By Jason McKeown
It says much about the growing disenchantment of many Bradford City supporters that news of the Halifax cup tie being shown live, on BT Sport, prompted jokes about how the £67,000 windfall would somehow leave the club financially worse off.
On many recent occasions where it seems the Bantams have been boosted by good financial news, expectations have been quickly dampened by the club’s board, who have pointed out that more revenue is still needed to cover budget deficits. £67,000 is a welcome bonus to the club’s coffers, but it won’t be evidenced through extra transfer market activity. The books need to be balanced by around £750k-£1 million before the end of the season, and the BT Sport money will go towards bridging that sizeable shortfall.
But it is a difficult sell to many supporters, with a degree of head scratching taking place that leads to cynicism and distrust in the club’s board. “Where has the money gone?” is a familiar utterance that follows every recent defeat. There’s a sharp tongue behind those supporter wisecracks.
The Exeter effect
When Exeter City achieved back-to-back promotions in 2008 and 2009, taking them from the Conference to the upper echelons of League One, their meteoric rise was attributed to solid foundations built upon a giant cup windfall. In January 2005, the non-league Grecians’ drew Manchester United away in the third round of the FA Cup, improbably holding them to a draw and enjoying the bonus of a televised replay at St. James Park. They lost, but the two games generated what for Exeter was a life-changing sum of £1 million.
As Bradford City celebrated reaching the League Cup Final in January 2013, there were heady expectations that – like Exeter – the future was now assured, and that the club would use its new-found riches to climb back up the Football League ladder. Yet 12 months after promotion from League Two was achieved via the play off final, this summer City embarked on a range of cost-cutting measures that have resulted in a difficult League One campaign so far.
All of which has led questions over what happened to the League Cup legacy. If 2013 ranks amongst the biggest parties in the club’s history, 2014 is proving a painful hangover the morning after. A hangover where at some point we open up our wallet and feel confused as to where all those crisp ten pounds notes have disappeared to.
Since 2012, the Bradford City board have deployed a strategy of setting Phil Parkinson a playing budget higher than the business can afford at the point it is spent (during the close season), with variants in place for recouping these losses over the campaign. In the summer David Baldwin told Width of a Post that the objective is to begin each new financial year (starting on 1 July) with either no debt from the previous season or with a profit carried over.
The variants in place for recouping the budget deficit include a cup run (the club budgeting to go out in the first round of every competition, so any progress is a bonus); selling youth players (think George Green); approaching clubs who City youth players were previously sold to, in order to negotiate releasing money early from the add-on clauses in their contracts; selling first team players; and an increase in match-by-match ticket sales.
The so-called legacy
It is widely believed that the League Cup adventure earned City £2.5 million. So where did it go? Well, to start with, the 2012/13 budget deficit was recouped through this windfall. Initially, the overspend was around £600k (instantly reducing the £2.5 million windfall to £1.9 million). However, with the cup run going so well and to aid in the ultimate quest of promotion, in January 2013 Parkinson was allowed to bring in two additional players to strengthen his squad.
Michael Nelson arrived from Kilmarnock for around £50,000, and Andy Gray joined from Leeds on a free transfer. It is unclear the level of signing-on fees and wages involved in these moves, but neither player will have come cheap. Finally, promotion triggered player bonuses that will have further eaten into the League Cup profits.
I have no direct knowledge of how much Nelson and Gray cost, or how much the promotion bonuses were worth, but Mark Lawn told a Bantams Past meeting, in April 2013, that City ended the season with the highest budget in the division due to these extra commitments. So let’s be conservative and suggest that all of this cost an additional £200k (it could have been more). Therefore resulting in an overspend of £800k for the season, recouped through some of the £2.5 million cup money, and leaving £1.7 million left over.
In the summer of 2013, Julian Rhodes took the decision to pay back the money Mark Lawn had loaned to the club in 2009; money that was loaned to cover the losses of the 2008/09 season. Lawn lent City £1 million, with interest charged at 9% above Bank of England Base Rate (meaning it was 9.5% a year). As part of the repayment of this loan, Simon Parker confirmed that Lawn did receive the interest he was due. It’s not clear how much this will have added up to, but fair to suggest it would be around £400k (we are talking about a four-year period between the initial loan being made and its repayment).
This would mean that repaying the loan cost around £1.4 million. Therefore, after the original loan, remaining interest payments and the 2012/13 overspend were accounted for, there would not have been much League Cup money left over going into 2013/14. Perhaps £300k-£500k.
This is not an attempt to criticise Lawn for this loan. He took a huge risk in the first place by providing it, particularly when you consider the financial difficulties of 2010/11, where City were attempting to negotiate with Gordon Gibb over Valley Parade rental payments. If City had gone into administration at any point, Lawn would have been forced to the back of the queue of creditors. And this, after all, was his children’s inheritance.
It was also beneficial for City to no longer have this loan to worry about; so you can see why it was repaid when the club was in a position of strength.
The remainder of the League Cup windfall was used in 2013/14, including funding an increase in the playing budget (a £600k deficit gap was agreed again) and paying Falkirk for Mark Stewart (the long-running court battle began during 2012/13, meaning the Board had to make preparations). It is also rumoured that Guiseley’s sell-on clause for James Hanson was bought out by the club.
A large part of the money raised from the sale of Nahki Wells in January 2014 was used to cover the club’s 2013/14 overspend, and it’s likely that much of the remaining Wells money was used to sign Aaron Mclean. He may have been a free transfer, but was still contracted by Hull City, and so there would have been some additional financial cost compared to signing a free agent.
