Charlton Athletic Takeover Attempt - The right move?

I noticed the recent article on the Kent Live news that the rumoured Charlton Athletic bid from the Australian Football Consortium (AFC) had stalled owing to a lack of capital raise.

While any move to oust Duchatelet as owner should be seen as a good thing I can’t but help think that if a consortium has trouble in even raising the suggested purchase price then questions must be raised as to their ability to maintain the ongoing financial commitment that is required for a football club.

Let’s not kid ourselves here.  Breaking even is an admirable goal and might be achievable but currently not many clubs do achieve this.  The Deloitte 2016 annual review of football  gave an average annual loss for the 2014/15 season of £1.7m for League One clubs and £0.5m for League Two clubs.

Charlton’s losses run even larger than this and given the term of existing players’ contracts, the commitment made to the training ground and the size of the Valley generally such losses cannot be curtailed immediately.

In fact the AFC’s website states that “A critical component of AFC’s strategy will be to invest heavily into the training facility so that the club can attract and develop local talent and provide them with the opportunity to represent their club at a senior level.”

Given all this, any investor would need a sizable war chest just to allow the club to continue in its current form.  This is just not going to come from a scratch investment company such as AFC. The last thing that fans want is a nervous wait while the company struggles with a whip around in order to avoid bankruptcy.  

Any debt to finance these losses would need to be raised from external commercial lenders such as banks (rather than a benevolent owner) at commercial rates and with suitable security over assets such as the football stadium.

I'm no Duchatelet fan but while I'm sure that the AFC has a board with the necessary football experience (unlike our current CEO and owner) we need to ensure that they have the adequate resources to go along with it.

Sources

Kent Live Article

http://www.kentlive.news/charlton-athletic-takeover-talks-australian-investors-attempting-to-raise-more-cash/story-30314448-detail/story.html

Deloitte Annual Review of Football

https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/annual-review-of-football-finance.html

Article on Duchatelet's influence at St Truiden

John Chapman the Belgium football writer (look for him on twitter under @BelgoFoot, he is worth a follow) has been a good source of information on the goings on in the Duchatelet network.

While Duchatelet has now sold Standard Liege John still provides information on St Truiden.  The latest snippet is a report from Sport Foot Magazine.  You can read the original article here:-

http://sportmagazine.levif.be/sport/foot-national/duchatelet-a-discute-avec-des-coaches-pour-saint-trond/article-normal-501551.html

If your language skills are a little rusty and you use Chrome as a your browser you can "right click" on the article to translate it into English, otherwise copy and paste into Google Translate.

The gist of the article is that it appears that Mr Duchatelet has a strong say in the running of the club despite St Truiden being owned by Mr Duchatelet's partner and him having no formal position at the club.

There are rules in the Belgium league that prevent the ownership of more than one football club so previously when he owned Standard Liege he could not be involved in the ownership or running of St Truiden.  However, now that Standard has been sold he could legitimately take over the reigns at St Truiden with a formal shareholding or directorship.

If the report is true then to flatly deny such influence when there is no formal connection with the club is frankly disingenuous and a barrier to any sensible minded person taking up any role with responsibility at the club.

The fact that Roland is doing this should be no surprise to Charlton fans.  Despite repeated assurances by the directors to the contrary we have seen the impact of Roland's meddling at the Valley.  The more this goes on, the greater the lack of credibility in the eyes of anyone looking at Charlton.  Given the alleged actions at St Truiden I doubt very much that any decent manager would want to join the club even if their contract gave specific assurances.  Perception is everything Roland!

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Financial Fair Play – All change as Charlton are relegated to League One

As well as the obvious drop in income that the club will suffer as a result of being relegated to League One it also has to contend with a different set of rules for Financial Fair Play (FPP).

Unhelpfully the link to the Football League regulations has disappeared from its website and they have not responded to my request for the regulations or to restore the link so the following is my interpretation of the rules from various other sources.

This season in the Championship, under FPP, clubs were permitted a maximum loss of £13m (or £5m if the owner did not inject more equity) over one season.

