[Cricket] This is how to deal with clubs in financial trouble

Buzzer · Oct 3, 2016

Thinking more generally - and looking at [MENTION=31]El Presidente[/MENTION] and [MENTION=25]Gwylan[/MENTION] here, how is the 'fit and proper' test applied by the FA/FL? Is there a dedicated compliance unit or do they have lawyers and accountants contracted to do the work? And are there any follow ups, say yearly tests?

Anyone on here who works for an accredited professional body - accountants, electricians, lawyers, architects, gas fitters etc etc all know that we have to keep up-to-date with courses on technical stuff, legal and so on and we have to submit annual returns proving this. I know for accountants it's not just financial probity but there are clear rules and guidance on ethics and I'm sure that it's the same for other professional bodies.

If the FA/FL don't have something similar for football directors then I'm amazed given how many external stakeholders rely on directors acting in best interests of the club. I don't think it's good enough for these tests to be applied only when there are club ownership changes. Archer proved this 20 years ago and the Oystons are a prime example of owners who are clearly not acting in the best interests of the club they own.

Blue Valkyrie · Oct 3, 2016

El Presidente said:
Closer to £20 million last season.

I hope a fair chunk of that is 1 off costs rather than repeating annual expenditure.

studio150 · Oct 3, 2016

blockhseagull said:
I also see that it means Durham have lost their test status meaning no test matches.

Surely this will cause further financial issues and actually seems a bit harsh on cricket fans in the area.

Having to bid for international matches probably contributed greatly to their financial mess. In tjst they had to out bid other test grounds snd are not able to charge London prices and even then struggle to attract sell outs and the additional rebenue streams.
Although the process is changing not having tests may not be too much of a handicap.

El Presidente · Oct 3, 2016

Buzzer said:
Thinking more generally - and looking at [MENTION=31]El Presidente[/MENTION] and [MENTION=25]Gwylan[/MENTION] here, how is the 'fit and proper' test applied by the FA/FL? Is there a dedicated compliance unit or do they have lawyers and accountants contracted to do the work? And are there any follow ups, say yearly tests?

Anyone on here who works for an accredited professional body - accountants, electricians, lawyers, architects, gas fitters etc etc all know that we have to keep up-to-date with courses on technical stuff, legal and so on and we have to submit annual returns proving this. I know for accountants it's not just financial probity but there are clear rules and guidance on ethics and I'm sure that it's the same for other professional bodies.

If the FA/FL don't have something similar for football directors then I'm amazed given how many external stakeholders rely on directors acting in best interests of the club. I don't think it's good enough for these tests to be applied only when there are club ownership changes. Archer proved this 20 years ago and the Oystons are a prime example of owners who are clearly not acting in the best interests of the club they own.

The Fit and Proper test has been replaced by an 'Owners and Directors' test. However it is mainly a box ticking exercise and much of it is self certification by the new owner. Whilst there does seem to be greater scrutiny by the football authorities these days (as evidenced by the time it took for the summer takeovers at Villa, Wolves and West Brom, and the delays at Hull), unless there is evidence of financial mismanagement or present criminal activity then there is little the FA/EPL/EFL can do to stop anyone buying a club.

The Oystons would argue they have done a great job at Blackpool from a financial point of view, top of the table two seasons running in terms of Championship profit.

View attachment 78417

View attachment 78418

El Presidente · Oct 3, 2016

Blue Valkyrie said:
I hope a fair chunk of that is 1 off costs rather than repeating annual expenditure.

Highly unlikely. We are paying out competitive wages for very good players.

dazzer6666 · Oct 3, 2016

Gwylan said:
Durham can't pay their bills. They get rescued by the ECB but the price is relegation AND a 48 point deduction. Imagine if the FL took this stance with every club in financial grief - we'd have clubs with minus points at the end of the season.

While I wish the FL were a bit tougher, can't help thinking that Durham have been hit hard here. Not only has it rescued Pants from relegation but that additional points penalty is a bit gratuitous. Wonder if Derbyshire will be next - they're in a real mess

Bear in mind that's 48 points from a likely total of 200+ - equivalent to maybe 10-12 for a football team, which is about what happens anyway ?