It is well documented that Mclean’s wages are considerable (indeed, there are whispers that Hull were still contributing to his salary up until May), and in relative terms he was a huge outlay for the Bantams.
The scars of the past
There is evidently a big difference between the Bantams’ League Cup windfall and that which Exeter City picked up nearly a decade earlier – the starting positions of both clubs.
For Bradford City, the 12 years of struggle and two spells of administration still carried a burden, and the windfall was an opportunity to address this once and for all. Over half of the money earned from toppling Arsenal and co. was needed to repay the debt to Lawn (or in other words, to repay the bill from four seasons earlier), and to cover the more recent 2012/13 budget overspend.
Exeter were able to grow as a club after their pay day, Bradford City were able to wipe out their debts and find stability. Not quite the legacy we envisaged as we danced around Villa Park in celebration of reaching the League Cup Final, back in January 2013, but an important progression nonetheless.
The result is that City have climbed up a division and are a more financially stable business. The Wells transfer owed more to the realities of life as a lower league club – you have to sell your best players from time-to-time. The fear is that the latest budget deficit could mean history is repeated this January and the club cashes in on James Hanson. Before he left the club to take up a post at Burnley, David Baldwin outlined other potential variants that can be explored first – and that the sale of a first team player is a last resort.
The way forwards
Nevertheless, it is unclear how the club’s upwards momentum can be maintained. There is no indication of further investment from Rhodes and Lawn – who have both contributed a lot of money in the past, and understandably are unwilling or unable to do so again – and even less sign of outsider involvement. In 2011 businessman Steve Parkin (not that one) expressed interest in buying the club, but nothing materialised (it is said he did not want to jointly own the club with Rhodes and Lawn). No one else has appeared on the horizon since, at least in public.
There is an argument to make that the club has not looked this attractive to buy since it made it to the Premier League in 1999. The financial mess of two administrations has long since been addressed, and the loan to Mark Lawn repaid. The previously considerable rent commitment for using Valley Parade and the office blocks has been halved to make it more manageable. The club’s set up is strong on and off the field, and there is a large fanbase to tap into.
If you’re looking to buy a football club, you could certainly do worse.
Yet there is apparently no interest, despite Rhodes and Lawn openly stating they would welcome offers and that the club is up for sale. So instead City must continue to rely upon their joint owners, and continue to rely upon generating revenue from other sources. The budget overspend approach worked handsomely in 2012/13, but less so in 2013/14. Whether it is continued in 2015/16 will largely depend on how the next few months shape up.
There is an expectation that next season – Phil Parkinson’s final year of contract – the boat will be pushed out more to give the manager a chance of mounting a serious promotion challenge. Yet at this moment it’s hard to see how this will happen; at least not without spending money the club doesn’t at the time have and worrying later about how it will be repaid.
In its current structure, it is difficult to envisage the club making that next step up and climbing into, and becoming part of, the Championship.
Time to raise season ticket prices?
Which begs the question of whether the season ticket initiative, launched in 2007, has now run its course. Bradford City have the second highest average attendances in League One this season but also the cheapest season tickets by some distance. It has been a commendable approach and worked well in strengthening the club’s fanbase, but it doesn’t translate into the largest of playing budgets for the manager to operate with.
It will be interesting to see if this is something the club looks at changing next season, although there are huge risks with abandoning this policy. Unless there is a dramatically positive change in the direction of the team’s form this season, it is likely that the supporter mood going into the summer will be muted at best. Ramping up the season ticket prices would see a drop off in numbers, and indeed it could become a PR disaster.
Imagine if City finished around the 14th spot they currently occupy, the home record remained patchy and then season tickets for 2015/16 went up by £100? It would be a difficult sell to everyone but the hardcore supporter. For those whose interest might be waning, such a price rise would simply offer the excuse to give up. Since 2007 the club has worked so hard to build up its fanbase, and it would be very sad to see that work undone.
It would have been easier to have ramped up season ticket prices in the summer of 2013, when the club was on a high and entering into a new division. It would be easy to push up prices were City to be promoted to the Championship. But it’s a risky strategy to adopt when the Bantams are at a standstill or even creeping backwards.
Managed badly, a significant season ticket price rise could rip the heart out of the club.
We’ve come a long way
Only three years ago, City were looking nervously over their shoulder at a drop to non-league. The initial budget planning for 2012/13 included looking at the scenario of the Bantams being a Conference side. Rewind further back and there are false dawns, relegations and a couple of financial crisis’s. It was a torrid time to support, and to own, Bradford City – and the lessons taken from those dark days should never be forgotten.
We must always continue to live within our means, and that takes precedence over any self-belief that City ‘belong’ at a higher level and that anything short of achieving Championship status is a failure. League One is not the place we want to see out our days, but at the moment there isn’t too much fuel in the tank and patience is needed.
The worry is how easy it would be to go back to the bad old ways. To force ourselves into selling James Hanson in January, to kid ourselves that sacking Phil Parkinson is the answer (and taking the hit of paying him off). At the very least, we have to stay where we are in the short-term, as relegation at this stage would be a huge, huge setback.
But if we’re going to stick together we need a vision that we can all get on board with, and that vision needs to come from the top. The two chairmen have been very quiet of late, but they will know better than anyone that message board mutterings and sarcastic jokes about the finances can quickly turn ugly, and that very soon the arrows could be heading their way.
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