Minority Report 2019-20 Talking Finance 4

We would be if the plan had commenced the minute they took over.

 

Obtuse. We're discussing the actions of the club and what they could have done differently, no?

 

Of course an investor pays the least they can get away with, but the transaction is still on both sides of the Balance Sheet, no matter what they paid.

They have not bought the ground. See latest accounts of Oakwell Community Assets Ltd to 31 March 2018.

 

Sorry, I misunderstood.

The owners have said that they will not do loans because they do not want to invest the time of our coaches in developing another club's assets. There is no return on it for us.

 

Precisely. Which is pure ideology.

Surely, as a football club, your fundamental objective is to do the best you can on the pitch? Surely, the starting point is to formulate your perception of what a successful team on the pitch would look like. You would then delve into coaching, recruitment and development. All within the parameters of not overspending, and allow that to harness what your team is and what you need to be as successful as possible.

Our ideology is not seemingly fuelled to obtain the best blend that gives us a chance of competing on the pitch.

If you consider this ideology and consider there is a very strong possibility that we will be in league 1 next season (not guaranteed, of course), look at your starting position next season. A massive squad. Very long term contracts for players who have failed. And an immediate hit of £6-7m to income.

There is then a strong chance you need to just get rid of players to get back to some form of solvency. There is no guarantee of promotion the following season.

This ideology is high risk, low return and hugely intensive. But clearly you disagree, and thats absolutely fine.

But you must see, these choices are self inflicted and there are other ways of doing it that don;t result in us being £300m in debt and being at risk of extinction.

 

The accounts are already 19 months out of date.

 

What about the investment in retaining Championship status? Failure to do that loses us £6-7M, reportedly. Loans used carefully can be an investment if they help turn things around. They also avoid a permanent signing of a more expensive player.

 

It also considers things in isolation, as if all decisions individually stand alone, but this is not the case.

In my business, I often see junior members of the finance team operating in this way, seeking to make discrete decisions without understanding the interoperability of two things, because it’s easier to simply blanket apply a rules based policy.

So as Red Rain states - the logic is stringently applied and we don’t do loans because in isolation, we don’t make money out of it.

The trouble with this is, in the meantime the following things are happening that devalue the investment we’ve made in young players that we want to sell on:

1) They’re in a low profile, unsuccessful, losing team.
2) They have no role models/exemplars/mentors in the playing squad to help them through difficult times and improve their game.
3) They’re potentially demotivated and disillusioned from the constant losing.

All these three things have direct consequence on the sale value of the player - and all three could have been potentially addressed, at least in part, by judicious use of a couple of the right type of loan players, for example.

 

Good points, TM. In a business you might bring in a consultant to provide short-term help in a key area where your organisation lacked experience, might you not?

 

Funny they don't want to do loans that could help the football club. Yet they happily took out a interest loan in the summer.

 

And in some cases, those consultants do such a great job, enjoy it so much... that they later come to be involved full time at that organisation.

 

If ideology is another name for plan, then yes it is.

How much would you budget to lose each year and how would you fund that? I am asking because budgets are a fundamental tool in the running of a business and I am sure that you will have come across them many times before. They are the short term version of the long term plan. So what is the answer to that fundamental question.

If we are relegated, we lose £6m as you rightly point out. We fall back into the control of SCMP and SCMP demands that we limit our player pay to 60% of the revised turnover figure. The directors have said in the past that player contracts include a relegation clause that reduces player pay whilst in the lower league. This is all explained in Talking Finance 3. However something that I missed off that explanation is that the wages of young players not in the first team squad are excluded from that calculation. Frankly, if we are talking about SCMP, it is far more preferable to go down with young players on lower wages than older players on higher wages.

The first challenge for any business is to remain solvent. We nearly lost our football club in 2002, and that lesson should be at the top of every fan's list of priorities. .

The players will not have failed if the team is relegated. They are all very young and there is plenty of time for them to get over the setback.

 

Yes they are. There will be another set out covering the year to 31 March 2019 in January 2020.

 

Thing is fans dont want Barnsleyfc to be a nursery club. And what you're saying almost tips over into that. And that's the line that needs to be sorted imo.

