Extract of Conway's comments in The Athletic article

I've got a cheap (£1) 6 month initial subscription to The Athletic, so I went looking for the Conway interview referenced in the Yorkshire Post.

I couldn't find the one referenced in the YP article but I did find this one from 22nd September regarding Chinese /US investment in football. I've pasted the relevant bit below.

It gives a bit of insight as to their investment strategy. Basically the cost of buying European football clubs is so much lower than other sports (NBA gets referenced as an example) that they're investing where they can.

The general issue I have with the approach, after reading this, is that they seem to be treating the investments like penny stocks. Buy cheap and hope that one of them strikes gold, but with no specific focus as to which one this is. They're largely just content to leave things alone and no doubt live with a few failures on the way as long as some are successes.

It makes more sense to me now as to why they've invested in us and then seemingly done little to grow the investment. However it does little to re-assure me as a supporter that we're going to see anything more than minimal input from them to actually grow and develop the club.

I thought it would be of interest for others to be able to read it.

I must admit, I did laugh at the bit about spending a lot of time on site though.

 

Thanks for that and it very much gives credence to my long held opinions that they're essentially buying cheap distressed purchases in the hope of moderate speculative appreciation, similar to their recruitment strategy last season. Maybe they are even being provocateurs to encourage the minority stake to buy them out at a higher leveraged price (a la OGC Nice).

It may well be they think they can get teams into the Champions league or Europa league from a flat or declining base, but what doesn't hang together is the mechanism for doing that, and without the added commercialisation and internationalisation they inferred from day 1 nearly 3 years ago, it's not easy to see how they increase the amounts to spend and operate at a higher level than when they started. I can see why they may initially approve of the changes to league structures and monies, but its not conducive to the aspirations they allegedly hold.

And frankly, without investment, their best hope is for football to almost collapse and the huge indebtedness in some clubs to bite hard. All a bit Leninist, to rule from the ashes. But if this bail out were to happen, it's not guaranteed we'd still benefit enough to allow us to ascend to a higher norm. Other clubs have bigger bases and may still find owners willing to write off monies to subsidise losses to try and outcompete. Monies may also be paid on the basis of indebtedness (hopefully with conditions), or on a league placing sliding scale. Neither of which would benefit us at this time.

I've long said I don't see any strategy to any of what they are doing. I hear words, very infrequently, but they lack congruence with action and tend towards excess hyperbole instead of reason and truth.

The words that still resonate most loudly when they acquired us was "it was too good to be true". I wonder if they still think that privately?

 

Can someone explain to me how increased investment, especially in the Championship, ever leads to a payback, a return on that investment. Most Championship clubs have used exactly that strategy, and for most, there has been only a catalogue of increasing losses and increasing debt.

 

It seems to me that looking at that approach, they will care little for any fan views expressed on here, and indeed seem pretty relaxed as to how the club fares in the short to medium term. To me, their objectives are not particularly aligned to the aspirations of many of the supporters. But no doubt there will still be those who support the owners' approach.

 

Said all along i think their strategy is about the market value increasing with TV revenue being at the forefront of that, nothing in that statement changes my view in fact increases it.
At the time of their investment Chinese TV revenue was expected to increase significantly and Indian TV was being touted as the next big thing estimated to be worth Billions.

 

If they are hoping for capital appreciation during their tenure, it certainly seems that it will have to come from external factors rather than their own endeavours.

 

Thats a very well thought out post mate. I know some posters like to believe in their long term plan and the application towards running OUR club.
To be fair they have slightly diluted their attitude to some players, within the plan and granted our last coach a couple of experienced players (albeit from abroad).
It must very diffecult for most boards to run a football club at the best of times but our custodians do not help themselves. They have a very poor PR with the fans and their major announcements have been worse.
Iv e stated all along (imho) that for professional overseas succesful businessmen their record at our club, despite their boasts of improved commercialism and international dealings have been as flat as their comments.....i expected more....MUCH more and after 3 years in charge not only have we not seen any visable improvement in those areas, i would argue we are no better off in any way shape or form.
The Nice thing concerns me greatly and so does how they are paying for our club and the internal board wranglings.

