Pour yourself a drink before you start reading - it's a long 'un.
Once again Paul has taken a fair bit of time to try and answer the points that some thought he was evading or had misinterpreted or just required greater detail. It is, however, well worth reading and I encourage you to do so.
I've just got back to Brighton after a hectic 24 hours in London. I've managed to speed read the various comments from the great and good of NSC. People have made and raised some very good points and it's great to be engaged with so many supporters in this way - NSC at its best.
We're dealing with some complex issues. We live and debate them every day - and we don't yet have all the answers ourselves - so I can fully understand why there remains a few queries from supporters. Whilst I do not want to labour my various points or bore people any more than usual or necessary, I've decided to treat this exercise as a "virtual fans forum" - and to clear up a few outstanding points for completeness and peace of mind.
Here you go, supported by tomorrow's programme notes (which inevitably repeat various chunks of what's already been written on NSC) this is my final instalment for now.
However, if this exercise has been valuable and it helps supporters better understand what we're trying to achieve as a club, then I'm very happy to engage NSC's audience with similar contributions in the future.
Catering
Stadium catering is not an easy business. There are a number of issues (not excuses!), some of which are obvious and others maybe less apparent:
The majority of our catering staff will always be made up of casual, often very young, local and/or university labour, and this does mean that service levels can be (and we know are) variable, particularly earlier in the season; not good enough and we're working hard to minimise the issues. Despite assertions to the contrary, catering staff do receive training - it's in the caterer's interests to do this - but there's no substitute for facing real queues. Occasionally it is necessary to throw people in at the deep end - just like most other businesses: not ideal, I know, but sometimes necessary.
Stadium caterers typically only open for business, excluding non match day events which are very different, 25 times a year; I do think this point is often overlooked by supporters (of all club's not just ours); it's an unusual business and therefore it makes for quite different economics. It means that it can take a while for new staff to get up to speed; we know this is frustrating for supporters and clearly it's in our interests to retain as many staff as possible. It also means there is little (or in some cases) no opportunities to carry over certain stock items (eg kegs of Harvey's opened for one extra pint, uneaten pies or burgers, hospitality food) and as such, caterers will always attempt to minimise waste levels in order to keep prices reasonable This does mean that, from time to time, certain products will sell out in certain concessions or lounges. Usually, the same item is available at another concession but, understandably, queuing twice isn't palatable (excuse the pun) for most people, particularly at half-time.
Offering a wide range of products may be desirable for supporters but it slows service and creates longer queues. Similarly, concourse kitchen space is limited; this prevents us from stocking certain items as they require different or special preparation with equipment we don't have.
More staff in concession areas doesn't always mean faster service; it can mean the opposite as limited space can lead to even more delays as staff get in each other's way
Re-plenishing stock is not easy at certain times in a stadium environment; moving food and drink around crowded concourses is clearly an issue and just isn't possible at peak times.
Concourse catering is about volume sales, so it is in the caterers' interests to get stock and staffing levels at the optimum point, but it's not an exact science - eg a sudden change in weather can massively shift sales patterns.
I list these issues not as excuses - because as I will explain - it's in all our interests to optimize our performance in this area, but nevertheless they are factors that make stadium catering far from perfect - and, in my various roles in football, I've experienced stadium catering all over the world in stadiums much bigger than ours and also much smaller than ours.
By the same token, I've negotiated three different types of catering contracts in the the last couple of decades: a single supplier for concourse and hospitality areas; separate suppliers for concourse and hospitality areas; multiple concession based suppliers for concourse areas combined with a single supplier for hospitality areas. I can assure supporters there are many different pros and cons to each. In my experience, none are perfect, service levels can vary, and sometimes prices are higher with split catering services as the contractors are unable to achieve sufficient economies of scale.
The term of our business model must obviously remain confidential but I can say that, whilst like most clubs, we receive a minimum guaranteed payment, our remuneration is also linked to the volume of sales (concourse and hospitality) at each game. I believe this model works best for our caterer, the club, and, very importantly, for supporters. It means the caterer has a real incentive to optimise sales at every match (to earn back the minimum guarantee). It means the club has an incentive to ensure the caterer delivers high levels of service (because we benefit further from higher sales volumes). And it means the supporters can be assured that both caterer and club are aligned to deliver the best possible service and quality for them.
