Impressions from last night

this is worrying for me, in a successful promotion and wembley double season, we still actually blew £1 million ?

whats this news as well about winnall & hourihanne saying they want to play at a higher level and wont sign new contracts. is this what was actually said/meant ?

 

The club has already been asset stripped because the club doesn't own 100% anymore due to the council share. If the council aren't willing to sell their share it's no wonder we don't get proper bids for the club so that our own can enjoy himself more without the stress.

 

What stress ..its a safe guard stopping any one selling off the land and putting the club in a bad position....PC welcomed the deal when he took over the reins...what would you rather have ...a chance for Patrick to sell the land and the ground for housing...or a position whereby we have a club and a ground that cant be built on...and before anyone goes Patrick wouldn't do that..hes a business man and if the right offer came in he would want to sell up...then what would be the safe guard then from stopping the new owners running the club to the ground ....and selling up completely...no more BFC.....mmmmmm now that would be stress

Patrick split the newly formed BFC when he took over into 2 hence one company own the ground and the other owns the team....he owns the team out right...him and the council own the land and ground ...simple as that..

 

It was said that Winnall & Hourihane will not sign a new contract, but I am not sure how much the reasoning was being invented. The way that I read it is this, would you sign a new contract when it could be to your advantage to let it run down. At the end of the season, they will make a decision based on the offers that they receive then. The example of Adam Hammill was quoted. He let his contract run down, he looked at his offers, and he still signed with us. Cryne said he did not fear the process because we would have had value for money for the fee that we had paid. But he may just have been putting a brave face on things, for all I know.

 

Quick question Red Rain. [Lazy on my part, but I don't know the answers or even the background to this.] Peter Doyle "rescued" the club but reportedly didn't put his own money up. I think he must have used his financial standing to obtain loan capital? So he didn't bottle feed the club cash. Self-sufficiency? [Not points-scoring - just playing devil's advocate for the sake of debate.]

 

No it's not. The club with Mr Cryne did what was best. It happens. Not sure why people can't see and/or understand the differences between Financial fair play and SCMP.

They are VERY different

 

We spent more than we made. In what world is that a good thing?

 

A business should run at a profit.

 

The intervention by Peter Doyle was so long ago that it almost seems a different lifetime. I am afraid that I do not exactly recall the events that took place then either, so others may have to fill in what I miss/get wrong.

The business of Barnsley Football club was being run by an Administrator, who had taken it over when the bank invited him to come in because the business run by John Denis had almost run out of money and was in imminent danger of catastrophic failure. The remit of the Administrator was to find a new owner who was capable of taking over the business and running it successfully. The bank wanted as much money back as it could get, so there was always going to be a price to pay, most of which was going to be in respect of the land and buildings.

The way that I heard it at the time, Cryne was always going to buy the club, but he was dragging his feet, because he wanted the best price. Doyle could not afford to buy the land and buildings, so he agreed a price for the football club, and in one fell swoop, he became the owner of a football club that he could not afford and had not the talent to run, and he increased the price that Patrick Cryne would eventually have to pay. Doyle did not have the funds himself, so he borrowed the capital that he needed to run the club from a set of loan sharks at an exorbitant interest rate. Who knows how he expected it all to work out for the best, because is was all pretty much doomed to failure from the start. In the end, Patrick Cryne saved him from himself and rescued the land and buildings from the Administrator through a joint deal with the council that meant they could never again be used in order to secure an unaffordable loan.

Doyle had gotten many things wrong, but the biggest thing was that he had over-estimated the goodwill of the fans. They just did not rally round in the numbers he expected. Season ticket sales were almost flat because no-one had any confidence that the team would make it through the season under Doyle's leadership. He had under-estimated the amount of capital that was needed to set the club back on its feet. He saw himself as saviour, but in reality, he was the only one who did.

That is probably not the answer that you wanted. I guess that you wanted me to say that he could have succeeded, if only to sustain the argument that I had made about self sufficiency. But the argument about self sufficiency only works if you have a decent management team, a clear plan and adequate initial funding. Sadly, none of these things were in place during Mr Doyle's brief reign.

