Time to Blow Off the Cobwebs for Another Season

While my blog has certainly not been updated over the last few months, with the exception of a brief hiatus at the end  of last season, the goings on at Charlton have ensured that there has been no time for cobwebs to settle at the Valley.

Much has been said on the subject of the new owner and the changes that took place at the end of last season.  Over the summer we’ve witnessed a number of changes that have started to put the owner’s intentions for the club into force.  Many believed that Charlton might become a cut price club, lacking in investment, with a head coach forced to field players sidelined by other clubs in the network.  While some beneficial elements of using the network are there, this is looking far from the case as recent spending reveals quite a different approach. 

While a new pitch was clearly a top priority it looks like we’ve ended up with a £1m investment in a pitch of Premier League quality, with state of the art drainage and under soil heating.  This along with other ground improvements such as replacement seating and pitch side astro turf will continue to make the Valley one of the more pleasant grounds for visitors in the Championship.  While a pitch renovation was required, the rest of the spending is perhaps more cosmetic but to me shows the intentions of the club to provide a quality match day experience for the fans.  The only downside I can see came from Twitter where an apparent ban on high heels on the pitch side artificial turf has meant a wardrobe rethink for certain stylish members of staff.

I wasn't expecting much of a spending spree this summer so the signing of Ivor Vetekeleh for a fee believed to be around Eu3m was a surprise.  However, I'm not expecting much more of the same and the recent signings while exciting have shown as much.  Feedback on first impressions of Bob Peeters is that he is likeable and gets on well with the squad.  I'm pleased to see his comments on certain players in the development squad and a decent complement of younger players turning out for the Welling game.  Duchatelet has also committed the club to its youth policy with Charlton’s ambitious plans for the new training ground complex to go ahead.  Some might say this is just a good excuse to get a cheaper squad but no manager or coach will play academy players if they are simply not up to the job. 

Having said this it looks like player wages are being firmly capped.  I have no idea as to what salaries players are on but we all remember the rumour of Ricardo Fuller being on £13k a week.  With Kermorgant and Stephens who were arguably our top wager earners gone, the number of younger players coming up from the development squad and cheaper (not my words) foreign players coming in I suspect that salaries are around the £3,000 a week mark.  While this helps in terms of the bottom line it does mean the Charlton will be one of the lowest paying teams in the Championship.  Other teams have not been so quick to adapt and are likely to breach Financial Fair Play rules as a consequence but may have the talent to propel them into the Premier League.  The alternative is that we become a club in a similar vein to Peterborough where they have a great ability in finding cheap but talented lower league footballers that subsequently leave for larger clubs who can afford to pay them higher salaries.  The good news is that the transfer fees effectively pay for the upkeep of the club.

 

The recent run outs at the Philips Stayen Cup and at Welling gave the fans a first chance to witness the players live but give us just a glimmer of new coach Bob Peeters thoughts on the first team line up.  A couple of players were missing from the Welling line up though.  While I presume that Reza is still enjoying a much deserved holiday after his world cup campaign there was no sign of Piotr Parzyszek (Belgium press reports him going to Sint Truiden)  The squad is not complete and clearly need more games under their belt, but there are rumours of another striker coming in and there are a couple of other obvious holes in the squad that need filling.  However, I am sure we will see a marked improvement as the July amd August friendlies go by and Peeters finds his ideal formation.  The Welling game showed Solly and Wilson pushing forward deep in to the opposition territory if that offers any clue as to current thinking.

It is pleasing to see that the club has maintained certain standards by continuing its family policy of not allowing a gambling outfit to sponsor its kit but there is clearly a harder nosed attitude to making the assets work for the club. Further sponsors on the mtach kit in addition to to the main shirt sponsor is an obvious example of new revenue generation.  It appears that a full review of contracts and services has been undertaken and changes have been made internally with director Katrien Meire taking a more hands on role. 

Recent contracts with the same outsourced caterers used by Arsenal and Wembley show the shape of things to come, but we should not read this as bad news for fans.  The partnership with IT company ITRM clearly states that is to "create better opportunities for fan engagement".  We have had a recent glimpse of the intentions of the board with the introduction of the excellent Fan Wall on the Charlton website, the introduction of free broadband at the Valley and the free youtube streaming of the recent tournament in Belgium.  I see this as a long term drive for a better game day experience that should ultimately attract and keep fans.

