore if we were under the same stewardship as previous, same controlled finances and FFP regulations were in place you would have to say that FFP would actually put us in a stronger position as we were already running a tight ship. Taking all this into consideration and without any bias or preconceived notions of supporter owned clubs or trusts then you would have to say that FFP means wealthy owners cannot bank roll clubs. Will therefore owners consider strongly the operational costs of running a club and generating income streams rather than consideringing the vanity and fame ? Personally I think not. We have always said from the very beginning of our ideas that the concept must be based around running a financially well run club. FFP has come about and underpinned all of our ideas and concepts. BUT, this has to be what supporters want and continue to join our membership, otherwise it cannot grow and become a force that will work. Currently we are concentrating on building our membership (£10 per annum) http://www.roverstrust.com/registration-page/

We will move to stage 2 and concentrate on pledge generation and raising once we get an indication from the current or future owners that they are willing to discuss options. However, as stated, currently the focus is on membership generation.

I urge you to join. At £10 per annum there is very little risk and financial cost. As a member you can vote on the upcoming elections for committee positions and be a full part of what we are trying to achieve. Our clubs supporter base is reducing by the week, we need to do all we can to reverse this apathy and disconnection with the club. I urge you to join. We are 100% transparent and a very hard working and committed steering group with mixed skills and backgrounds. We respect ALL other supporter groups and organisations and urge them to support and join us also. Only together as a strong force can we achieve the ultimate reason for why we do this, to protect the heritage and future of the football club we all support.

[MrT]

When you say we have never done well commercially you are comparing us to the very big boys, which is obvious. However to other clubs at our level we were comparative and above the other local northern towns in the football league. Only 2 years ago we had c25,000 average crowds, a £1.5m per annum shirt/club sponsor and a number of stand sponsors. We had box holders and full commercial lounges. The previous 10 years accounts were more or less break even. This is while clubs around us, Bolton, Wigan etc among others were making heavy losses. Therefore if we were under the same stewardship as previous, same controlled finances and FFP regulations were in place you would have to say that FFP would actually put us in a stronger position as we were already running a tight ship. Taking all this into consideration and without any bias or preconceived notions of supporter owned clubs or trusts then you would have to say that FFP means wealthy owners cannot bank roll clubs. Will therefore owners consider strongly the operational costs of running a club and generating income streams rather than consideringing the vanity and fame ? Personally I think not. We have always said from the very beginning of our ideas that the concept must be based around running a financially well run club. FFP has come about and underpinned all of our ideas and concepts. BUT, this has to be what supporters want and continue to join our membership, otherwise it cannot grow and become a force that will work. Currently we are concentrating on building our membership (£10 per annum) http://www.roverstrust.com/registration-page/ We will move to stage 2 and concentrate on pledge generation and raising once we get an indication from the current or future owners that they are willing to discuss options. However, as stated, currently the focus is on membership generation. I urge you to join. At £10 per annum there is very little risk and financial cost. As a member you can vote on the upcoming elections for committee positions and be a full part of what we are trying to achieve. Our clubs supporter base is reducing by the week, we need to do all we can to reverse this apathy and disconnection with the club. I urge you to join. We are 100% transparent and a very hard working and committed steering group with mixed skills and backgrounds. We respect ALL other supporter groups and organisations and urge them to support and join us also. Only together as a strong force can we achieve the ultimate reason for why we do this, to protect the heritage and future of the football club we all support.

Agree Wayne, we need to get all of them around a table inc Ian B and Ian C.......Especially the latter as you should try and get his father in law Gavin Steele involved in some capacity.

He did a fantastic job at Blackpool

[Daniel Louis Grabko (Dan)]

What also concerns me, and a number of others, is the feeling of complacency amongst some of our supporters and it is confirmed by some of the comments on this MB - 'things can't be that bad' and 'isn't it the same for other football clubs'.

Take your point about some commonality across clubs re finances, however, the dynamics of clubs are all different. For example, yes, we did have debt under the Trust but it was controlled and managed efficiently in marked contrast to the, IMO, shambolic ownership / operational management of Rovers now.

I think the more supporters who have an understanding of just how dire our financial position is then the better.

Couldn't agree with you more. Under JW, one had the feeling that even though things were tight, they were being managed in a professional amd competent manner, with calculated risks based on a business model that not only aimed to break even but had contingency plans to make it happen should the team not achieve the budgeted league position.

Now the budgeted league position (if you can call it that) is promotion or bust, it appears...

