Extract of Conway's comments in The Athletic article

Couldn't agree more.

 

Fair points. But surely if they want to returns on their money (the money they bought the club with) then they have to invest more money to grow the club. That's only how it can work in English football. Or indeed European football. To grow, clubs require substantial investment. Now, I'd argue that Barnsley can't actually grow that much. So then I'd argue, why did they buy us in the first place? I think it's because they simply don't have a solid grasp of English football and culture. In the U.S., fans swap and changes teams all the time. Not only that, a lot of them support many teams of the same sport. It's just how it is. People from Manchester, Sheffield, Newcastle, are unlikely to start supporting Barnsley even if we made it to them prem. However, many people from Barnsley started supporting Manchester City when they started winning things. But City has had billions of pounds of investment and is a global club now. Barnsley is Barnsley. We're small club. So why buy us? Now we're just in this cycle of selling and trying to survive. Until we go back to League One and I think they will call it a day.

Also, it's not that fans are calling for reckless spending, either. A little communication surrounding the money we have received for players and where it has been reinvested. Not fussed what anyone says, some money has gone missing. I appreciate COVID has happened. And if the board came out and said we have had to use up reserves to keep the club afloat, fair enough. They don't though. When the board communicate it's usually **** poor nonsense slinging mud at a former employees.

They like to portray themselves as all seeing, all knowing business tycoons, but football in England is much much more than stats on a spreadsheet. And if it wasn't for us lot, they wouldn't have a club to play with. Surely they must appreciate that in buying a football club, pressure from fans to invest in the club and to put the success of the club first comes hand in hand? It's more than a business venture. In the U.S. it might not be, but it is here.

 

This is ridiculous. You are repeatedly refusing to acknowledge the difference between a customer and a business owner. I know full well that you understand it, so why do you repeatedly act as if they're making the same decisions and for the same reasons? It's perfectly understandable for a customer to not want to spend twice what they already do to get a better product. It's not understandable for an owner to flat out refuse to put in cash in order to improve the earning potential of their business.

These owners are buying businesses that more or less break even, with a ridiculously solid customer base and set of intangible assets, for more or less 1x earnings. In normal business you'd have to be insane to think that you could get into that game and not spend money somewhere. But this isn't normal business, and they're not insane - this article makes clear that they have no interest in Barnsley, they're just banking on the rising tide of international TV rights money raising the ship that they bought for a song.

We should be owned by the fans. The end product would be the same, but at least the club would have a soul. And, if we ever make it to that point, your perennial analogy will finally be justified. We still won't want to spend a grand apiece on season tickets, but we'd be no worse off and much happier.

 

I am happy for you to remove limited short-term success and substitute no short-term success, because it has no effect on the main point of my post.

 

Oops, replied to my own post... apologies.

 

So if we're in agreement that they have made no positive (at best) progress in 3 years commercially or on the pitch, and they haven't made any obvious efforts to increase revenue, and in addition they've not consolidated assets (the ground) into the limited company they 80% acquired... why do you think they bought us, and what do you perceive may be their exit strategy?

 

In 2018, (the last time we played in the Championship for which we have filed accounts) the club lost £1.4m before player trading. That loss was reduced to just £0.2m because we made a profit of £1.2m on player trading. The season after, we played in League 1. Our turnover fell by £6.2m and our losses before player trading increased to £4.8m, although this was once again reduced to £3.4m because of a profit of £1.4m on player trading. The club consistently losses money (even without COVID19) and if it wants to break even, then it must sell players. It is the only demonstrable way of funding the losses.

The rest of the Championship have demonstrated that if you invest more, you lose more, and there is absolutely no guarantee that you can ever recover those losses. Those losses must be funded, and no commercial lender will touch such a risky loan, so in practice, the owners must fund that investment through loans. Our owners do not wish to do that, and in that respect, they are taking the same attitude as the fans to risk and reward.

 

To be honest, I cannot see a way of improving the value of a football club, based upon any logical reasoning. But that statement is even more true for the other clubs in the Championship than it is for us. Investors are sometimes willing to ignore past performance on the basis of future potential, and in some cases, clubs that have larger accumulated losses than we have, also have a better potential than we do. However, investment in football is not something I would be prepared to risk my limited financial resources on, so I am probably not the right person to ask about their motives.

 

I think there are numerous ways you could hope to increase the value of a club.

The first is buy it in a distressed state in the first place.

 

I don't agree that selling players is the only way of covering a £1.4m loss, and I refuse to believe that a set of literal billionaires (if they are to be believed) think that either. You're telling me that a bunch of businessmen who are well-versed in US sport looked at the Oakwell matchday experience and considered that there was absolutely no way they could look at bringing the profit up by about an extra £50k per fixture?

Investment doesn't necessarily mean throwing massive transfer fees around and spending huge amounts on wages. If they want the club to be sustainable then I approve, but even sustainability doesn't come without investment.

 

In fact, pretty much the only thing they've done of which I do approve is their current drive to apparently cut the running costs and associated money spent on the maintenance of Oakwell. I just think that in doing so they've exposed their own incompetence and lack of due diligence at the outset.

 

I was with you until you said we should be owned by the fans. Not a model for a team at the higher end of the EFL.

 

I don't really agree, but that's a different debate! My point was just that these guys bring us absolutely nothing that fan ownership wouldn't, except the lack of a stake.