However, in League One, clubs are subject to a Salary Cost Management Protocol (SCMP) where player salaries are capped at 60% of Turnover plus 100% of Football Fortune Income.

Fan Anger will reduce Turnover

Only wages of players are including non contracted and loan players.  Management, youth players (under 20 and who have come through the club's youth programme)  and other non playing staff are not included.  The salaries of players loaned out to other clubs are not included for the duration of the loan.

As a newly relegated club Charlton can also exclude some players from the wage bill if they were signed pre-September on a contract longer than three seasons.  I believe that this exemption covers Bauer, Sarr and Bergdich but not Ba, Cellobas or Kashi who only signed three year contracts.

The definition of Turnover includes match day income, commercial/sponsorship income as well as revenue from TV rights.  As a newly demoted club this figure rises to 75% for Charlton for the first season.  If the club is demoted to League two then the turnover figure drops to 55%.

Football Fortune Income is variable or one off income which includes financial donations and equity from the owner, transfer income (on a cash basis) and cup match income.

The overall effect it to ensure that clubs have enough money in the bank after covering players’ salaries to ensure that they should be able to break even while still allowing them to spend windfall monies on player salaries.

The sanctions for breaking the rules is a player transfer embargo.

How does this impact on Charlton we might ask?  Using the annual accounts to June 2015 staff turnover was 96%.  This figure includes all training and football management as well as 45 administration, commercial and stadium staff so is on the high side for SCMP but is a good proxy and clearly will need to come down.  If turnover and wages were to remain as they stand then the owner would have to inject approximately a further £3.3m as equity or a donation in order to meet the criteria above.  

Clearly turnover will be heavily down across the board.  Broadcasting income will be virtually non existent and I suspect ticket income will also be down heavily.  I for one will not be renewing my season ticket under the current owner's regime.  So as things currently stand it would be a good estimate to assume that for the 2016/17 season player salaries are higher than turnover.  In practice I believe that the losses at the club will be larger than this year and greater than the amount required to meet the Turnover rule above.

The good news for Charlton fans is that loans and other debt are specifically excluded from Turnover and Football Fortune Income calculations as it would defeat the object and just mean that the club gets further and further into debt.  Roland Duchâtelet will therefore have to fund the club properly through equity injections or a gift instead of a series of loans from his holding company Staprix NV.

Or he could just sell up and go..........


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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!

Fixtures List - Outbreak of Common Sense at the FA

Big pre-planned press announcement days are always a good way of burying bad news.  Normally it's the government trying to slip in a few lines about some dismal failure in amongst all the press releases on Budget day.  This time, with all the excitement generated by the release of the new football season fixtures list today, I hope that fans saw the Football Association trying to bury its own bit of bad news.  In a rare outbreak of common sense they announced that the FA Cup Final will take place 17 May, a week after all other league games had concluded.

However rather belatedly and using another PR trick of turning what should have been an apology into a good news item they finally admitted that they had got it wrong.  FA general secretary Alex Horne said: "We're aware fans and media have been calling for the FA Cup final to have a day to itself and we're delighted that this is going to happen for 2014."

Well done chaps.  Despite all the communication channels and modern media it's only taken you three years to realise! At last we all as football fans from which ever club we support can now enjoy the showcase finale at the end of the season in the manner in which it was intended.

Now let’s hope the FA can continue with their apparent run of common sense and schedule the kick off time so that all fans, who want to, can actually travel to and from the match Wembley by train on the same day.  I know we don't know which teams will be playing but If Alex Horne is reading, can I suggest his next task is to flag 17 May with the railway companies now, to at least attempt to ensure that there will be no maintenance works planned on that day and the possibility that extra coaches might be put on would also be nice.  At best this would show that the FA really does care about the fans and at worst it shows they tried and deflects the criticism on to the railway companies.

Elsewhere I have to take my hat off to the dedication of the Charlton media team in getting the fixture list out to supporters.  At the rate they must have been typing to bang that information out on the website, facebook and twitter, someone must have triggered off the smoke alarm at the Valley.