And there doesn't appear to be anyone at the club who has the first clue about how to go about achieving that, or know what they should do in the case that it doesn't happen. It isn't a matter of selling one player to balance the books anymore, and we only have a few players that could command the kind pf transfer fees that would help out in any significant way an longer...we've already sold most of those in the past two years. I could very well see the club put in a position where the owners hand over the largest fixed assets, such as the ground and the academy, to themselves as security on their loan to the club if they decide they've had enough. That way they would ensure that whoever came in after them would have to pay them up to take over, in much the same way that Portsmouth is being put through the ringer by their former owner.

[Stuart]

When we were owned by the Trust, we were desperate for someone to come in who had the money to takes us forward, take us from a trading club to a financially sound, competing club.

Sadly, it looks to me as though the Trust believed (or shut their eyes/ears and hoped) they had found this, and at the same time Venkys were sold the Trust model but with a conveyor belt of bright new talent from their 'friends in the industry'.

For the 'conveyor belt' to work, they couldn't have Allardyce or even Williams doing the deals, they probably weren't 'open-minded' enough to see what Venkys 'are trying to do here'.

The trouble is those with most to gain appeared to take a gamble that a career coach could provide the necessary tactical nouse and management skills, just because he had a few inspirational quote posters in his office and was 'a good thinker'.

Add to that a lack of appreciation for how much failure would actually cost and you have a recipe for disaster.

It may be that Venkys do have the necessary wealth to inject, as and when required, but they seem clueless as to how best to approach this and who to trust after being let down. They bring in their own man, flamboyant with a penchant for straight-talking but without the necessary filter to avoid dropping clangers to the detriment of his own, and the club's, credibility.

I believe that our ship has sailed to be honest and we are now a lower league club and we now need to move forward with our eyes open and with people in charge who care, first and foremost, about Rovers and not their other businesses (see both Venkys and Walker Trust here) and the sooner the better.

Playing devil's advocate, however, if Venkys are to stay, they need to scour the English (or even Scottish) football leagues for a credible football administrator who can be left to manage the club's affairs as he/she sees fit, and who can appoint (if necessary) and support the right manager to sort out the football side, with targets and performance-based milestones. (Part of me thinks that Paul Hunt was this man but that he was undermined by Team Kean?).

So I appeal to Venkys and offer you a cup of char in the last chance saloon. If you have cash and any intention of using it to the betterment of BRFC, send Singh to go on bended knee and make John Williams your top target to bring back to the club. Then tell Singh to hand over the keys to John and send him of on a marketing junket to the Far East - for a couple of years.

If you have no cash and are simply borrowing money to cover up your incompetence, please do the decent thing. Hand over the club to the Rovers Trust (gratis) and walk away. We'll even support a charade to 'let you' walk away with your pride intact.

Thanks.

[K-Hod]

It's no surprise that a relegated club would be struggling financially, but to be this bad is a concern.

[Wayne Wild]

When we were owned by the Trust, we were desperate for someone to come in who had the money to takes us forward, take us from a trading club to a financially sound, competing club.It may be that Venkys do have the necessary wealth to inject, as and when required, but they seem clueless as to how best to approach this and who to trust after being let down.

Stuart. Your post is still aimed at wanting Venkys (or anyone else) to inject cash to compete. The problem I think that 99% of supporters of all football league clubs, and soon to be PL clubs, do not yet fully understand is that wealthy owners CANNOT just inject cash without serious consequences. Clubs MUST compete under Financial Fair Play regulations. Otherwise there will be large fines and even player signing embargoes. THE most single important issue WILL be running a financially secure club within its income streams. This is like the credit bubble bursting. The more financially adept operating clubs are the more secure their future will be. This thread must be the most boring aspect of being a football supporter but currently its the most important.

It's no surprise that a relegated club would be struggling financially, but to be this bad is a concern.

Burnley and Blackpool aren't. They had wisdom in their approach. They realised that PL football would be very difficult to compete in and set players contracts and signings accordingly. If they had stayed up for more seasons that would have reaped the benefits even more. But they didn't gamble the future by over spending. £48m in parachute payments over 4 years gives relegated clubs a serious advantage over the rest of the division but again must me spent wisely.

[K-Hod]

Stuart. Your post is still aimed at wanting Venkys (or anyone else) to inject cash to compete. The problem I think that 99% of supporters of all football league clubs, and soon to be PL clubs, do not yet fully understand is that wealthy owners CANNOT just inject cash without serious consequences. Clubs MUST compete under Financial Fair Play regulations. Otherwise there will be large fines and even player signing embargoes. THE most single important issue WILL be running a financially secure club within its income streams. This is like the credit bubble bursting. The more financially adept operating clubs are the more secure their future will be. This thread must be the most boring aspect of being a football supporter but currently its the most important.

