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

Charlton: Financial Fair Play, Transfers and Reality

I had started to write an article entitled "N'Guessan I'm guessing" as my first attempt at speculation as to who would be joining Charlton this season.  Given that Dany N'Guessan has been a Charlton target for over a season now and with him apparently out of favour with Kenny Jackett he looked a certainty to me to be top of Chris Powell's buying list.  However, a week is a long time in football and as we all know Kenny Jackett has moved on and Steve Lomas will undoubtedly want to review the squad before making any decisions.  I believe that N'Gussean also has another year on his contract with Millwall and given that Charlton opted not to take up their free option on extending Danny Haynes' contract, they are unlikely to pay a fee to obtain the Millwall front man.

There are plenty of players out of contract this summer from the Premier League (see here for a complete list www.thepfa.com/transferlist )  but Financial Fair Play rules (FFP) in the Championship mean that (with the possible exception of a few clubs with Premier League parachute payments) it's going to take some serious reality to settle in on wages before those players join a lower league club.  Unfortunately I don't think that reality will settle in for a few years from now as former Premier players realise they're not going to be able to command those types of wages in the lower leagues even if a club has a new Sugar Daddy willing to splash a bit of cash.  With Charlton struggling to pay a rumoured top weekly wage of about £13k to Ricardo Fuller, what chance do we and other clubs have of paying £20k plus to the likes of Jermain Pennant and others?

The FFP rules are different between the three divisions of the football league.  For Leagues 1 and 2 it's based on player salaries as a percentage of turnover, while for Championship clubs the aim is to break even on the core element of the club's activities (ie spending on youth development and improving the stadium fall outside its scope).  For more information on FFP see the following link FPP Explained

I believe that Charlton have a deficit of roughly £500k a month to fill before we meet the criteria once they strictly apply.  The FFP rules allow for a certain amount of equity injection and with a £6m annual deficit we are comfortably within those boundaries for the next season but this assumes that Uncle Tony is willing to continue to bank roll us so far but the message is clear that this is not going to continue.

We're not the only team to suffer.  It seems certain to me that Jackett left Millwall as he was frustrated at the club's lack of resources to strengthen the squad.  Even the Premier League is not immune if we are to believe the newspaper stories currently doing the rounds.  It is rumoured that Michael Laudrup is unhappy at the transfer policy at Swansea and Harry Redknapp is on the verge of walking out over the hold up in recruiting out of contract Wayne Bridge from Manchester City who has since gone to Reading.

I did attempt to put Charlton's deficit in perspective using a back of the envelope calculation.  If we imagine that players are on £5k a week (I have no idea if this a realistic figure and have to admit that its a complete stab in the dark)  then £1/2m is equal to culling over 20 players in order to break even. This is quite a stunning figure by any stretch of the imagination and with solidarity payments only rising by 5% and other non Charlton income remaining fairly static I'm not sure how the void can be filled. 

With the the different FPP rules in each of the four divisions I can also certainly see player contracts getting a lot more complicated to allow for potential promotions and demotions each year.  Good luck to the finance department is all I can say.

Talking of fair play, its good to see that the Football League have now about to introduce tighter rules on foreign loan players to stop the ridiculous farce that was the Udinese B team masquerading as Watford FC.  While no self respecting Charlton fan wanted to see Crystal Palace go up, I'm pleased that this type of behaviour while perfectly legal was not rewarded with a place in the Premier League.

Standing Room Only....?

An article in the Independent* newspaper on 22 May claimed that Championship clubs had unanimously supported an initiative to back a trial on standing room in parts of the stadium.

For the record, I have no problem with safe standing areas and am happy for any initiative that will invigorate football support.  I just don't feel that many clubs actually need to implement it or that it will have a huge impact on fan numbers.  I tweeted that I couldn't really see the point and received some good arguments as to why standing should be allowed.  However, my reasons are based on the facts about capacity, as set out in the statistics below thanks to the BBC online article on clubs' support* and a bit of help on stadium capacity from Wikipedia*.

I have just taken the Championship for the 2012-13 season and used attendances and stadium capacity to work out the number of empty seats in a stadium.  The two columns on the far right show the % of empty seats based on average attendance and highest attendance respectively.  The excess capacity is calculated as the number of empty seats as a percentage of the stadium capacity.