We do not split concourse and hospitality catering for one very simple reason - our 1901 memberships do not require members to eat at every, or indeed, any, match. This means that, aside from pre-booked hospitality, our caterers are taking a substantial risk at every match. They need to order and prepare a lot of food to sell - we have 3,000 people in 1901 lounges - but they cannot be guaranteed to sell it. Few clubs operate their hospitality areas in this way or, at the very least, will have a mixture of lounges with different offers, many of which will tie at least some of their members to a specific food package thereby guaranteeing their caterers a level of income.
To offset the risk I describe, our caterers have the opportunity sell on our concourses too. It's in their interests to optimise concourse sales and to secure the necessary economies of scale to keep prices reasonable and to offer supporters a decent range of products, some of which can be shared across the different areas.
It's incredibly frustrating for us to hear some supporters say that they "refuse to buy anything in the stadium". Of course, it's their money and therefore their choice but the club relies on the only people to whom it can sell its catering products - the supporters that come to our matches! We can't sell to anyone else and it's very disheartening to think that money supporters are prepared to spend on match day food and drink is going to pubs and food outlets in town and not us!
I'm well aware of course that everyone has to operate on a personal budget and that some of our prices will be higher than pubs (that open more times in a month than we do in a year), supermarkets (that sell more of certain products we stock in an hour than we do in a year), burger bars (that also open more times in a month than we do in a year), or even petrol stations (who similarly open every day and sometimes for 24 hours at a time).
Ours is a very different catering business, massively affected by the limitations I have described, but I sincerely hope that supporters will continue help us drive our revenues up by buying food and drink at the stadium. It may not seem like a big deal but it helps enormously, particularly as we only need people to spend that little bit more, if indeed we are a bit more expensive, once every couple of weeks on average through the year.
Finally, this support is - and has to be - a two-way street: if fans are going to get behind us and our caterers and be prepared to spend more, we absolutely need to ensure the service is good, the product quality is consistent, prices are reasonable (if not the cheapest) and, where possible, look for ways of expanding our product range to keep it interesting and, where possible, local. This is something we already discuss with Sodexo regularly and I promise we will continue to pressure them to keep all of this under review.
Finances
One supporter questioned why I seem to quote different levels of losses. This is because at certain times I'm referring to FFP loss limits (a maximum of £8m last year, £6m this, and £5m next) and at other times I'm referring to total losses which adds back in the costs we incur for running things like our Academy (these are allowable expenses in FFP calculations and so reduce our FFP losses).
Another supporter questions why, if I considered a loss of £8 million to be unsustainable, how losing any more than this could be any more sustainable. The simple answer is that any loss of these magnitudes is unpalatable at any time, and is unsustainable in the longer term. It's why our job is to create a strategy that gives us the best possible chance of promotion while meeting FFP requirements and minimising our losses - which also means reducing our dependency on Tony.
Unfortunately, talk of "lottery wins", "big gifts" or "mystery new investors" being helpful to our position are misguided as they would not be permissible under current FFP regulations. It's why our focus must continue to be on driving revenues - selling tickets, food, drink, hospitality, merchandise and events - and minimising our operational costs. It's the difference between the two that creates the margin for us to invest in our football budget which Tony is then entitled to top up to the limits determined by the League's FFP rules.
Player sales are of course exceptional items and cannot be guaranteed in any way. It simply does not follow that when you buy a player for X amount and sell him for 4X, you can (or should) automatically replace that player for 4X. By definition, that player has moved to another level and players at the next level will command much higher wages. So, if we sell for 4X and buy for 4X and the new player's wages are also 4X the player we've just sold, the club's annual losses will increase.
If we don't replace a player at the same value for which he is sold it doesn't mean we lack ambition. Our job, like all clubs at our level, is to find the best possible value in the market or, better still, develop our own talent. This means, again like all clubs, we will look to unearth great talent from this country and overseas, look to our academy to bring through outstanding young players, use our various contacts and connections to discover great talent from the loan market, and, wherever possible we will of course do all of this by minimising transfer or loan fees we must pay. The opposite is of course true when we sell a player - maximizing the fee is our aim.
