Well Red (and that’s just the balance sheets…)
This is the most important season at Ashton Gate since 1982. As a fan who remembers those dark days and the terror that our club might not exist, I do not say that lightly. Yet I believe it is true for two reasons. First of all, every day brings us closer to an inevitable “rationalization” of the league structure. The need to haul ourselves out of this division and into the more exciting and financially lucrative surroundings of Division One is growing more and more urgent. The alarm bells are ringing and this may be our last chance to do that before the structure changes forever and consigns us to a third tier of football from which it will become increasingly difficult to escape. Realistically, we are certainly looking at structural change within two or three years. It may be the greedy Division One clubs who are leading the drive for change, but it is dog eat dog, and to survive we must fight for our own place in the elite.
Yet this desperation to scramble out of the third tier of domestic football before it is too late must be balanced with the second reason why the coming season is so vital, and one which bears a more direct comparison with 1982. Put simply, this club must fight to survive. We lost £2,684,000 in 2001 on a turnover (excluding transfer fees) of just £5,146,000. Our wage bill was £4,726,000 – higher than five Division One teams. I will pause while you look at those figures again and think about what they actually mean. No matter how much we want promotion, the stark fact is that our club simply cannot survive hits like that long term. And with the bottom falling out of the transfer market, the only way to recoup money is to cut costs. The figures for the 2002 season have not yet been published. But it does not take a genius to realise that despite cutting the wage bill, the unforeseen TV deal collapse and the signing of Christian Roberts mean the figures for the year ending May 2002 are almost certainly going to be even worse. As vice-chairman Steve Lansdown said on City’s official forum: “The club cannot go on losing £2/3 million a year. I understand fans want us to spend, spend, spend but we just can't do it and stay in business. I am fed up with the phrase ‘speculate to accumulate’ which is banded about by everyone as justification for spending beyond your means. Just ask the shareholders in Enron and WorldCom for their opinion on this.”
The bottom line is brutally simple. We must take drastic action to knock the club back into shape before it is too late. We have to change, otherwise we will never be able to compete consistently from a stable base. It’s all very well thinking of ourselves as a “big club”. It’s all very well arguing we “should” be able to buy new players. In the real world of 21st century football, there is no such thing as “should”. Bank managers don’t pay attention to what accounts “should” say, or what the manager “should” be able to afford to spend.They look at hard financial figures. So let’s do the same.
The big difference between 1982 and today is that it is not just City in a mess. The whole of football is in a financial shambles. And, ironically, therein lays one of our main reasons for hope this coming season. The Deloitte Touche analysis of the financial state of Division Two football is enough to bring any football fan out in a cold sweat. Detailed scrutiny of the report reads like a disaster movie script. And it reveals that, for one reason or another, most of our promotion rivals face their own demons this season. In May 2001 – the last date for which figures are available - the average Division Two club was trying to cope with a wage bill of £2,969,000 on a turnover of just £3,358,000. Consequently, even including all transfer deals, each of them lost an average of £1,095,000. And this was before the ITV Digital scandal plunging the clubs into deeper financial crisis. As we all know, the outlook has become much, much worse since then.
Let’s contrast our own situation with the clubs we will be competing against for promotion next season. The good news is that after taking into account the ground, bank overdrafts and all other incomes and expenditures, the Deloitte Touche number crunchers conclude Bristol City Football Club is solvent. Even taking into account our debts, the club has overall net assets of £6, 411,000. Reassuringly, the Deloitte Touche report shows that provided we change our ways, reign in expenditure and buckle our belts, we will survive.
Yet many clubs whose gambling excesses have been far worse than ours, whose loyal fan base and turnover make it less easy for them to boost income, or who do not have directors willing to personally cover the black holes, are in a far more precarious situation. Teams that have come down in the past two years face the same debilitating battle which crippled us on relegation – paying First Division wages to Second Division players with Second Division income.
Of the likely promotion contenders, Barnsley made a slim profit of £608, 000 the season before their relegation campaign – but even at that stage their debts exceeded their available funds by £1,641,000. A relegation season and a £7m-a-year salary bill will have left them massive problems to cope with and huge pressures to reduce bills as they readjust to life in Division 2. They cannot afford to ignore the books.