	2012-13 Season Attendance				Excess Capacity
Club	Average	Highest	Lowest	Capacity	Average	Highest
Barnsley	10,207	15,744	7,844	23,287	56%	32%
Birmingham City	16,702	19,630	13,532	29,409	43%	33%
Blackburn Rovers	14,974	20,735	12,230	31,154	52%	33%
Blackpool	13,916	15,907	12,653	16,007	13%	1%
Bolton Wanderers	18,103	24,844	15,675	28,100	36%	12%
Brighton & Hove Albion	26,236	30,003	23,703	30,750	15%	2%
Bristol City	13,348	19,148	11,836	21,804	39%	12%
Burnley	12,928	21,341	10,450	21,940	41%	3%
Cardiff City	22,998	26,558	20,058	26,847	14%	1%
Charlton Athletic	18,499	26,185	15,585	27,111	32%	3%
Crystal Palace	17,280	22,154	12,757	26,225	34%	16%
Derby County	23,228	33,010	20,063	33,502	31%	1%
Huddersfield Town	15,113	21,614	11,840	24,554	38%	12%
Hull City	17,368	23,812	14,756	25,404	32%	6%
Ipswich Town	17,526	21,988	15,417	30,311	42%	27%
Leeds United	21,572	25,532	16,788	37,914	43%	33%
Leicester City	22,054	25,913	8,585	32,312	32%	20%
Middlesbrough	16,794	28,229	13,377	34,998	52%	19%
Millwall	10,559	18,013	8,607	19,735	46%	9%
Nottingham Forest	23,082	28,707	18,748	30,540	24%	6%
Peterborough United	8,215	13,938	5,435	14,494	43%	4%
Sheffield Wednesday	24,078	31,375	18,922	39,732	39%	21%
Watford	13,453	16,968	11,022	17,477	23%	3%
Wolverhampton Wanderers	21,662	28,595	18,174	30,852	30%	7%

The excess capacity for an average gate in the Championship is 35%.  Even if we do take the highest capacity, which is usually only a couple of key derby games, there is still an average 13% excess capacity.  We need to remember that those highest capacity games don't take place on the same day across all the clubs.

I appreciate that there are practical issues such as separation of terraces holding away supporters from home supporters which might distort things a bit, but from the table only Blackpool, Brighton and Cardiff really have a case for wanting to fit in more fans through a standing area.  For other clubs such as Barnsley, Birmingham and Blackburn, they need to concentrate more on getting fans through the door.

With acknowledgements and thanks to @AlexBowness, @ValleyTalkBlog and @markunderwood9 on twitter for their contributions to the debate (please follow them), some of the arguments for standing terraces are as follows:-

Capacity
I have to acknowledge that for certain key derby games such as Charlton v Crystal Palace or Millwall would get more people through the gate if the stadiums could support them and standing room would certainly help this.  I don't think that the statistics above accurately reflect those few occasions.

Cheaper Pricing
I can agree with this one if it increases capacity, on the basis that more people can fit in to the stadium, but with the excess capacity shown in the tables there is no need for standing areas to fit in more people.  Initiatives such as Charlton's excellent "Football for a Fiver" days are more effective and have all worked really well to draw in crowds.  The only trouble is that this can annoy existing season ticket holders who have paid full price up front.  Maybe having to stand to get the cheaper ticket might appease this particular group of supporters.

Atmosphere & Novelty Value
Certainly I can see more people might turn up initially if standing areas are introduced.  I know the atmosphere in the away end of a game is usually cracking when we all tend to stand up for the majority of the match, but I think that is more about being the away team and amongst the die hard supporters who will travel to watch their team.  My gut feeling is that it would only attract existing supporters who would attend anyway.

Flexibility
It would allow some more flexibility for groups of people to move to stand together rather than having to find a cluster of free seats in amongst those already sold.

Room
I am reasonably svelte and find the West Stand seating comfortable in terms of leg room, but a number of Charlton fans in other areas of the ground have said that they are cramped in their seats and standing would actually give them more room to stretch out.  Other grounds with older terraces also suffer from this so standing with the appropriate railings might be a decent solution.

Against this, I'm not the tallest of people and I find it difficult to follow the game when taller people are standing in front of me. I know that away ends where the supporters all tend to stand anyway have been rather frightening places for younger kids and have seen a number being lead away in tears to quieter parts of the stand, but of course using the standing terrace would be a choice. 

It will be interesting to see if the proposals are adopted and look forward to the results of the trials.  I certainly won't be standing in the way.

*Acknowledgements
Independent    www.independent.co.uk/sport/football/football-league/exclusive-championship-clubs-set-to-push-for-safestanding-trials-8626274.html
BBC Sport     www.bbc.co.uk/news/uk-england-22541130
Wikipedia       en.wikipedia.org/wiki/List_of_football_stadiums_in_England
All those who contributed to the debate on twitter - many thanks