Burnley and Blackpool aren't. They had wisdom in their approach. They realised that PL football would be very difficult to compete in and set players contracts and signings accordingly. If they had stayed up for more seasons that would have reaped the benefits even more. But they didn't gamble the future by over spending. £48m in parachute payments over 4 years gives relegated clubs a serious advantage over the rest of the division but again must me spent wisely.

To be fair, they just refused to break the wage structure they'd had for years, they were one-offs, and it was their first time in the Premiership. For Rovers, this is only our 3rd season out of the top flight since it's inception 20 years ago.

[Stuart]

Stuart. Your post is still aimed at wanting Venkys (or anyone else) to inject cash to compete. The problem I think that 99% of supporters of all football league clubs, and soon to be PL clubs, do not yet fully understand is that wealthy owners CANNOT just inject cash without serious consequences. Clubs MUST compete under Financial Fair Play regulations. Otherwise there will be large fines and even player signing embargoes. THE most single important issue WILL be running a financially secure club within its income streams. This is like the credit bubble bursting. The more financially adept operating clubs are the more secure their future will be. This thread must be the most boring aspect of being a football supporter but currently its the most important.

It was more a potted history I was describing, Wayne. At the time of the sale, I'd say that's what the vast majority if supporters were hoping for though.

But there are ways and means of getting cash into the club that can be managed commercially. E.g. selling sponsorship: who decides its value and who can buy the advertising space?

However, if clubs are truly going to have to live within the means of what supporter gate receipts bring into the ground then we really are stuffed - whoever owns us.

The people of Blackburn aren't going to pay the going rate for a championship season ticket, not in the required numbers.

It makes me even more grateful for Jack. That really was once in a lifetime stuff, wasn't it...

[Stuart]

I hope Chelsea fans are taking note. Because if I lifelong Blackburn Rovers fans could ensure the best possible future safeguards for his club - via his family(!) - then there's not much hope for them when their owner become bored or heaven forbid his health suffers.

[Wayne Wild]

It was more a potted history I was describing, Wayne. At the time of the sale, I'd say that's what the vast majority if supporters were hoping for though.

But there are ways and means of getting cash into the club that can be managed commercially. E.g. selling sponsorship: who decides its value and who can buy the advertising space?

However, if clubs are truly going to have to live within the means of what supporter gate receipts bring into the ground then we really are stuffed - whoever owns us.

The people of Blackburn aren't going to pay the going rate for a championship season ticket, not in the required numbers.

It makes me even more grateful for Jack. That really was once in a lifetime stuff, wasn't it...

Once in a lifetime indeed !!

It's all income, TV money, gate receipts, commercial sponsorship, player trading etc. that is NO different to the last 10 years of running a club within the levels of income.

[StubbsUK]

What also concerns me, and a number of others, is the feeling of complacency amongst some of our supporters and it is confirmed by some of the comments on this MB - 'things can't be that bad' and 'isn't it the same for other football clubs'.

We've had no success on the pitch, we've been relegated and your average fan on the terraces can't see things getting any better, a perfect breeding ground for apathy, and no-one is going to begrudge fans feeling like that.

Apathy is to be expected and that's one of the areas where Rovers Trust can help, we have a wide range of people on the current steering committee, people like myself with a specialty in IT, people with finance backgrounds, people with backgrounds in business admin & community projects & members don't need to give up their precious time or anything else, you just need to become a member (which will cost a tenner) and while we're in the stage where we're building membership that's all you need to do.

There is 1 thing you can do, and that's tell people why you joined and convince them to join too.

[Mercer]

We've had no success on the pitch, we've been relegated and your average fan on the terraces can't see things getting any better, a perfect breeding ground for apathy, and no-one is going to begrudge fans feeling like that.

Apathy is to be expected and that's one of the areas where Rovers Trust can help, we have a wide range of people on the current steering committee, people like myself with a specialty in IT, people with finance backgrounds, people with backgrounds in business admin & community projects & members don't need to give up their precious time or anything else, you just need to become a member (which will cost a tenner) and while we're in the stage where we're building membership that's all you need to do.

There is 1 thing you can do, and that's tell people why you joined and convince them to join too.

To be honest, not convinced by it.

Main concerns are firstly, will be grossly under capitalised unless acquiring club in a dire insolvency situation and secondly, feel there are too many 'politics' and self interests involved in these supporter 'related' groups.

However, if the need arises, sincerely hope that you guys are up for the task and genuinely act in the best interests of BRFC and personal agendas / egos are set on one side.