The economics of Bradford City

Picture by Thomas Gadd (thomasgadd.co.uk)

Picture by Thomas Gadd (thomasgadd.co.uk)

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.

The strategy

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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Categories: Opinion

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23 replies

  1. Great article. I just hope that all those moaning and asking “where’s the money gone?” read it. I think the club’s been good and quite open about cup money, budgets etc. Most of the information is out there in the T&A, interviews and so on.

    I think we can probably all agree that £199 for an adult season ticket is too low for League One football. I know the economy’s pretty grim at the moment but it’s cheaper than a few local non-league teams!

    I’ve thought of a possible solution though: pay-what-you-like pricing. The minimum is set at this season’s prices but if people want to pay more they can do. The club can promise that all season ticket revenue goes towards the wage budget (they do that now) and I think a good number would happily pay an extra £50-100 knowing it would strengthen the squad.

    I believe there is a transfer fund that fans can contribute to already but it’s not well-publicised and this way would be clearer and easier.

    I think it’s so important that we don’t scare off casual fans or those struggling financially but give an opportunity for fans to pay more if they feel they have the means.

    Could this work? Any thoughts?

    • There has been this “pay more if you want” scheme before (Stuart’s fighting fund I think it was called).
      The extra revenue this brought in might have bought a pie and a pint in Wetherspoons.

      • I think it still exists as Baldwin (?) mentioned it in a recent interview but that’s precisely my point. Most seem unaware of it and even if they know about it perhaps don’t have the time or energy to contribute.

        Seems like a few want prices to increase so let them pay extra and keep it affordable for others.

  2. Good piece Jason, it irritates me when fans just blurt out ‘Where’s the Money’ as if there’s a bottomless pit that can be tapped into at any given moment. Its either ignorance or denial of the facts that the club needs to balance the books whilst remaining as competitive as possible without overstretching as in the past. I’m proud that the joint chairmen have taken this more prudent approach. After 2 administrations the goodwill of the business community would have been almost non-existent and had to be rebuilt which wouldn’t happen overnight.

    I’d rather see us rebuild prudently & slowly than throw money we don’t have to race up the league and then hit a brick wall and find us out of our depth. We are progressing year on year under PP so far even though to some it might not look that way and the key word for me is stability. If we start hiring & firing managers again with all the pay-offs that brings with it, we will in theory be even worse off. Lets all be a bit patient, trust the Joint Chairmen & Manager and see where it takes us.

    The appointment if there is one , of David Baldwins replacement could be a crucial one with new eyes & opinions on marketing the club and attracting investment.

    Some of the comments on social media are bordering on panic and paranoia and the anger shown by some is really not needed or called for. If they can do any better, step forward and lets see. ML & JR are easy targets but i’m thankful they are proper City fans and not some foreign fly-by-night just here to make a quick buck out of us on a whim.

  3. I think the board were banking on the 10% add on clause for Tom Cleverley that never materialised at the end of August but should hopefully come in January.

    Otherwise we may look to cash in on James Hanson, but how much is he actually worth ? We must think he’s worth more than Guiseley if we have already settled the add on clause. Thus shows the club are seriously considering selling him. At the moment Stead is playing better than Hanson, so the fans may accept us selling him.

    We also have a sell on clause for Liverpool’s Andre Wisdom who is currently on loan at West Brom. Could they sign him in the summer ?
    We have too many players on big wages who don’t justify the outlay. McLean, Davies, Darby and even Yeates are in that category.

    • In 2011 Mark Lawn told me and Michael Wood (BfB) that the terms of the Wisdom deal are more lucrative than Cleverley. So if he ever does move from Liverpool, City should do well financially.

  4. Firstly whoever wants Parky sacked is deluded because he’s going no where as we cant afford to pay him off.
    Secondly why would we want to get rid as for me he’s our 3rd best manager in my lifetime behind Jewell and Cherry.
    Also arent we still due around a million from Huddersfield and if so when is that due? That if true would cover everything and more but maybe thats already been factored in

  5. In my opinion the wage budget is the problem. Maybe it’s time to reintroduce the salary cap we had under McCall.
    It can’t do a lot for team morale when some players are on a lot more than others and not even pulling their weight. Maybe this is one of the reasons why Parky wants to move McLean on.

  6. There was an article on here recently about disillusionment and I can’t help but think about it and feel cautious when people start talking about raising ticket prices.