Huddersfield lost £6.5m on top of £4.5m the previous season and had overall debts of £12.8m. They too, must cut their cloth. At last reckoning, Deloitte Touche reveal Brentford have net liabilities of £3,733,000. They have already started offloading their best players to secure long-term survival at the expense of their promotion threat. Rotherham are in the red overall to the tune of £1.5m, while Oldham and Bournemouth are also massively in debt.
Wigan may have a sugar daddy at the moment – but they also have overall debts of £12,839,000. Likewise, Cardiff made a £3.5m loss in 2001 and had already accumulated debts totaling £4m more than their entire assets before Hammam took over. After originally splashing the cash, sending the wage bill soaring, he too has put the reins on new signings. It remains to be seen how long he can absorb those losses. And don’t forget, like al Fayed’s Fulham, Cardiff are living off loans, not gifts. If they do not remain manageable then they face stormy waters ahead. Imagine what would happen if Wigan or Cardiff suddenly lost their benefactor, through disillusionment, disagreement or death. Given Sam Hammam’s character and lack of historical loyalty to Cardiff, I would argue that is a very real scenario. Sugar daddies do not last forever. And for a club to know it can survive long-term rather than be at the beck and call of any individual, it must be able to cover its own losses and repay the loans from directors which fund the new players and cover their wages. Neither Wigan nor Cardiff are in that position. The Deloitte Touche report had no figures for Bury, QPR, Luton, Peterborough, Port Vale or Swindon, but it is fair to assume that the majority of them are in it deep. Luton may have brought in extra cash through the transfer market, but their wage bill is likely to be much higher for the coming season. Like Cardiff, Northampton’s new benefactor hardly inspires long term confidence. They will all have to make massive sacrifices to survive. It is not hard to see why so many teams are now facing the very real threat of oblivion. Wigan are the only rivals with a super-rich chairman loyal to the club. That has been the case for a number of years now – but since when did that bring them success? So far they have proved a classic example of the argument that that money alone does not buy success.
Tranmere and Crewe are better placed to emerge from the impending trauma in relatively good shape, having reduced their wage bill to more than £1m below ours while still playing in a higher division, thus enabling them to actually return tiny profits under £100,000. Despite that, Tranmere’s debts still outstripped their assets by £755,000. Stockport’s £3,631,000 Division One wage bill was below City’s in the division below. Yet they still made a £148,000 loss, while debts exceeded total assets by £1,684,000. Both will still need to make adjustments to steady the ship.
So we can see that our promotion rivals will have their own handicaps to confront off the field. And if they want to stay in business, face them they must – whether they like it or not. We can only benefit from that. Those boards which bite the bullet will, like us, fight to get their house in order now, ruthlessly reducing costs. Others directors who bury their heads in the sand and carry on the way they have been doing may find short-term favour with their fans, but they will soon find themselves with no club to control.
Incidentally, congratulations to Reading and Stoke on promotion. They needed it. Reading owe £20.3m in repayable loans and made a pre-tax loss of £4.6m in 2001. Stoke owe £4.6m – and even before the TV collapse, their overall debts exceeded their assets to the tune of £1.2m.And that includes their wonderful new ground. Disregarding their non-liquid assets, the latest figures show their debt exceed their funds by £6.3m. Once more, an advanced mathematics degree is not needed to appreciate the impact of that. Add the huge transfer signings they made during the season and the wages that went with them, and the price of promotion may yet prove too high. If they think reaching Division One is a guarantee of financial safety which makes those huge losses sustainable, they are in for a shock. Only six clubs in their new league made profits in 2001, and overall the clubs lost an average of £4.98m apiece. How many will be able to survive hits like that year after year? That may be why the Stoke board parted companies with their manager, despite going up. Their directors too, may have realized that some things are actually more important than instant promotion. The point I am making is that regardless of which division we are in, good housekeeping is the only road to long-term survival. Promotion is not a panacea.