I would always prefer a first fixture at home but we could do worse than away to Bournemouth in August and I'm looking forward to the start of the season.

COYR......

Pre season friendlies and the League Cup...are you going?

With the announcement on Monday of the League Cup draw against Oxford, I see the moans have already started about Charlton's lack of success in the competition, the likely weak team that will be fielded and the low attendances.  Within minutes of the announcement going up on the official Facebook page we had comments like:-

"10 quid we lose"

"Shall we give them the game now"

"Out on pens end opf cup run AGAIN"

"bye bye league cup"

Now admittedly some of them may have been in jest (especially given our last performance against Oxford) but it was good to see a few supporters sticking up for the team with retorts such as:-


"Yep-fully aware of our cup record thanks. Don't mean we should write the team off before they've even kicked a ball!"

"Give the under 21s a game rest some 1st team players .... Good draw"

I have to say that I for one am firmly in the second camp, booking my ticket for the fixture and ensuring that I also get to see a number of the friendlies taking place this summer.  With the stakes so high in the leagues, the first few rounds of the League Cup are the only places for the development squad to show they have the mettle to step up to the plate in a first team fixture atmosphere at the Valley.  Apart from the first chance to see some decent football over the summer the friendlies are also a chance to get a first glimpse of our new signings (we hope) and more likely a look at any trialist that Chris Powell may be running the rule over.

There are two moments in Charlton history that stick in my mind that sum this up.  The first was when Alan Pardew brought on Scott Wagstaff for his first full blown premiership game.  Despite his experience and captaincy of the reserves he was like a rabbit in headlights when faced with a full Valley crowd.  Pardew himself admitted that he had introduced Waggy too soon.  The full match day experience phases some people more than others.  I'm the same when it comes to public speaking.  I can go into a room of ten strangers and comfortably present my business with them in a professional manner but stand me up in an auditorium full of people and my eyes glaze over and I turn to putty.  It should be no surprise that is no different for football players who need easing in and the first few rounds of the League Cup are a perfect opportunity to give them a chance in an appropriate competitive environment.  I'm pleased to say that Scott got over this and produced some marvellous football for us down the wing in subsequent games.

Many of the development squad members will be well known to Charlton fans by name, from the match reports and their call ups to various youth squads for their country but I for one just don't get the opportunity to see them play much during the season.  For many of us the summer will be the first opportunity to see some of the younger squad in action as they mix with the first team in a competitive environment.  Yes, it may lead to disappointment for fans as we get knocked out of cup games but with Financial Fair Play kicking in it looks like Charlton will be relying more and more on its youth set up for the Championship so this may be a more important factor than revenue from ticket sales in the League Cup.

The other memorable moment is the look on fans' faces in a friendly at the Valley in 2009 when the match day announcer first mumbled the name of Christian Dailly over the tannoy.  There was no programme or team sheet available and most of us did not catch the full name.  As the Scotsman came on to the pitch you could here talk of

"He looks familiar",

"Didn't he play for....",

"I remember him being pretty decent"

and similar comments, rippling through the crowds as we racked our brains on the history of this iconic player (no smart phones for the majority of us in those days folks).  Dailly went on to be named Charlton's player of the year that season but the first glimpse the pitch that day was a special moment for me when we first witnessed him as a trialist.

I am sure other fans have nabbed the bragging rights of when they first saw another trialist, Bradley Pritchard first play in a friendly for Charlton.  Given the current lack of signings and the need for Charlton to be inventive in this transfer window I am sure we will see a few more surprises over the coming pre-season fixtures. 

Friendlies are therefore a breeding ground for the rumours that are the bread and butter of Charlton bloggers and diarists.  Miss a match and you miss the opportunity to report a first.  So enough with the negativity, lets get behind what will be the future of Charlton Athletic and hope that they have a decent kit to wear when the club unveils the new strip tonight!


Acknowlegements
League cup quotes are all from Charlton Athletic Football Club's official facebook page