As the chairman reported at the Amex fans forum in the summer, we have, as in previous seasons, maintained a competitive player budget for this season that is entirely in line with previous years. We've achieved this despite increasingly tight FFP restrictions. We've also used some of the transfer fees we've received to offset some of the annual losses we've made and to support the additional costs we've incurred in opening a world class training and academy facility.
Regardless of FFP, our overall objective is - and must surely be - to run this football club prudently and sustainably. Our club, perhaps more than most, has in the past endured a torrid time financially and our supporters have borne the brunt of where that can leave a club. We're ambitious but we cannot be reckless. It's why during transfer windows we keep our counsel, try to get our business done quietly, and - as hard as it can be sometimes - why we ignore some of the more hysterical rhetoric out there!
Finally, on this topic, a quick word on parachute payments. For clubs relegated last season, they have received more than £20 million to ease the pain of relegation. I'm not quite sure how anyone could think this doesn't give those clubs an immediate (and, with currently 3 more payments to follow, a sustained) advantage - before they've even sold a ticket, pie, pint or replica shirt - over clubs such as ours who've never benefitted from such income. Although there's absolutely no guarantee of success, I do know (for sure!) which position I'd rather be starting from!
Yes, of course, it's true that much of that parachute payment money will be swallowed up meeting the terms of player contracts negotiated as a Premier League club but let's be clear: this means those clubs are either keeping players with significant Premier League (and, in some cases, international) experience and quality OR they are selling them which leaves them significant room in their player wage (and transfer) budget to re-build the very best Championship squad OR they are creating a squad using a combination of both methods.
Dialogue with supporters
I'd really like to think that our club continue to enjoy a very good link and bond with its supporters. We utilise as many modern methods of communication as we can. We know that not everyone receives their news or information in the same way so we attempt to deliver ours in a variety of ways, even if this means repeating ourselves to fans across different channels.
For me, however, the most powerful form of communication is face to face. Tony and I have already committed to attending as many supporter group meetings as possible, and where our diary commitments mean we cannot attend certain meetings, we will always offer up different members of our senior executive team to answer supporters questions and build relationships.
We really look forward to supporter meetings and, although we have absolutely no idea of the questions coming our way, we don't rehearse our answers and, to the best of my knowledge, we've never ducked a question (although that certainly doesn't mean we know the answer to every question!). If you haven't been to one of these events, please try and get along...it would be nice to put a face to some of the NSC "names"...
We're also looking to encourage the formation of more supporter groups, both across the county - and beyond. The supporter groups we do have, and visit regularly, are superbly run, provide great organisations for Albion fans to attend different events and enjoy each other's company, and, of course, travel to matches, home and away. As we look to expand our fan base, we'll be looking for volunteers to set up new groups and to spread the word.
In return, we will happily support the new supporter groups in any way we can and I know that anyone with the time and inclination to set the groups up will also receive great support and guidance from the various successful supporter groups already established. I really believe this is a great way our existing supporters can help us achieve a key sim, fill empty Amex seats, boost club revenues, and reduce our dependency on existing supporters. We need your help with this.
I'm well aware however that some supporters remain sceptical that a club growing as quickly as ours, and that's changed so much by necessity from its Withdean and Gillingham years, can retain close links with its supporters and, more broadly, with its community. I'm also aware that some supporters believe that, given the club's past, it will always be necessary to question and challenge the club's management.
Contrary to the opinions of some, I have absolutely no problem with either position. In fact, I welcome both. We can only answer the former by our actions, and the latter by making ourselves available and accessible as often as possible. In both cases, I'm entirely satisfied that, whilst we may not get everything right, our strategy and our operating style are totally aligned to alleviating and ultimately overcoming what are entirely legitimate concerns.
For as long as I'm chief executive, and my approach is supported by Tony and the board, I can assure all supporters that we will always be as accessible, as open and as direct as we can possibly be, bearing in mind we are running a highly competitive business where confidentiality in many areas is key. As I said previously, we can't (and we won't) give in to every demand, we won't always make decisions that are instantly popular with fans, and we won't disclose commercially sensitive information, but we will always be honest and straightforward and we will always take decisions that we believe are in the best long term interests of the club.
With ticket sales of something over 26,000 expected, here's to 3 points tomorrow....