There is though a dichotomy at the heart of the football industry. Under normal circumstances, the performance of all trading companies is judged by its annual financial statements. It is these that determine whether the company is judged a success or a failure. In fact, if the company losses money consistently, it will eventually find that it can no longer persuade lenders/share holders to continue financing it, and at that point it is wound up and it ceases to exist. Football clubs are judge more on their position in the football pyramid and how successfully they are at performing on the field. If Mr Cryne is right, last season was an incredibly successful one for the club on the field, but the company that operates the club lost a million pounds.

Not everything is reflected in the financial statements of a football club though. Transfer fees paid out are written off as costs over the term of the player's contract. That is, if we sign a player on a 3 year contract and pay his former club £300,000 for his services, we would write £100,000 off against profit in the financial year covering the first year of his contract and at the end of that year £200,000 would be carried forward in the balance sheet as an asset. So the Balance Sheet shows under assets the total value of player transfer fees not yet written off to profit and loss account, which is fine as far as it goes. However, if the player's valuation in the market has gone up, or indeed, a player has come through from the academy and we have never paid for his services, but he is now worth something on the open market, these figures are not recorded anywhere in the accounts. And of course, the final example is the John Stones situation. John Stones was sold with an add on fee of 15% of any subsequent profit that Everton FC make, so we could be entitled to a cut of 15% on £50 million if some of the stories are to be believed, and this is not recorded in the annual financial statements either.

All of the above mean that the financial statements take a very conservative view of the financial position of a football club, but the problem is that the unrecognised assets can only be liquidated and included in the financial results if the players are sold, in which case, future ongoing financial performance is likely to be affected adversely. Football Club accounts are very hard to read and interpret, so most do not bother. Instead, they are judged on how quickly they are burning cash, which is not the same as how quickly they are losing money. Now, the club does not usually publish its accounts until it absolutely has to by law. It is entirely possible that they have not been audited yet, and that Patrick Cryne is quoting, not what the clubs profit performance was, but how much money he was called upon to put into the club.

Even here we have a problem. Because of SCMP, the club must keep its spending on senior player wages to just 60% of turnover. If wages looked like exceeding this percentage, Mr Cryne would introduce capital to bring the figure below the 60% figure, and thus ensure the club escapes sanction. so it may not have burned all the cash that he was required to inject.

So, life is complicated, and just about now you are nodding off and leaving yourself a message not to ask me any more questions. Unfortunately, I do find this sort of thing of some interest, even though others probably do not. However, I was trying to illustrate how hard it is to identify the meaning of the phrase "self-sufficiency". What is actually meant is whether the club is able to generate the cash that it needs to spend, not only on wages, but also on transfer fees. SCMP does not recognise transfer fees paid, the logic being that a large transfer fee will attract a large wage, which will be recognised within the calculation. However, football club financial problems usually come about because the club runs out of cash, and cannot obtain cash from any other source, so what SCMP should do is ensure clubs are adequately financed.

Actually, what SCMP ought to do is ensure every club in a league has an identical budget for first team squad wages at all times. Then the playing field would be truly level and teams would only be granted promotion if they could prove that they could afford the standard financing requirements of the league above. Most of the problems arise when football clubs try to compete at a level they cannot afford.

 

My mate is a football club accountant...not BFC...the joke is ...to make yourself a millionaire , be a billionaire and buy a football club.

 

Said owner isn't immortal and we're not aware of an orderly queue of potential investors.

 

An interesting and comprehensive answer RR. (I haven't requoted it all so as not to clog the forum up). My gut feeling is that although PD may not have sacrificed any of his capital, and to that extent ran the club on a 'sound' basis, it was not a regime that necessarily advanced the long term future (or even survival) of the club? I imagine Mr Cryne will have a finite limit on the amount that he wishes to inject into the club during his stewardship. If so, then his support/commitment will have it's limits.

Some other thoughts though. In the life of any business there is a point where investment needs to be made for future growth. (In this case the 'growth' means getting out of the alehouse league that we were playing in.) I'd argue that that investment was made with the recruitment of Adam Hammill, Aidy White and Keving Long (for a period) - an investment that arguably turned our season around. And although we may have 'lost' £1M last season, the value of the football club (as a member of the Championship) has surely grown? I know there are complications about Mr Cryne ever being able to realise that value but I'd argue that the money was not simply thrown away. I don't know that your idea of everyone having the same budget for their "draft" would work in practice, but I agree that the playing field ought to be a lot more level than it is. Interestingly, Lady Kaht came up with a novel solution when she suggested to me that the parachute money should really be paid to the newly-promoted clubs and not the relegated ones!