Fortunately, our directors have been among the first to come to their senses and realise the dangers of raising the stakes too high. It has to be said that they must shoulder their share of responsibility for the club’s current plight. They were part of the Scott Davidson regime which promised much, yet ultimately rolled the dice, lost and landed us back in Division Two with a bloated, high-earning squad which couldn’t cut the mustard. They were also guilty of giving Tony Pulis more money to spend than we could afford. Most was spent poorly, bringing in more high-earning under-achievers and loading yet more albatrosses around the club’s neck. I must stress, this is all said with hindsight. I, like most other fans, did not protest at the way the Davidson board (which included the current directors) bought more and more players in a desperate, doomed attempt to escape the drop. There were many fans unhappy with Tony Pulis, but I heard no complaints about the fact he was being allowed to spend money. Blindly, we hoped each new player would be our saviour. Now the directors have opened their eyes and, to their credit, they have paid for their mistakes by covering the losses themselves with loans. I believe they have also learned the hard way from those mistakes. While other clubs could not see looming disaster, our directors started began making tough, unpalatable and unpopular decisions to reduce the wage bill and cut the flab off the club, even if it was not what us fans wanted to hear. They refused to bring in players if it meant stretching the wage bill and maintained their financial discipline. The prudent approach has stood us in good stead. It is a battle many of our promotion rivals will have to face, and that should put us ahead of the game. So while other clubs struggle to keep alive and have to take ever more drastic measures – measures which will inevitably have on-the-field impact – we will be there to capitalize.
None of us like to see players of the quality of Mickey Bell placed on the transfer list. None of us like to see players like Paul Evans and de Zeuww going elsewhere. Yet we have to maintain our discipline in order to survive and prosper long-term. The state of football is such that these days all clubs are selling clubs – even giants like Leeds United and tottenham Hotspur now have to sell players to keep the wage bill within their limits and finance new signings. If we want to keep the likes of Murray and Peacock while staying solvent, we too must make sacrifices. We have swallowed the bitter pill early, while those who dither or pander to the wishes of the fans for “just one more signing” instead of facing reality are only increasing the sacrifices they will have to make in the long term. There is reason for much optimism as you walk to the ground before the Blackpool game. We are ahead of the game before we even take the field on August 10.
Provided our board stay the course and knock this club back into shape, bringing it to the point where it is once again financially self-sufficient, there is no reason why we should not emerge stronger and, yes, in a higher division. Others are cutting their squads and relying on untested youngsters emerging from youth policies starved of cash by directors who chose to pump it into transfer fees for years. We have a young team with talented Academy players. Matty Hill, Aaron Brown, Kevin Amankwaah, Tommy Doherty and Joe Burnell, who have plenty of first team experience, will be on manageable wages and can, with wise heads like Tinnion, Murray and Peacock around them, mount a challenge for promotion that does not cost us our future.
We are all chasing the promised land of Division One. Yet the stakes are higher than ever. For those directors who gamble too much of their club’s assets in getting there and fail, the price paid will be the ultimate one. Many others will be financially crippled and forced a massive rebuilding project, just as we were by out own doomed gamble to stay in Division One.
Football is a balancing act – weighing the wish for success against the cost of achieving it. But this season, more than ever before, it is a balancing act the board must get right. As successful businessmen with a wish for the club to succeed and the latest financial information at their fingertips, we have to accept that our directors are in a better position than any of us to make that judgement. We all know the club’s chances of promotion would be enhanced by signing an experienced central defender and attacking midfielder. I am sure they do too. And there is hope, with Steve Lansdown promising: “If a player comes up within reason we will be able to take them on. This has always been the case and does not take away the need to perhaps move someone out at the same time.”
I want my children and grand-children to be able to experience the same emotions of watching Bristol City which I have been privileged to experience for the past 25 years. To share the tears of sorrow at the painful losses, the fury of refereeing decisions which cost us vital games, the buzz of being in a crowd in a derby match, the breath-taking joy of a screaming last-minute winner, the adventure of travelling to a new ground, the delight of singing a new song at an away game. I would love them to experience it in the Premiership or Division One. But most of all I want them to know what it feels like. And for that, our club has to exist.
So as we launch another campaign remember that promotion - as important as it is - is not the be all and end all. And pity those teams who throw caution to the wind for one desperate last shot at promotion. Because for those who don’t make the promised land, or who end up spending too much to get there, the cost will be more than zeroes on a balance sheet. And it will be future generations of fans - deprived of any opportunity to follow and love their team - who will pay for it.