 

The owners hope that if they operate a strategy which aims to break even over the long term, that the alternative, which is to lose money and incur huge amounts of debt, will eventually break the will of other owners to continue financing the losses. You do not become successful by simply emulating what others do. You become successful by having a different strategy, one that better reflects the market place. All I read on here is that we should adopt the failed policies of other football clubs, as though a consensus of failure must be right. It isn't and it has led to a highly unstable Championship. In the current turmoil, the successful clubs will be the ones that operate differently, and not the one that follows the herd.

However, I do agree. Without a root and branch reform, more money is simply not going to help. It does not take away the reason for the trouble that football below the Premier League is in. That reform is vital before any bail out is begun.

 

I've not advocated more debt though. Typically, a business increases its value through other mechanisms, not astronomical debt accumulation.

 

The "all or nowt" argument being run again, I see. If you move to a better house you usually have a bigger mortgage (more debt) but a more valuable and enjoyable asset in the meantime. And eventually the debt is repaid and you own the asset outright.

 

Indeed. I see absolutely no evidence that our "professionalism" in terms of governance has improved since they took over. No expanded income streams and being beaten to every player we're linked with. A repeated failure to learn from mistakes, and a seeming inability to put together a team fit for the Championship. The only thing we do better than other clubs is our communication with fans (apart from when it relates to big announcements), and as far as I can tell that's all done by people who were here before they arrived and will probably still be here long after they've left.

In fact, the more I think about it the more cross it makes me. Ignore football for a moment, and think about "professional" businesses. When buying and running a business, it's hugely uncommon - and maybe even unheard of - to pay the purchase price and make no investment, claiming you can run it as it always has been out of existing turnover. Even if you bought a coffee shop you'd redecorate, buy new furniture, maybe invest in a brand new espresso machine. Buying a business and expecting to turn a profit without investing a bit of your own cash isn't running a business professionally, it's something retired people do because they think it'll be a nice change of pace.

 

I know that the owners suggested commercialism and internationalisation were possible ways of increasing revenues when they took over, but I always thought that it was "pie in the sky". What other ways are there of doing so, given the reluctance of fans to pay any more. I can only think of the strategy they use. Buy young players, improve them and sell them on for profit. I may be being unintentionally slow witted, but it would be great if there was an alternative strategy that could be successful.

 

The alternative strategy is to put together a business plan, invest a reasonable amount of (either your own or borrowed) capital, and aim for a return over 3-5 years. It's riskier than your average business, but that's why the value is there compared to US teams. It's priced in. Seems to me that they haven't even gotten as far as the first bullet point on the list - they're just throwing darts at random and hoping to strike lucky.

 

Whether you considered it pie in the sky or not, it was still their claim. And 3 years on, there is no real evidence pre or mid covid, of any seismic jump. If someone were "investing" for profit into an entity, you would expect to see signs of activity that they suggested were taking them to their intended goal.

And if you start to evaluate the acquisition of young players and turn into profit, at this time, profits are merely subsidising losses on failed signings. That might change in future, but at the levels we're selling our best players at and the alleged fees some of our new signings have been brought in at, I don't see that changing for several cycles at least.

The other thing that is important to factor in. The success of Barnsley FC as a football team and the cost effective success of the consortiums acquisition of the limited company are not linked in a linear way. Barnsley FC does not have to succeed to be worth more on disposal. It just has to be seen as more valuable, or value added in the cheapest most cost effective way possible.

OGC Nice is a prime example. They got much much more on sale for doing very little off the back of one season of champions league football, after which they got rid of the players that got them there and sank.

The fans would say they were taken backwards. The consortiums sales proceeds will be viewed very differently.

