WACCOE -> For What It's Worth
Bill Gerrard
It's difficult to work ot where our club is financially with so limited information in the public domain. But here goes my best estimate.
When Ken Bates took over, he mainly talked about the balance sheet. He said that the liabilities (what we owe creditors such as the taxman, ex-players, etc.) was down to around £13.5m (including £4.4m of loans owed to the previous directors). However over the last few weeks, as he has got his feet under the table and his advisors have got to grips with the financial details, Mr Bates has put more and more emphasis on the operating position (cash flow in and out). His programme notes have indicated that we are currently losing around £120k per week which is annual loss of £6.25m. There has been some pruning of the playing squad with a few young players leaving but the only major wage reduction has been Duberry. According to Bates, Duberry's transfer has saved £700k over the next 17 months (or £9,500 per week). So at best we are still projected to lose around £5.75m next year.
A projected financial deficit of around £6m next year seems credible given the Premiership earners still on the books plus what has to be paid to ex-players and other creditors over the next 12 months. It was the scale of the continuing operating losses and the need to find around £6m to fund the club next year that was the major reason why the Stubbs consortium moved so slowly.
There are only really two alternatives to fund the deficit - get new investors to put money in or try to increase matchday revenues by hiking up prices. Today's letters to season ticket holders confirms what most of us probably expected. And I think the chairman's programme notes have been preparing us for today's news with all the talk about average revenue per seat.
It's a high-risk strategy. Hiking up ticket prices hits loyal fans with families and/or low incomes. The club obviously believe that the fall in revenue from fans who don't renew will be more than offset from the increased revenue from the fans who renew at the higher prices. As I said, it's a high-risk strategy that will cause considerable resentment and may not even generate much in the way of additional revenue if the club has overestimated the expected number of renewals. The brutal reality is that the club is relying on the fans to cover the funding gap. The fans are ultimately having to pay the price of previous financial mismanagement.
So to sum up the ticket price rises were almost inevitable. Bates's takeover prevented administration/relegation and broke a very vicious spiral of decline. Bates brought a degree of financial stability but he didn't solve all of our financial woes. Two things are absolutely vital over the next 14 months - a successful team on the pitch and further new investment. In the meantime we as always are picking up the tab.
Bill Gerrard
It's difficult to work ot where our club is financially with so limited information in the public domain. But here goes my best estimate.
When Ken Bates took over, he mainly talked about the balance sheet. He said that the liabilities (what we owe creditors such as the taxman, ex-players, etc.) was down to around £13.5m (including £4.4m of loans owed to the previous directors). However over the last few weeks, as he has got his feet under the table and his advisors have got to grips with the financial details, Mr Bates has put more and more emphasis on the operating position (cash flow in and out). His programme notes have indicated that we are currently losing around £120k per week which is annual loss of £6.25m. There has been some pruning of the playing squad with a few young players leaving but the only major wage reduction has been Duberry. According to Bates, Duberry's transfer has saved £700k over the next 17 months (or £9,500 per week). So at best we are still projected to lose around £5.75m next year.
A projected financial deficit of around £6m next year seems credible given the Premiership earners still on the books plus what has to be paid to ex-players and other creditors over the next 12 months. It was the scale of the continuing operating losses and the need to find around £6m to fund the club next year that was the major reason why the Stubbs consortium moved so slowly.
There are only really two alternatives to fund the deficit - get new investors to put money in or try to increase matchday revenues by hiking up prices. Today's letters to season ticket holders confirms what most of us probably expected. And I think the chairman's programme notes have been preparing us for today's news with all the talk about average revenue per seat.
It's a high-risk strategy. Hiking up ticket prices hits loyal fans with families and/or low incomes. The club obviously believe that the fall in revenue from fans who don't renew will be more than offset from the increased revenue from the fans who renew at the higher prices. As I said, it's a high-risk strategy that will cause considerable resentment and may not even generate much in the way of additional revenue if the club has overestimated the expected number of renewals. The brutal reality is that the club is relying on the fans to cover the funding gap. The fans are ultimately having to pay the price of previous financial mismanagement.
So to sum up the ticket price rises were almost inevitable. Bates's takeover prevented administration/relegation and broke a very vicious spiral of decline. Bates brought a degree of financial stability but he didn't solve all of our financial woes. Two things are absolutely vital over the next 14 months - a successful team on the pitch and further new investment. In the meantime we as always are picking up the tab.