Once again Paul has taken a fair bit of time to try and answer the points that some thought he was evading or had misinterpreted or just required greater detail. It is, however, well worth reading and I encourage you to do so.
I've just got back to Brighton after a hectic 24 hours in London. I've managed to speed read the various comments from the great and good of NSC. People have made and raised some very good points and it's great to be engaged with so many supporters in this way - NSC at its best.
We're dealing with some complex issues. We live and debate them every day - and we don't yet have all the answers ourselves - so I can fully understand why there remains a few queries from supporters. Whilst I do not want to labour my various points or bore people any more than usual or necessary, I've decided to treat this exercise as a "virtual fans forum" - and to clear up a few outstanding points for completeness and peace of mind.
Here you go, supported by tomorrow's programme notes (which inevitably repeat various chunks of what's already been written on NSC) this is my final instalment for now.
However, if this exercise has been valuable and it helps supporters better understand what we're trying to achieve as a club, then I'm very happy to engage NSC's audience with similar contributions in the future.
Catering
Stadium catering is not an easy business. There are a number of issues (not excuses!), some of which are obvious and others maybe less apparent:
The majority of our catering staff will always be made up of casual, often very young, local and/or university labour, and this does mean that service levels can be (and we know are) variable, particularly earlier in the season; not good enough and we're working hard to minimise the issues. Despite assertions to the contrary, catering staff do receive training - it's in the caterer's interests to do this - but there's no substitute for facing real queues. Occasionally it is necessary to throw people in at the deep end - just like most other businesses: not ideal, I know, but sometimes necessary.
Stadium caterers typically only open for business, excluding non match day events which are very different, 25 times a year; I do think this point is often overlooked by supporters (of all club's not just ours); it's an unusual business and therefore it makes for quite different economics. It means that it can take a while for new staff to get up to speed; we know this is frustrating for supporters and clearly it's in our interests to retain as many staff as possible. It also means there is little (or in some cases) no opportunities to carry over certain stock items (eg kegs of Harvey's opened for one extra pint, uneaten pies or burgers, hospitality food) and as such, caterers will always attempt to minimise waste levels in order to keep prices reasonable This does mean that, from time to time, certain products will sell out in certain concessions or lounges. Usually, the same item is available at another concession but, understandably, queuing twice isn't palatable (excuse the pun) for most people, particularly at half-time.
Offering a wide range of products may be desirable for supporters but it slows service and creates longer queues. Similarly, concourse kitchen space is limited; this prevents us from stocking certain items as they require different or special preparation with equipment we don't have.
More staff in concession areas doesn't always mean faster service; it can mean the opposite as limited space can lead to even more delays as staff get in each other's way
Re-plenishing stock is not easy at certain times in a stadium environment; moving food and drink around crowded concourses is clearly an issue and just isn't possible at peak times.
Concourse catering is about volume sales, so it is in the caterers' interests to get stock and staffing levels at the optimum point, but it's not an exact science - eg a sudden change in weather can massively shift sales patterns.
I list these issues not as excuses - because as I will explain - it's in all our interests to optimize our performance in this area, but nevertheless they are factors that make stadium catering far from perfect - and, in my various roles in football, I've experienced stadium catering all over the world in stadiums much bigger than ours and also much smaller than ours.
By the same token, I've negotiated three different types of catering contracts in the the last couple of decades: a single supplier for concourse and hospitality areas; separate suppliers for concourse and hospitality areas; multiple concession based suppliers for concourse areas combined with a single supplier for hospitality areas. I can assure supporters there are many different pros and cons to each. In my experience, none are perfect, service levels can vary, and sometimes prices are higher with split catering services as the contractors are unable to achieve sufficient economies of scale.
The term of our business model must obviously remain confidential but I can say that, whilst like most clubs, we receive a minimum guaranteed payment, our remuneration is also linked to the volume of sales (concourse and hospitality) at each game. I believe this model works best for our caterer, the club, and, very importantly, for supporters. It means the caterer has a real incentive to optimise sales at every match (to earn back the minimum guarantee). It means the club has an incentive to ensure the caterer delivers high levels of service (because we benefit further from higher sales volumes). And it means the supporters can be assured that both caterer and club are aligned to deliver the best possible service and quality for them.