    Having considered it more since then and in light of reading this article it seems an appropriate time to point out how disappointed and let down many supporters still feel over the Nahki Wells sale. Our best player sold for peanuts and now the club has much less chance of progressing than they did with him or if the club had secured an appropriate fee for him.

    • Gareth, weren’t we in a way held to ransom over the fee by a combination of Player power & Agents flexing their muscles? Nahki’s attitude was a disgrace possibly encouraged by his agent who has previous with the club. Nahki’s refusal to consider other clubs who had made superior offers backed us into a corner. Cash in or risk him seeing his contract out for no return.

      • If this was the case we simply do not sell him. We definitely do not sell him for 50% less than the well publicised asking price, in my opinion it is appalling business!

  7. All interesting stuff and it does appear money just seems to dissolve when it arrives at VP. As well as the league cup windfall you refer to surely the playoffs also produced substantial funds. Three televised matches; three lots of gate money and the associated benefits via corporates, merchandise etc. – half a million pounds plus?

    As for this season’s over budget position one of the joint chairmen was quoted as saying we have double the budget of Rochdale and Oldham, and look at where those teams are in the division. Does this suggest players will only come to VP if they are offered top money or we don’t have the scouting system to identify bargains or we have no one with the negotiating skills to play hardball with agents or…? And have we all already conveniently forgotten the Leeds money?

    The season ticket question is a difficult one. An increase of £100 would not go down well even if this season ultimately improves with a top 10 finish. I can’t help but think the club have missed a trick by not making small increases of, say, £10 per season since promotion. I doubt any fan would have refused to pay the extra in the first season so an extra £100,000 could have been generated. A further £10 this season and suddenly £300,000 has appeared in the club’s coffers. But we are where we are and need to start the process for the forthcoming season.

    Finally, our old friend JH! PP said when the transfer window closed that he had had no enquiries for the player so why does everyone assume he is a saleable asset?

  8. Changing managers is hideously expensive when you include paying off the coaching staff and the new manager wanting to bring in their own players. You will probably also have to pay agent’s and lawyer’s fees to make sure the dismissal and appointment go smoothly. Even Parkinson’s detractors must see that is not in the club’s interests as long as we don’t get relegated.

    Regarding the wage budget, we are not getting value for money at the moment for two reasons. Firstly, we have brought in high profile players who have performed very badly whilst failing to uncover the hidden gems which characterised the first part of the Parkinson era. Secondly, the current team is disjointed on the pitch and significantly less than the sum of its parts. My worry is that the approach to coaching and recruitment is to go for “proven quality” – a deeply flawed concept in a team game – and let the players sort it out on the pitch. This is not working. The manager will need to find the solutions to these problems if we are to achieve promotion without buying the league at huge cost.

    I wonder if the strategy of giving as much money to the first team playing budget as possible is starting to show its cracks. Perhaps in the medium-long term we would benefit by reserving some of that budget for a bigger back room team for scouting and training the players.

    • Chairman Lawn & Rhodes run the club as a business, there’s nothing to gain by reckless spending on wages to get ourselves into the championship. That approach is very risky look at Tottenham! 120 million invested in transfers from the Bale transfer to Madrid & gone backwards.
      The sensible supporter’s I speak to are like me just happy to see the progress we’ve made in under Phil Parkinson.
      I’ve always said at the time £200 season tkt brought bk the floating supporter, it’s worked out extremely well, but to move the Club forward it’s got to be upped as we’re watching lge 1 football cheaper than someone non-lge team’s! .
      If an extra £50 was put on adult season tkts next season I certainly would not complain.
      We have to think of the long term stability of our club! I could give a list of 15 non lge clubs that pay more than our currant season tkt layout per season.
      It’s upto us the supporter to now put our hand’s in our pockets to give the club that bit of extra income to be used for transfer budget.

      • On the sale of James Hanson.
        That’s an absolute last resort surely.
        He’s one of our own a real Mr Dependable. Knowing how we operate we’d let him go for peanuts & end up without the same quality James Provided? .
        If you think we’ve struggled to replace Nahki Wells try to replace James Hanson. Yes every player does have a price but for me there’s no amount of money worth the sale of James Hanson

  9. Great article giving some interesting perspectives. One angle that isn’t covered, intentionally or otherwise, is the manager’s use of his budget.

    In his 3 seasons here so far, looking purely at league position and (admittedly speculative) relative budgets, Parkinson has underachieved.

    In his first season we finished 18th with a budget much higher. In his second season we finished 7th with a top 3 budget (which became the highest in the division according to the article above) and last season was arguably our best finish relative to the size of our budget.