 

Your post would certainly have got a like from me if it was ended with a number of practical suggestions as to how your assertion could be achieved on an ongoing basis. The weakness of your case, in my opinion, is that you do not have any suggestions. Once more, you turn your attention towards our owners and suggest that it is their fault that they have not solved the problem, rather than accept that the solution to the problem is a difficult one. Let us face it. The successful management of football clubs is not as easy as you are suggesting. In fact, it is very hard, and that is especially true when the club you are trying to manage has less income than the majority of clubs that it competes against. If you cannot accept this, then I think that we should agree to differ on the subject.

 

Red Rain said:

I have finally got round to checking the assertion in your opening paragraph. That assertion was that you do not have to fund continual losses to be promoted from the Championship, and you quoted Huddersfield and Sheffield United as examples.

Company balance sheets contain a line called RETAINED EARNINGS. What this represents is the accumulated profits or losses of the company since its formation. It is adjusted for Corporation Tax and Dividends, but since football club rarely if ever pay either, I have ignored it. I thought that you might be interested in the retained losses of those two clubs up to 2018. They are

Huddersfield Town -£31m
Sheffield United -£32m.

Just for comparison the figure for Barnsley is £3m cumulative profit.

Sheriff:

I understand exactly what the figures represent, being a Chartered Accountant by profession. I have also previously worked on a finance review for a Championship level club in which I helped draft a business plan for them, and have seen the inner workings of a football club far closer than most, including attending their Board meetings and reviewing player contracts (both eye-opening experiences).

The figures you quoted were largely irrelevant to the post I made, for which the general point was that you don't need to fund continual losses as a Championship club, and describing a model under which our club could be run which would give us the best chance of achieving both aims, which also highlighted where we currently fail in this regard. The points made still stand - if you have limited funds you find ways to maximise the value of your individual investment decisions. We are currently failing to do this and, as you've subsequently pointed out in the discussion re Pinnock, we've also advertised to the outside world that we'll sell a player at pretty much any cost if he's in the final year of his contract and turns down a new deal, thus allowing other clubs to take advantage of this in any transfer dealings. Not exactly an optimal strategy to adopt, IMO. I accept the general logic of trying to get value for players as their contracts expire, but applying a black and white approach in that way, and sticking blindly to it regardless, doesn't result in the best decisions.

Ultimately, managing cashflow is far more critical for football clubs than their reported profits and losses, particularly in the way that player contracts are capitalised and amortised, which means that player trading accounts look very different to the cashflow impact of transfer fees which are paid in instalments. I did a review of the latest BFC company accounts when they were published, which is on here somewhere, and it was actually difficult to work out the status of the recent transfer business from them, although IIRC, the bulk of it was visible in the relative movement of debtors and creditors vs the comparatives.

The two examples I gave you were of clubs who had very obviously managed to get promoted to the Premier League without chucking stupid amounts of money at the playing squads, relative to others, primarily via outstanding coaches getting the most out of limited resources. They currently represent the most recent examples of this type of success. It is entirely feasible for BFC to adopt a similar approach to establish themselves as a stable Championship club and build from there. Look at our relative fortunes compared to Millwall since we beat them in the playoff final for another example of the type of progress I'm talking about.

We've clearly gone backwards as a club under the new owners. In an earlier post you said that we're operating the same model now as the one we had under Patrick Cryne, which is not the case. We've taken than basic model and stripped out the underlying (very fundamental) requirement to attempt to be competitive in the division we're playing in, in favour of an almost entirely formularised approach to generating player profits, broken only once since they took over when they signed Solbauer. In doing so, we've become blind to the fact that the impact of whatever theoretical profits the spreadsheet approach generates for you are diminished when you're content as a club to chuck half your annual income away by surrendering meekly to relegation each time you get promoted.

As for the other question which you are now trying to get people to focus on, the reason no-one answered this is that it was overshadowed by you stating, as fact, the incorrect assertion that an owner had to "be prepared to fund huge losses over a long period of time", which is the point everyone picked out to challenge. The answer to this question for me is that my chosen investment as a supporter of BFC is directly correlated to the expectations I have for the club to try to achieve beyond its means. I can't set a figure on it, as there are a huge amount of variables to this, but I can safely say that a continuation of the misguided management we've seen from the ownership will cut it dead pretty quickly.

I can only provide you with my experience from the current season. After Stendel's sacking, I was so angry that I had no desire to use my season ticket for a number of games (again well documented already on this board). I had started to go back to games prior to lockdown, but my decision on a new season ticket for next season was very much subject to how the Board set the pricing and timing of renewals. I can safely say that if there'd been an early bird renewal window ending in April at similar pricing levels to recent seasons, I would not have renewed because this season has been such an infuriating experience from a Board with zero ambition to compete. As it happened, Coronavirus changed the landscape for everything and the offering of a cheap season ticket for next year was one I felt I could take a chance on. Again, there would have been zero chance of me renewing if I'd somehow let the early-bird window pass and would have to renew at full price.

So currently, my 'price elasticity' as a supporter is as restricted as it has ever been. In fact, I don't think I've ever previously considered whether or not I would renew. It was only ever a question of when and how much. This year, only the discounted price of £250 has kept me as a season ticket holder for another season. As for next season, I have no idea, but I will fundamentally need to see evidence that the ownership have the same ambitions as I do, and at present I'd say we are as far apart on that as it's possible to be.

Sheriff, Jul 18, 2020

 

Exactly think that proves that they failed despite making claims to the contrary. They haven’t improved us on or off the field.

Let’s be honest too Conway boasts how much cheaper it is to buy an English club compared to an American one but then doesn’t want to fund it properly to succeed. Sadly Patrick sold it to the only sharks interested at the time.