We do not split concourse and hospitality catering for one very simple reason - our 1901 memberships do not require members to eat at every, or indeed, any, match. This means that, aside from pre-booked hospitality, our caterers are taking a substantial risk at every match. They need to order and prepare a lot of food to sell - we have 3,000 people in 1901 lounges - but they cannot be guaranteed to sell it. Few clubs operate their hospitality areas in this way or, at the very least, will have a mixture of lounges with different offers, many of which will tie at least some of their members to a specific food package thereby guaranteeing their caterers a level of income.
To offset the risk I describe, our caterers have the opportunity sell on our concourses too. It's in their interests to optimise concourse sales and to secure the necessary economies of scale to keep prices reasonable and to offer supporters a decent range of products, some of which can be shared across the different areas.
It's incredibly frustrating for us to hear some supporters say that they "refuse to buy anything in the stadium". Of course, it's their money and therefore their choice but the club relies on the only people to whom it can sell its catering products - the supporters that come to our matches! We can't sell to anyone else and it's very disheartening to think that money supporters are prepared to spend on match day food and drink is going to pubs and food outlets in town and not us!
I'm well aware of course that everyone has to operate on a personal budget and that some of our prices will be higher than pubs (that open more times in a month than we do in a year), supermarkets (that sell more of certain products we stock in an hour than we do in a year), burger bars (that also open more times in a month than we do in a year), or even petrol stations (who similarly open every day and sometimes for 24 hours at a time).
Ours is a very different catering business, massively affected by the limitations I have described, but I sincerely hope that supporters will continue help us drive our revenues up by buying food and drink at the stadium. It may not seem like a big deal but it helps enormously, particularly as we only need people to spend that little bit more, if indeed we are a bit more expensive, once every couple of weeks on average through the year.
Finally, this support is - and has to be - a two-way street: if fans are going to get behind us and our caterers and be prepared to spend more, we absolutely need to ensure the service is good, the product quality is consistent, prices are reasonable (if not the cheapest) and, where possible, look for ways of expanding our product range to keep it interesting and, where possible, local. This is something we already discuss with Sodexo regularly and I promise we will continue to pressure them to keep all of this under review.
Finances
One supporter questioned why I seem to quote different levels of losses. This is because at certain times I'm referring to FFP loss limits (a maximum of £8m last year, £6m this, and £5m next) and at other times I'm referring to total losses which adds back in the costs we incur for running things like our Academy (these are allowable expenses in FFP calculations and so reduce our FFP losses).
Another supporter questions why, if I considered a loss of £8 million to be unsustainable, how losing any more than this could be any more sustainable. The simple answer is that any loss of these magnitudes is unpalatable at any time, and is unsustainable in the longer term. It's why our job is to create a strategy that gives us the best possible chance of promotion while meeting FFP requirements and minimising our losses - which also means reducing our dependency on Tony.
Unfortunately, talk of "lottery wins", "big gifts" or "mystery new investors" being helpful to our position are misguided as they would not be permissible under current FFP regulations. It's why our focus must continue to be on driving revenues - selling tickets, food, drink, hospitality, merchandise and events - and minimising our operational costs. It's the difference between the two that creates the margin for us to invest in our football budget which Tony is then entitled to top up to the limits determined by the League's FFP rules.
Player sales are of course exceptional items and cannot be guaranteed in any way. It simply does not follow that when you buy a player for X amount and sell him for 4X, you can (or should) automatically replace that player for 4X. By definition, that player has moved to another level and players at the next level will command much higher wages. So, if we sell for 4X and buy for 4X and the new player's wages are also 4X the player we've just sold, the club's annual losses will increase.
If we don't replace a player at the same value for which he is sold it doesn't mean we lack ambition. Our job, like all clubs at our level, is to find the best possible value in the market or, better still, develop our own talent. This means, again like all clubs, we will look to unearth great talent from this country and overseas, look to our academy to bring through outstanding young players, use our various contacts and connections to discover great talent from the loan market, and, wherever possible we will of course do all of this by minimising transfer or loan fees we must pay. The opposite is of course true when we sell a player - maximizing the fee is our aim.