Driver8 · Oct 3, 2016

They should have promoted whoever finished second in Div 2 instead.

Buzzer · Oct 3, 2016

El Presidente said:
The Fit and Proper test has been replaced by an 'Owners and Directors' test. However it is mainly a box ticking exercise and much of it is self certification by the new owner. Whilst there does seem to be greater scrutiny by the football authorities these days (as evidenced by the time it took for the summer takeovers at Villa, Wolves and West Brom, and the delays at Hull), unless there is evidence of financial mismanagement or present criminal activity then there is little the FA/EPL/EFL can do to stop anyone buying a club.

The Oystons would argue they have done a great job at Blackpool from a financial point of view, top of the table two seasons running in terms of Championship profit.

This is where it all falls down then because the Oystons have proven that you can run at a profit and still run a club into the ground. I think if I'm right that directors' wages as a percentage of overall wages has Blackpool streets ahead of anyone else.

The players have to clear dogsh*t from the park where they train because facilities are so poor, the state of the pitch is an embarrassment and fans' input into any aspect of the club is a joke. There needs to be an ethical/best interests element to this and they need to be auditable with a clear threat to name-and-shame and personal fines and punishments on the directors for non-compliance.

Blue Valkyrie · Oct 3, 2016

El Presidente said:
Highly unlikely. We are paying out competitive wages for very good players.

26 man senior squad, 20 million loss above all income.

That sounds disasterous.

Was hoping a lot was training ground cost ( and of course the cost of free tea in 1901 ).

El Presidente · Oct 3, 2016

Buzzer said:
This is where it all falls down then because the Oystons have proven that you can run at a profit and still run a club into the ground. I think if I'm right that directors' wages as a percentage of overall wages has Blackpool streets ahead of anyone else.

The players have to clear dogsh*t from the park where they train because facilities are so poor, the state of the pitch is an embarrassment and fans' input into any aspect of the club is a joke. There needs to be an ethical/best interests element to this and they need to be auditable with a clear threat to name-and-shame and personal fines and punishments on the directors for non-compliance.

I agree with you in principle, but the Oystons are very litigious. (not as litigious as the board of another club in that division who have used some very unusual acounting approaches to keep within FFP limits). If an ethical appoach is going to be used who makes that decision? Most audits are agreed on the golf course, you only have to look at the successful lobbying by the big accounting practices to restrict auditor rotation to see that there is a very cosy relationship between them and their clients.

ManOfSussex · Oct 3, 2016

Driver8 said:
They should have promoted whoever finished second in Div 2 instead.

That was Kent, so grudgingly they've done the right thing by letting Hampshire stay up in my book. :lolol:

Buzzer · Oct 3, 2016

El Presidente said:
I agree with you in principle, but the Oystons are very litigious. (not as litigious as the board of another club in that division who have used some very unusual acounting approaches to keep within FFP limits). If an ethical appoach is going to be used who makes that decision? Most audits are agreed on the golf course, you only have to look at the successful lobbying by the big accounting practices to restrict auditor rotation to see that there is a very cosy relationship between them and their clients.

It would need to be an independent review. Maybe if EUFA got involved and took a Europe-wide approach then the spot-check investigations could be undertaken by another country's compliance team. I fully take your point about the current fudges and cosying up - not just in football but generally and it's a golden rule that the more arms-length between the investigators and investigated, the more independent it will be.

El Presidente · Oct 3, 2016

Blue Valkyrie said:
26 man senior squad, 20 million loss above all income.

That sounds disasterous.

Was hoping a lot was training ground cost ( and of course the cost of free tea in 1901 ).

The Albion made an operating loss of £10.4 million in 2015, which on the face of it appears to be no worse than the previous season.

If you delve into the foonotes though this is disclosed

View attachment 78419

A profit of £8.7 million arose from the sale of Ulloa and Buckley. So the loss in 2015 excluding these one off gains would have been £19.1 million (£10.4m+£8.7m).