On the subject of fan engagement, the summer so far has been especially annoying from the mindless and crude drivel posted by those brave smartphone warriors claiming to be fans on various social media every time Charlton post an update. Calm down boys and girls, stay out of the sun and think before you tweet abuse.  How about providing some constructive criticism or at least giving the players a chance in an Addicks shirt first before you burden the rest of us with your refined and experienced three word opinions? You could do something useful like joining the supporters trust www.castrust.org.

Of course the real test is when we start to play in the league.  While there are a number of veterans in the squad, many players have not tasted Championship football and it does remain to be seen whether they can cope at this level but with the spread of youth and experience I am cautiously optimistic.  That’s not to say that I’m expecting miracles this year but it all looks like the club is starting to shape up for both the financial rigours and the pitch battles of the Championship.

Just one small selfish plea from me - please can we have proper pies back at the Valley?  I’m sure these nice people www.pieshop.co.uk would be only too happy to assist.

Harriott Pushes Charlton over the Line

First may I extend my gratitude to Charlton Live commentator Pete Finch for a quick behind the scenes tour of the press room and studio before the game.  It was good to meet Terry Smith, Paul Glover and match day host Dave Lockwood in person, having followed them for sometime on twitter.

Valley Faithful

There were fist pumps all round the room as Mr Lockwood confirmed the team news hot off the press with a 4-5-1 formation with Solly and Wilson both playing down the right hand side.  The omens were good and the game was better with three excellent goals from open play to secure our Championship position for another year.

I was really pleased for Callum Harriott.  Despite deserved criticism in recent games he stepped up when it mattered.  He knows he hasn’t had the best of games at home recently (partly as a result of being played out of position) and the two goals more than made up for it.  He does tend to blow hot and cold and I put it down in part to a lack of awareness of his surroundings leaving him struggling at times when he has the ball.  However, when he gets it right he plays some magnificent football, witness the game at Sheffield Wednesday creating Sordell’s goals with some sublime passing in difficult situations.

Troy Deeney’s goal for Watford was a corker and I wouldn’t be surprised if he is sought by a Premier League club this summer.  However, if the Hornets want any realistic chance of promotion they need to stop this cynical style of football that saw a flurry of yellow cards and a sending off.

Captain Jackson applauds the Fans

When our third goal went in my friend turned to me and said “well you’re safe now” to which I replied “No, this is where Watford score a quick goal and we have a white knuckle ride for the next 15 minutes”.  As predicted the goal did go in shortly after, but was thankfully disallowed by the assistant referee.

I bumped into the lads manning the “fan cam” after the game and was asked if staying up had changed my mind about the new owner.  My answer was that it is too early to tell and we will have to see what the summer brings.  Riga’s contract was just to the end of the season so we don’t even have a head coach after the Blackpool game as things stand.  Although I was sad to see Chris Powell go I would be happy to see Riga’s services being retained.  He seems to “get Charlton” and I do sense a positive connection between him and the players, especially the academy players coming through.  He couldn’t have made this clearer in his post match speech to the Valley faithful. 

We also have a core of key players that are out of contract including Ben Hamer, Dorian Dervite and Michael Morrison.  Poyet too has not signed a contract yet meaning we will get a paltry fee set by the Elite Player Performance Plan if he were to leave.  With seven former academy players in action it is clear that they will form the back bone of the squad in the new season but we will have to see how the rest of the team shapes up during the summer.

Celebratory drinks were definitely in order and the latest edition to the pumps at Old Loyal Britons in Greenwich, Truefit Brewing’s Caldecote Amber Ale certainly fitted the bill nicely.

Here’s to another year in the Championship!

Will it be a Toast to Celebrate or Tears in the Beer?

Hopefully Charlton's season will be sorted out for the better on Tuesday night when we play our game in hand and final home game of the season against Watford. 

Our form has been such that the outcome is exceedingly unpredictable but as all Addicks know, we're not in the habit of making life easy and I'm preparing to accept that it might go down to the wire in our season finale away at Blackpool, where both teams could be fighting for Championship survival.  With Birmingham, Doncaster and Millwall also in the mix there are plenty of permutations to make it a nervy climax the the season.

So for those of you not making the trip to the seaside for our last game can I plug the following local event that South East London CAMRA are putting on this coming weekend.  Whichever way the results go you'll be in the right place to drown your sorrows or celebrate survival with some fine ales and ciders on tap.