As the chairman reported at the Amex fans forum in the summer, we have, as in previous seasons, maintained a competitive player budget for this season that is entirely in line with previous years. We've achieved this despite increasingly tight FFP restrictions. We've also used some of the transfer fees we've received to offset some of the annual losses we've made and to support the additional costs we've incurred in opening a world class training and academy facility.
Regardless of FFP, our overall objective is - and must surely be - to run this football club prudently and sustainably. Our club, perhaps more than most, has in the past endured a torrid time financially and our supporters have borne the brunt of where that can leave a club. We're ambitious but we cannot be reckless. It's why during transfer windows we keep our counsel, try to get our business done quietly, and - as hard as it can be sometimes - why we ignore some of the more hysterical rhetoric out there!
Finally, on this topic, a quick word on parachute payments. For clubs relegated last season, they have received more than £20 million to ease the pain of relegation. I'm not quite sure how anyone could think this doesn't give those clubs an immediate (and, with currently 3 more payments to follow, a sustained) advantage - before they've even sold a ticket, pie, pint or replica shirt - over clubs such as ours who've never benefitted from such income. Although there's absolutely no guarantee of success, I do know (for sure!) which position I'd rather be starting from!
Yes, of course, it's true that much of that parachute payment money will be swallowed up meeting the terms of player contracts negotiated as a Premier League club but let's be clear: this means those clubs are either keeping players with significant Premier League (and, in some cases, international) experience and quality OR they are selling them which leaves them significant room in their player wage (and transfer) budget to re-build the very best Championship squad OR they are creating a squad using a combination of both methods.
Dialogue with supporters
I'd really like to think that our club continue to enjoy a very good link and bond with its supporters. We utilise as many modern methods of communication as we can. We know that not everyone receives their news or information in the same way so we attempt to deliver ours in a variety of ways, even if this means repeating ourselves to fans across different channels.
For me, however, the most powerful form of communication is face to face. Tony and I have already committed to attending as many supporter group meetings as possible, and where our diary commitments mean we cannot attend certain meetings, we will always offer up different members of our senior executive team to answer supporters questions and build relationships.
We really look forward to supporter meetings and, although we have absolutely no idea of the questions coming our way, we don't rehearse our answers and, to the best of my knowledge, we've never ducked a question (although that certainly doesn't mean we know the answer to every question!). If you haven't been to one of these events, please try and get along...it would be nice to put a face to some of the NSC "names"...
We're also looking to encourage the formation of more supporter groups, both across the county - and beyond. The supporter groups we do have, and visit regularly, are superbly run, provide great organisations for Albion fans to attend different events and enjoy each other's company, and, of course, travel to matches, home and away. As we look to expand our fan base, we'll be looking for volunteers to set up new groups and to spread the word.
In return, we will happily support the new supporter groups in any way we can and I know that anyone with the time and inclination to set the groups up will also receive great support and guidance from the various successful supporter groups already established. I really believe this is a great way our existing supporters can help us achieve a key sim, fill empty Amex seats, boost club revenues, and reduce our dependency on existing supporters. We need your help with this.
I'm well aware however that some supporters remain sceptical that a club growing as quickly as ours, and that's changed so much by necessity from its Withdean and Gillingham years, can retain close links with its supporters and, more broadly, with its community. I'm also aware that some supporters believe that, given the club's past, it will always be necessary to question and challenge the club's management.
Contrary to the opinions of some, I have absolutely no problem with either position. In fact, I welcome both. We can only answer the former by our actions, and the latter by making ourselves available and accessible as often as possible. In both cases, I'm entirely satisfied that, whilst we may not get everything right, our strategy and our operating style are totally aligned to alleviating and ultimately overcoming what are entirely legitimate concerns.
For as long as I'm chief executive, and my approach is supported by Tony and the board, I can assure all supporters that we will always be as accessible, as open and as direct as we can possibly be, bearing in mind we are running a highly competitive business where confidentiality in many areas is key. As I said previously, we can't (and we won't) give in to every demand, we won't always make decisions that are instantly popular with fans, and we won't disclose commercially sensitive information, but we will always be honest and straightforward and we will always take decisions that we believe are in the best long term interests of the club.
With ticket sales of something over 26,000 expected, here's to 3 points tomorrow....