 

When you buy a better house, is has an expected lifetime extending to longer than the term of the mortgage. The lender knows that he can repossess the house should you fail to keep up the payments.

When you buy a footballer, his maximum lifetime is the length of the contract he signs. If he is to be an improvement upon what was there previously, his wages will also be more. So to summarise. If you buy a £6 million player, that fee is written off over 3 years and no lender is going to advance you a loan for longer. The player's wages are £2m per year, about £1.5m more than the old player. The loan interest over 3 years at 5% is about £70k per year. The cost of that player over 3 years is £10.7m. At the end of 2 and a half years, you could be fortunate. The player could be worth £20m and you have recouped your investment and made a small profit. The player's value could have gone done and you could have lost money. The player may just walk away for nothing and you have lost the lot. Which ever one it is, the odds are that the whole process begins again. The is not the whole team, or even a big enough proportion of the team to make any difference, so you have to multiply these figures by the number of players that you believe you would need to make any difference.

Now I am not a betting man, and I would not touch such an investment with a barge pole. The odds are too heavily stacked against getting a successful conclusion, and the stakes are too high. But I know that you are a betting man, and I would be interested in your opinion on that sort of investment from that standpoint. Certainly, a lot of Championship club owners will currently be regretting their decisions to place those bets , I guess.

 

The current owners are operating a policy that is bringing them limited short-term success, but at a price they can afford, or at least at a price they are willing to pay. That is important if you think that any investment is limited in its growth potential, and that is where the owners differ from the fans. If a fan was spending their money, his aim would be to invest to get the best returns possible. The fan is not interested in long-term returns on any investment, because he is playing the investment game with someone else's money. However, if the fan is playing exactly the same game, but with their own money, we would see an entirely different assessment of risk and reward. A couple of months ago, I asked if fans would be willing to pay higher season ticket prices if it allowed more investment in the team and its pay. As I recall, there were just 2 takers. That illustrated the problem. All fans want to see better results, but few fans are prepared to pay the price. The owners will potentially benefit financially if the value of the club improves, but fans also benefit because they enjoy the football more. But who should pay, especially if the owners will not, because it does not make financial sense to them?

 

I don't expect additional investment (although I'd quite like them to pay the Cryne's the full purchase price they agreed, for appearances sake).

I do expect a policy where you utilise the available resources effectively to progress the club and realise full value for players when they do inevitably get sold. This includes retaining Championship status as a fundamental aim each season, as your squad becomes devalued within a League One team when it inevitably does get broken up. The sustainable strategy relies on you doing this successfully so that you can accumulate value with each cycle of investment, whilst still improving the base level of your playing squad over time. It's fraught with difficulty, but it is the only realistic model we have to develop further.

If your long-term investment goals are tied to the expectation of increased TV revenues, as suggested in the thread, then you also need to be playing at the level where your share of these deals is at its highest. Again, ignoring the miracle of promotion to the Premier League, that too relies on being a Championship club.

Failing to maximise value for your assets when sold, and sub-optimally investing in replacements, particularly with regard to them contributing immediately to the first-team, doesn't achieve the above and that's where we're currently failing. In particular, the priority of being stable in the Championship is just not sufficiently being evidenced and, as feared, we don't seem to be learning from the lucky escape we had last season.

Personally, I'd also prefer that the ownership were focused on a single club, not a portfolio of them (especially now that we're seeing transactions between them, which we have to assume are being carried out on a normal arms-length basis).

 

I'm not sure what success we've had if you look at December 2017 to October 2020. We're at the same place as when they took over.

We're certainly not more successful on the pitch, and we're definitely not more successful off it.

Youre linking consortium success with football success of the club, and the two just aren't linked at all. They may have overlap, some may assist to a degree, but its absolutely possible these owners could make decisions that benefit themselves to the detriment of the club in the long term, but allow short term profit and capital growth.