 

There's a problem with that model though isn't there? Even wealthy people have finite resources and are mortal.

I wish PC a happy long and prosperous life and wish he could always be here to guide our club.

 

Lady Khat is a very wise woman. That is something that I have often debated myself.

There are certain truisms that I think few would debate. The first is that the game is not played out fairly. Club A has more chance of winning games than club B because club A has more money. Last season Barnsley was club A, and whilst I had two marvellous days at Wembley, the feeling that we won both those games not because we were the better of two equally matched teams on a level playing field, but because our owner was willing to invest more of his own money so that we could employ better footballers. It is this sort of thing that complicates my feelings about the game. At one time, the game was played between my town and your town. It was a time when the footballers of the town represented it, and when they won, they won for the town. They went on an open top bus ride through the town and the people gathered around to express their pride in their team. The same happened this year, but in actual fact, those games were probably won because our budget was higher. Now that would still be an achievement for the town if the budget was higher because the people of the town had supported the team better than the other towns had supported their teams. If they had attended in greater numbers or if the had been willing to contribute more towards the success of the team, but the debate about ticket prices this week showed that many in the town want success without themselves being willing to contribute to it. In that case, the performances of the football club becomes, not the source of pride to the whole community that they should be. The club becomes the toy of a rich man, who plays a different game with other rich men, and the supporters become the onlookers at a game played out between rich men in a boardroom. The game of football was not like that when I first came into it and I have difficulty in reconciling my emotions these days. I still feel the same things in my heart, but in my head it feels different. I cannot help but think that the game has become detached from its roots.

The second point that I would challenge is about the investment of cash as an investment in the future of the club. You make this point in relation to the investment of the players mentioned. That investment has, directly or indirectly, allowed us to be promoted to a higher league, a league where the financial rewards are greater because of the money that Sky invest in it. The problem is that although turnover will increase, costs increase at a much faster rate. So the investment that Mr Cryne made last season has simply guaranteed that he will have to make higher investments if he wants to see his football club remain in that league, and I do not see that it makes last season's investment a particularly sensible one.

Of course, there will be those who think that our new magic formula is the answer, who think that we have suddenly found the antidote to the phrase "cash is king". I am of course referring to the new policy of finding players before anyone else, developing them and either incorporating them into the team or selling them on at a profit. It would be nice to think that last season's success was a first result of this new policy, but Mr Cryne's statement about our losses says different. It says, we were promoted because our budget was higher and not because we have some magic formula that no-one else has thought of. The new policy, if indeed it is going to prove to be a successful policy, will be judged by its success over the long term, just as our academy should be judged over the long term. Our academy fails that long term measure of success, and it will still fail even if John Stones is sold for a great deal of money by Everton. Some clubs have made a success of their academies, but we have not. The new policy has not proved itself yet and it can only be judged with the benefit of hindsight.

I maintain that the financial problems in football are caused because clubs try to operate above their natural ceilings, and that those ceilings are governed by the financial support of the community that surrounds them and supports them. Sky has confused matters because is has put vast sums into the game, and these sums are not divided equally between the clubs, as once applied. The main beneficiary of this unequal division of revenue has been the players, who have prospered as football club owners have seen that the way to obtain a bigger share of the Sky revenue is to pay larger and larger sums for the better players. The game has gone to hell because all the money that Sky invests has immediately left the game via the wages of the players, instead of percolating down through the league via transfer fees. Clubs like Barnsley are trying to run up the down escalator. They are trying to fund a competitive team whilst the cost of doing so continues to increase at an ever increasing rate. For Barnsley FC, I suspect that a solution will always be one more investment away from us, but the frustration for football in general is defeated by the one thing that is vital to the game. It is a competitive business on every level.

 

I just hope they've accounted for enough chalk for the new scoreboard

 

If he wants to do that fair enough. In an ideal world though you run at a profit or your worth will only keep getting lower.