The link for those interested is below
 
selcamra.org.uk/kidbrooke-beer-cider-festival/

I'm pleased to see that local brewer Hopstuff based in Woolwich is well represented with four of their ales on show and there are a number of other London and Kent breweries and cider makers on show.  Having met a few of the local CAMRA members at Old Loyal Britons in Greenwich I know they are discerning lot and we shouldn't be disappointed with their selection of casks which can be found on their website.



Notes
The picture is a poster produced by South East London CAMRA to promote the festival so please do share around.

Charlton Athletic Financial Results - a short analysis

First a big thank you to all of those who read my previous blog piece on the profitability of Championship football Clubs.  Having had a comfortable 200 or so hits to my previous blog pieces this received over 1200 hits.

One of the omissions from that particular blog was the financial report of my own team Charlton Athletic which had not then been published.  The accounts are now available and I thought I would provide a short overview for interested fans.

These are the consolidated figures for the holding company Baton 2010 Ltd to the end of June 2013 and well before the takeover by Staprix NV, Duchatelet’s investment vehicle.

The headline figure is a loss of £5.9m compared to £6.8m last year.  It looks like the club remains on course to continue to achieve Financial Fair Play targets once we take into account that certain expenses are disallowed.

Turnover/Income increased  by about £3m from  TV and broadcasting as a result of the move to the Championship and £0.5m from increased match day income.  There was a dip in commercial income owing to the way the company makes money from the club shop etc following the “Nike” deal which now sees the club receive a percentage of sales as a royalty, rather than account for sales in income and stock purchases in the cost line.  The upshot of this is that on an equivalent commercial income has actually risen slightly.

However, most of the increase in income was swallowed in salary costs which went up by approximately £3m.  Given that the number of commercial and administration staff remained static I assume that this increase was down to playing, training and football management which went up by 17.

Staff costs remain static at just over 100% of turnover which is clearly unsustainable and something which we have seen the new board address almost immediately much to the chagrin of many fans.  The sale of our reputedly highest paid player will go a small way to reducing this in the current financial year but I fear that in order to meet a more acceptable level further unpalatable cuts will be the order of the day, until both clubs players across the divisions realise that things will have to change.

The loss appears to have been funded by an increase in long term loans from the parent company CAFC Holdings Ltd who also appear to have funded the scheduled repayment of bank loans during the year.  The accounts confirmed that this debt has now been transferred to Staprix NV.

However, it appears that the interest free loans from previous directors remain in place, to be repaid if and when Charlton return to the Premier League.  There was speculation that that these might be repaid on the sale of the club but there is no mention of this in the post balance sheet events.

In other post balance sheet news, the club generated £570k from player sales and contingency fees.  I presume that most of this took place in the summer transfer window and does not include the sale of Yann Kermorgant or Dale Stephens as they were both sold after the accounts were signed off.

As expected the accounts are prepared and signed off by the auditors on a going concern basis with the parental support of Staprix NV.  From my little knowledge of audited accounts I believe that this means that as of 17 January 2014 (the day the accounts were signed off), Staprix has agreed to support the company for at least a further year.

In other news it is clear that the board are committed to the Youth Academy and intend on achieving Category 1 status in the Elite Player Performance Plan as soon as possible.  The fact that the New Eltham site has now got the go ahead confirms the new owners intention to honour this commitment which is good news for Charlton fans.

So all in all, no big surprises.  Despite what certain fans might think of them Jiminez and Slater kept the club alive and left it in a slightly better shape than when they bought it but more crucially they did find someone in time to be able to maintain and carry the club forward.

So on we go to the current financial year.  Again, Championship survival is key but other than that I don't expect any great surprises in the next lot of accounts.  Turnover will roughly be in line with the figures above but with the lack of player purchases this season and the sale of a few prominent players losses may come down a little further, again hopefully in line with Financial Fair Play.

.

Is anyone making money out of Championship football ?

Charlton Athletic's accounts (or more accurately its holding company Baton (2010) Ltd) for the year ending June 2013 are due for filing at Companies House by the end of March.

For a refresher on last year's results please take a look at the excellent analysis by New York Addick here

newyorkaddick.blogspot.co.uk/2013_01_01_archive.html

I'm not expecting any surprises as we know the previous owners were struggling to put any more money into the club and the transfer budget was severely constrained.  It was however our first year back in the Championship after a record points season in League One so it will be interesting to see how revenues have fared since.  The change in ownership falls in the current year and so will have no impact on the results but may well have allowed the auditors to sign off the company as a going concern.