If you look at what happened in 2015/16 we signed Hunnemeier, Skalak, Hemed, Murphy, Knockaert all for seven figure sums, with pay levels to match, and gave Lewis Dunk a substantial (and thoroughly deserved) pay rise on his new contract (rumoured to be £19,000 a week, no doubt higher still this season).

No players were sold for big gains, so if the losses are less than £19.1 million the club will have done very well IMO.

To put attendances into context, an extra 1,000 on the gate each match, at an average of £18 net to the club (based on mix of ST income, adult, kid and OAP tickets, less the 20% VAT) generates only £450,000 a year in revenue assuming 25 home games.

El Presidente · Oct 3, 2016

Buzzer said:
It would need to be an independent review. Maybe if EUFA got involved and took a Europe-wide approach then the spot-check investigations could be undertaken by another country's compliance team. I fully take your point about the current fudges and cosying up - not just in football but generally and it's a golden rule that the more arms-length between the investigators and investigated, the more independent it will be.

With Infantino in charge of UEFA and our own FA in turmoil over the Big Sam and Wembley cost overruns I'd love to see it but it's not a priority for them.

Buzzer · Oct 3, 2016

El Presidente said:
With Infantino in charge of UEFA and our own FA in turmoil over the Big Sam and Wembley cost overruns I'd love to see it but it's not a priority for them.

The English FA/FL could take the initiative and make their own arrangements with say the Scottish or Irish FA. A move like this would go a long way to rebuilding the trust of fans.

el punal · Oct 3, 2016

Badger said:
Especially as it's f***ing Hampshire who are benefiting the most from it again.

Two seasons on the trot now. The Crystal Palace of cricket in the lucky, lucky b* stard stakes. I'm sure they're all quaffing bubbly down at the Toilet Bowl as we speak.

LlcoolJ · Oct 3, 2016

El Presidente said:
The Albion made an operating loss of £10.4 million in 2015, which on the face of it appears to be no worse than the previous season.

If you delve into the foonotes though this is disclosed

View attachment 78419

A profit of £8.7 million arose from the sale of Ulloa and Buckley. So the loss in 2015 excluding these one off gains would have been £19.1 million (£10.4m+£8.7m).

If you look at what happened in 2015/16 we signed Hunnemeier, Skalak, Hemed, Murphy, Knockaert all for seven figure sums, with pay levels to match, and gave Lewis Dunk a substantial (and thoroughly deserved) pay rise on his new contract (rumoured to be £19,000 a week, no doubt higher still this season).

No players were sold for big gains, so if the losses are less than £19.1 million the club will have done very well IMO.

To put attendances into context, an extra 1,000 on the gate each match, at an average of £18 net to the club (based on mix of ST income, adult, kid and OAP tickets, less the 20% VAT) generates only £450,000 a year in revenue assuming 25 home games.

£7.2m of the loss is writing down tangible and intangible assets though. A paper exercise rather than "real money".

El Presidente · Oct 3, 2016

LlcoolJ said:
£7.2m of the loss is writing down tangible and intangible assets though. A paper exercise rather than "real money".

True, but 'real money' was used to buy those assets in the first place.

Kaiser_Soze · Oct 3, 2016

blockhseagull said:
I also see that it means Durham have lost their test status meaning no test matches.

Surely this will cause further financial issues and actually seems a bit harsh on cricket fans in the area.

El Presidente said:
Didn't the ECB to a certain extent create the problem by making counties tender to host Test matches.

Durham bid too much and ended up in this sorry mess.

Both absolutely spot on. Durham also had to improve Chester Le Street to continue to finance ground improvements so they could still bid for international cricket. The ECB are most certainly not a blueprint for the competent running of any sport.

LlcoolJ · Oct 3, 2016

El Presidente said:
True, but 'real money' was used to buy those assets in the first place.

For sure. It's just that when people go on about "losing x amount per season" they often neglect to mention that a lot of that loss is actually money that's already been spent rather than the extra that Tony has to plough in every year.

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[Cricket] This is how to deal with clubs in financial trouble

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