    I understand that there are mitigating factors in each of those seasons and I wouldn’t swap some of those fantastic League Cup experiences which obviously impacted our league form in that season. However, now that we are into our 4th season under Mr Parkinson, the evidence is stacking up that he isn’t able to develop a team that is more than the sum of its parts, or even one that is equal to the sum of its parts.

    I’m not advocating getting rid of Parkinson – it’d be too expensive for one thing, and it’s impossible to deny he’s been instrumental in bringing back some much needed success and positivity – but if you can’t increase the size of the budget, maybe it’s time to look at how we can get more out of the budget we do have.

    • Appreciate the general point of the comment but I don’t think PP can be held responsible for anything during that first season in charge, especially where the budget’s concerned – Jackson assembled a team but walked early on and Parkinson had to pick up the pieces. He kept us up, which was what we asked of him, and brought in Davies and Reid.

      Anyway, fantastic article full of common sense. Every City fan should read this. Fab stuff.

    • Jeez – talk about twisting the facts to support your own view. Two trips to wembley and promotion an ‘under achievement’…wow…

    • I think we’re on the same wavelength. Parkinson has done a lot for us but I see little evidence he can get us promoted without spending a lot more than the rivals. Sacking him would be stupid but so would giving him another contract. He has the best part of two seasons to make his case and the best of luck to him.

      Wage caps have been mentioned; I’d also like to see a portion of the wage budget reserved for players under 23 – say 10%. It would be nice to develop some players of our own who can provide squad depth, rather than developing other clubs’ players on loan when we inevitably don’t have enough bodies.

      • If any youth player shows promise there’s not a lot the club can do other than sell & let them develop at better academy’s. It’s to the benefit of the young player & club.

  10. I have an unpleasant thought concerning City which pops into my head with increasing regularity these days (it occurred again at the Doncaster game). it relates to the club’s current situation.

    Outsiders with no detailed knowledge, seeing the size of the city and our average 12-13,000 gates say “big club! should be in the championship”.
    what they fail to see is the fact that the gates are acheived on the back of ultra-low season ticket prices…..the big gates don’t result in big income, far from it! we are indeed crowd rich but cash poor.

    Now it is definitely possible to get promoted from the 4th tier of the Football league with no real money to spend on transfer fees. it has been done time and again (but it did take City several seasons to acheive this)
    In the 3rd tier it can still be done but it becomes more difficult. £250,000 to spend on the missing piece of the jigsaw can be the difference between promotion or just missing out.

    Now our joint chairmen are businessmen who have done (in sometimes terrible ciccumstances) a great job in guiding the club to financial stability and they deserve no criticism. But they themselves freely admit that they are first and foremost fans! they may be relatively wealthy but they are not rich! they are unable to make substantial transfer funds available to the manager outside the financially sound economics of the running of the club. they both say as much themselves and are open to someone with more financial clout taking the club over to take it onwards.

    Now there is that unpleasant thought i mentioned. am i being wholly unrealistic to want promotion this season as i did last season and no doubt will again next season? have we come as far as we can with the current set-up. should i swallow a big dose of reality and settle for a comfortable mid-table position in this division for the foreseeable future? an unpleasant thought indeed! but then i banish the thought by remembering that i am not just a lifelong football fan but a lifelong City fan! that fact and the concept of reality are incompatible….mutually exclusive!
    After all, in early 90’s in the dark days under Dave Simpson when City were going nowhere, my best mate and I would drown our City sorrows over a pint or two and wonder if the good times would ever return. little did we know that the Geoffrey Richmond rollercoaster was just about to arrive, horns blaring and neon lights flashing in the city!

    • Yes, I think you – and all of us – should settle for midtable for the forseeable future. Perhaps my views are influenced by the fact that I have supported City since the late 1950s and so, apart from occasional all too brief halcyon spells, I have been accustomed to more modest league placings. However, I believe the bottom line is to ensure the club continues to be run on a sound financial basis and to operate within realistic budget constraints. Being realistic this suggests mid table obscurity at best for the present.

  11. One benefit of cheap ticket prices at VP is that we have high crowds at VP. Another is that we get high away crowds because people evidently have the disposable cash to afford trips. However to all intents and purposes other clubs benefit from our cheap tickets because they get the gate money from visiting City fans. Wouldn’t it be preferable for that cash to be spent at VP? It is a massive gamble and a difficult decision but surely committed City fans will see the logic of increasing ST prices and accept it as necessary? Why give Oldham et al the financial benefit of subsidised football at BCFAC?

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