 

Too true. And I think that players are probably coming here now with no vision whatsoever of actually seeing their contracts out. They know that as soon as they begin to show up their agents will be on the job and our club will be ready to cash in for the appropriate fee. And let's face it, do we care about what the club's finances are? We go to Oakwell to watch the football - not read the balance sheet.

 

Ideology is not the same as a plan.

You assume we have a plan, there is no sight of a plan. Just an ideology. There is minimal correlation or interaction between words and actions of the club. I felt the fans were accepting under Cryne, and the new ownership. But the sands are ever shifting. Keeping the squad together.... then they sell. We want to shape the squad early (sell Moore days before the window closes). We'll only sell players in last year of their contract. Thiam and Cavare still here. Pinillos still here. Potts and Moore sold well before that.

If we utilised loans and free transfers better, and retaining our players better, and held out for better transfer fees... do they not actually free up revenue and capital budgets to better invest and incrementally improve the squad?

The objective (one of the few things the owners have said) is to remain in the championship. Therefore, upon relegation, we have failed. the players have failed, the coaches have failed, the owners have failed. The question then occurs, why have they failed. If the issue is that the players provided are not ready for the level they are being asked to perform, which I think is a pretty accurate view at this time.

Just quickly.... regarding your solvent comments and SCMP. You are right that young players, and I believe very long term contracts are negated from the calculation. So it's highly feasible that when we're relegated, a deduction in salary takes effect and we may be fairly close to being within 60%.

HOWEVER. That doesn't mean we are solvent does it? Nor would you expect 30 players (less ones that are released and out of contract) to be happy at being 20, 30, 40% worse off.... through no fault of their own being pitched into a team that would never survive.

So how is that a robust plan? Meeting SCMP and being solvent, are not the same. We could have a team of 20-21 year olds all on 4 year deals being discounted. Having sold Woodrow and Mowatt for less than market rate (if still there) we'll get some offset again.

But please do tell me how that a} is ensuring solvency is first and foremost. and b) how that fits into a plan to allow the development of the club to improve and become more valuable.. if these are the sole metrics you are willing to include to justify the actions and inactions of our "investors".

 

Not only that... but it flies in the face of the ridiculous suggestion why we don't get loans anymore. Of not developing players for the benefit of other people. That's all we do!!! Develop players for the benefit of anyone else! Its just that we might get a token few quid to sugar the pill.

 

As explained in Talking Finance 3, our costs also reduce.

This is not even *** packet stuff Orsen. If we lose £1m per season in the Championship and we invest even more in transfer fees and pay then we lose even more money and we have to sell more players to cover the losses.

To everyone:

I am finding myself answering the same questions over and over again now, and I am having to repeat myself with the same answers. If anyone brings up a new point, I will do my best to answer it, but otherwise, I see no point in constant repetition of the same arguments..

 

To be fair... you haven't answered many of the points about how we could do something differently. You've just closed the debate saying "we don't do that". The point many are trying to make is, we absolutely could do that and still be solvent, but the owners are making conscious choices not to.

For many, Barnsley FC is no longer a football club. Its a football player manufacturer (though a pretty average one at that). If all we're expected to do is wait for the filing of last minute accounts (but never sight of the HK investment vehicle) then aren't we all just better off picking a stock and watching its performance on the stock market once a week?

 

The problem is that while you illustrate your points well, you seem to set up absolute examples which you infer must apply. It doesn't follow that an investment in a loan player or two to assist the experience level must result in an extra £1M loss to the accounts. It's obviously a question of priorities, and balancing the money spent on new recruits with a judicious investment in a loanee, if that is what it takes. There are many other variables too. Season ticket prices could be increased, for example! There might be other, as yet untapped sources of income generation. And no - I don't know what they are! But they were hinted at when the new owners took over. These people are, after all supposedly shrewd entrepreneurs.

But I fear DannyWilsonLovechild has already made many similar points. The fact is that your argument appears to imply there are immutable laws of how our club must be managed financially. In reality we all know that there are many different models out there. Our owners' own model doesn't work for me. I think it short changes fans and also short changes head coaches. It doesn't even achieve their own objectives given that we look on for a second relegation in three years. There is nothing in what we have seen so far to suggest that we will see anything different from the current cycle of develop, sell, get relegated, start again. It's a totally unsatisfactory way to run our club and I'd sooner see a modest risk taken - even by poorer owners - than watch us become what Redhelen has described as a nursery club.