With the advent of Financial Fair Play I thought we would take a look at how other teams in the Championship division have managed so far and see if we can draw any conclusions on how prepared we all are.

First a word of caution on the figures.  Most clubs appear to have financial year ends at the end of the football season in May/June 2013 but not all of them, so the periods may not be directly comparable and in some cases the clubs (including Charlton) have yet to publish their latest accounts.  The figures quoted are usually the statutory profit/loss required under companies law and do not directly translate into the profitability or otherwise as determined under the FFP rules.  For example costs relating to stadium improvements or youth development are ignored for the purposes of FFP.  So the figures shown are not directly comparable but give a good indication of a club's ability to reach the FFP requirements.

Finally, some clubs have a complex web of legal entities, for various reasons including tax efficiency and protecting assets such as the stadium.  Just look at the Blackpool blog link below to see a prime example.  This understandably may cloud the headline figures that I have stated and the club may actually be in a far different position to those stated when taken as a whole.

AFC Bournemouth

AFC Bournemouth lost £3.4m in the financial year ending July 2012 amid concerns from auditors over the company's ability to continue trading.  According to the BBC, the figures highlight the importance of Russian co-owner Max Demin's involvement at the Goldsands Stadium.  The 2013 accounts are not due until April but I expect further losses of the same magnitude and injections in line with current FFP rules.

www.bbc.co.uk/sport/0/football/22612870

Barnsley

Accounts for Barnsley Football Club (2002) Ltd were filed in January and show

an increased profit of £1.9m after a small profit of £30,246 in the previous 12 months 

www.duedil.com/company/04573250/barnsley-football-club-2002-limited/financials

 

Birmingham

The Birmingham City director Peter Pannu was paid nearly £1m in 2012-13, a year in which the club lost £4m and sank into a perilous financial situation which continues to threaten its solvency.

www.theguardian.com/football/2014/jan/09/birmingham-director-peter-pannu-paid-nearly-one-million-pounds

Blackburn

£27m loss for 2013.

www.bbc.co.uk/sport/0/football/24533649

Blackpool

Blackpool Football Club Ltd pre-tax profit was down from £16.1m to £5.9m.  However, the finances are a little more complicated than this.  for more information see the excellent blog piece from independent fan Measured Progress below
   

www.duedil.com/company/00048409/blackpool-football-club-limited-the/financials
measuredprogress.co.uk/opinion/blackpool-fcs-1213-accounts-reviewed/

Bolton

Bolton have announced they are £163.8m in debt after parent company Burnden Leisure PLC released its figures for the year ending June 2013.  The group made a loss of £50.7m, which saw net debt rise from £136.5m

www.duedil.com/company/00335699/burnden-leisure-limited/financials

www.bbc.co.uk/sport/0/football/25559504

Brighton
Operating loss: £14.7m (up from £8.6m in 2011-12 accounts)
www.bbc.couk/sport/0/football/26055733


Burnley
£7.8m loss to June 2013 

www.burnleyfootballclub.com/documents/agm-2013-review-doc113-1174642.pdf

Charlton Athletic (Baton (2010) Ltd)
£6.8m loss to Jun 2012 no accounts published yet for 2013.  The next accounts are due at companies house by the end of March.

Derby County

Derby’s losses in the past two years have been £7.9m and £7.7m.

Their figures for the year ending June 2013 were submitted at the beginning of this month

 http://www.derbytelegraph.co.uk/Derby-County-tackling-constant-battle-Financial/story-20308658-detail/story.html#ixzz2wtqjNk9B

Doncaster (Patience Form Ltd)
Loss of £4.4m Jun 2013

www.duedil.com//company/03739676/patienceform-limited/financials

Huddersfield

Overall total loss of £4m (2011/12: £5.7m) to May 2013
www.htafc.com/news/article/club-news-201213-accounts-1259060.aspx#lT0IvyZF5Zf4ygCD.99

Ipswich
The Club is due to report a loss before tax of £9.8m (2011-12 £16.0m loss) for the year to June 2013

www.itfc.co.uk/news/article/financial-highlights-2012-13-1217945.aspx#0yqaHJxHpIwVCko899

Leeds
At the time of writing, Leeds have not filed accounts for 2013 and they are due by the end of March.  They appear to be losing £1m a month.
www.bbc.co.uk/sport/0/football/26717044

Leicester
The Club recorded losses in the year to 31 May, 2013 of £34 million (2012: £29.7m).
 www.lcfc.com/news/article/040314-201213-financial-results-1395981.aspx#JJ5ZpqdSdXSR0Wa5.99

Middlesbrough
Middlesbrough Football & Athletic Company (1986) Limited's accounts were filed at companies house on 21 March but I haven't seen any open press mention of them yet.  Heavily reliant on Steve Gibson, they made a pre-tax loss of £13m in 2012.

www.duedil.com/company/01947851/middlesbrough-football-and-athletic-company-1986-limited/financials

Millwall
£6.2m loss to June 2013
www.millwallholdingsplc.co.uk/ReportsAccounts30June2013.pdf

Nottingham Forest

Nottingham Forest made losses of £17.1 during the last financial year and had staff costs of £21m.

Those staff costs dwarfed the club's turnover of £14.4m during 2012/13.

www.nottinghampost.com/Nottingham-Forest-post-losses-17-1m/story-20764935-detail/storyhtml#ixzz2wtvKbbSa

QPR
Championship side Queens Park Rangers made a loss of over £65m in their accounts for the year to May 2013.
 www.bbc.co.uk/sport/0/football/26468560

Reading
The Championship side posted a loss before tax of £2.3m in the year to 30 June 2013, down from £11.7m a year earlier. Operating loss was also cut from £21.8m to £2.9m.
www.insidermedia.com/insider/south-east/107329-reading-fc-slash-annual-losses?


Sheffield Wednesday
Loss of £3.7m to May 13
http://www.swfc.co.uk/documents/swfc-reportsandfinancialstatements138-1385743.pdf

Watford
£200k profit after player trading (loss of £1.7m)
www.watfordfc.com/documents/13118-2013-report-and-financial-statements286-1181336.pdf

Wigan
Financial results for the year ending 31 May 2013 show the Championship side made a net profit of £822,000 compared with £4.3m net profit in 2012. (won FA cup)
http://www1.skysports.com/news/12040/9095431/

Yeovil
Yeovil announced a trading profit of £50k for 2012.  Their accounts have been filed for 2013 but it looks like they have a filing exemption so I can't find a freely available profit figure.  From the balance sheet of Yeovil Town Holdings company it looks like profits were pretty flat and so I'm guessing that they have broken even.  A connected company Yeovil Town Fc Centre of Excellence Limited suffered a small loss in net assets.


www.duedil.com/company/07113379/yeovil-town-holdings-limited/financials
www.duedil.com/company/06948893/yeovil-town-fc-centre-of-excellence-limited/financials
www.ytfc.net/news/article/profits140313-712726.aspx



Conclusion
Based on the above one wonders why anyone would own a football club.  However, this aside it seems clear to me that the Championship can be divided into three broad categories.

There are those that have spent to win promotion.  These fall into two sub divisions; clubs such as Brighton and Leicester hoping to go up, and secondly those recent former Premier League teams such as Blackburn and QPR with legacy financial positions fighting to get back.  I suspect any fines for FFP breaches for newly promoted clubs will be fairly small compared to the potential riches of the Premier League, but penalties could be crushing for those that gamble and fail to reach the top echelons. 

It will be interesting to see whether the clubs that go up roll the dice once more and spend big to ensure continued top tier playing time or remain fairly prudent in terms of financial outlay, comforted by the fact that they have a financial cushion to survive on should they go down.  I suspect that most clubs automatically have relegation clauses in their player contracts by now.

Secondly there are a small number of clubs that have had to do this out of necessity, never mind fair play.  They have not had the sugar daddies to bank role them but have managed their resources carefully.  I include Barnsley, Yeovil, Watford, Wigan and maybe Blackpool (its hard to decipher the true figures) in this.

The remaining clubs, including Sheffield Wednesday, Reading, Charlton and Millwall are slowly reigning in the losses but are comfortably within the confines of FFP.  It is clear that there is still work to be done and it will take a few years as player contracts come up for renegotiation but they will get there in the end.

It is noticeable that broadly, with the exception of Wigan and Reading, all the teams that are breaking even or safely within the bounds of FFP are at the wrong end of the table.  I am an advocate of Financial Fair Play.  It's clear from the above figures that this level of spending is not sustainable.  I fear that if the current legal challenge to FFP does succeed then the playing field will become even less level and/or we will see a number of clubs going to the wall as certain owners get tired of their "toys" as they fail to reach promotion and discard them.

Footnotes

Please let me know of any errors and I will happily correct and acknowledge.  Similarly if you can fill in the gaps for certain teams I’d be extremely grateful.