Bud the Baker Posted May 21, 2014 Report Share Posted May 21, 2014 Times is tough down Fir Park way! http://www.motherwellfc.co.uk/2014/05/21/statement-from-the-board-may-2014 The Board of Motherwell FC today issued its annual End of Season Financial & Strategic Update. For the attention of Shareholders, Members of the ’Well Society, Season Ticket Holders and all Motherwell Supporters. Once again we are delighted to have celebrated an exceptional on-field performance in the league campaign. While results in both cups disappointed and we did not progress in Europe beyond the early stages, we cannot overstate the achievement in reaching the runners-up spot for the second year in a row. Given the turnover in core first team playing staff, the ability of Stuart McCall and his team to recruit, motivate and reconstruct the first team has been quite exceptional. He has done so while maintaining an excellent culture that is becoming the trademark of our family club. We now look forward to European competition for the sixth year in the last seven. Once again a remarkable achievement given the economic realities facing our competitive position. We put on record our sincere thanks to the management and players and all the support staff for the great credit they have brought on both themselves and this club. Notwithstanding the excellent news on the pitch, the Board would like to draw the focused attention of our shareholders, members and supporters to the financial reality we face off it. In the last few years we have been at pains to ensure that our strategy is clearly understood and that we communicate both our financial performance and prospects with transparency. We did this in the summer of 2012, to allow members to make an informed judgement on the implications of SPL decisions as affecting Rangers FC. We do so again today to allow everyone who cares about Motherwell FC to understand the context of the decisions we have made as a Board and to allow time for individuals to determine their own actions before the Board determines the next set of strategic decisions that we must make. Strategic Context Our aim since the launch of The Well Society has been to create a sustainable model for the eventual fan ownership of the majority of the equity in the club. This required good governance structures to be created and function, fit and proper individuals to be nominated that could perform as full Club Directors and financial targets to be reached for the Society, that would provide the Club’s effective “strategic reserve”. From the outset, a figure of £1.5 million has been identified as the required strategic reserve. This strategy was created purposefully with the objective of stabilising the Club’s financial position on a sustainable footing so that we could maintain the financial strategy that has underpinned the Club’s competitive position which has produced the sporting success we have enjoyed over the last five years and more. Update on Financial Performance The following points should be considered in detail: 1. We have made a full year loss in the last two years of just under £600k in 2011/12 and £184k in 2012/13 respectively. 2. For 2013/14 we currently anticipate a loss moderately in excess of five figures for the year. 3. These losses have so far been absorbed by existing cash reserves and then by the ongoing cashflow management of the club in anticipation of future income, underpinned by a number of measures we have outlined below. 4. We have already recorded the reasons for these losses. In particular we have maintained our player budget in the face of falling central revenues and from gate and commercial receipts, as the Board judged the balance of risk to our competitive performance and the financial implications merited this, given all of the information at our disposal and having made reasonable judgements about likely outcomes. The main downside impact on our financial outcomes have been: Last year’s (2011/12) in-season recalibration by the SPL of the financial rewards for second place, before our agreed bonus structure for the team could be changed, meant we received no net additional income from finishing second. Overall the total pool of distributed funds by the SPFL to top league clubs has been reduced following the decision to pay more to the lower leagues. Combined revenue from gate receipts and season tickets has fallen by approximately 10% since season 2010/11 meaning a cumulative loss to the revenue of the club over the subsequent 3 years of £200k. Our home attendances this year have not been as strong as anticipated given the strength of team performance. 5. The governance of the ‘Well Society is working well and we have two Society nominees acting as full and equal club directors. 6. The ‘Well society has recruited 869 adult and business members and accumulated total funds of just under £470k. This is equivalent to 21% of our season ticket holders. In other words when taking account of regular pay at the gate fans we have recruited less than 1 in 5 of our loyal core base to the society. 7. The society holds 6% of the equity in the Club injecting £150k into the club’s balance sheet. In addition the society made available a bridging loan to the club of £230k in February 2014 and retain a further £40k in reserve. The total distributed/distributable sum at the disposal of the Society is therefore just in excess of £420k which is very significantly short of the clear target for the “strategic reserve” of £1.5 million. 8. In the current financial year the Board agreed a short term asset finance loan of £125k which was underpinned by the personal financial guarantees by a number of our Directors. It is our intention to pay this back within the next 3 months. 9. The Club has an outstanding historic loan to Mr John Boyle of just under £350k. 10. The financial position of a number of our competitor clubs has stabilised and improved for a variety of reasons. Implications for the Financial Position and Future Strategy of the Club The figure of £1.5m as a strategic reserve was arrived at as a reasonable estimate, based on past experience, of the funds which the Club would require to have at its disposal to fall back on in the event of a series of losses being sustained. As detailed above, losses have been sustained but the strategic reserve has not been met. Qualification for Europe has allowed the Board, based on past revenues generated and making reasonable assumptions on income for the coming season, to maintain the playing budget at the same level for season 2014/15. However, this is the last year in which we will feel able to do this unless a very substantial improvement in our revenue position occurs and/or the targets for the ‘Well Society are reached. A sustainable step-change in our revenues is not likely to be enjoyed in the short-term unless we enjoy the windfall of unexpected player sales or exceptional Cup performances. Given our experiences in recent years the Board cannot, and has not, planned for either as a central assumption. This means we must turn our attention to the achievement of our strategic reserve target of £1.5 million as an urgent financial priority for the club. Achieving our Strategic Reserve Target of £1.5 million Following repayment of the loan to the Society, the Society’s reserves will sit at approximately £270k after the purchase of equity in the club. As noted above this, when combined with the equity injection amounts to 28% of our target and reflects the reality that fewer than 1 in 5 of our core support has joined the society. The number of 1886 and Claret members is significantly lower than we had hoped. While not wishing to diminish the simply outstanding work and commitment of so many people to make the Society a reality, this performance to date is disappointing and, to be crystal clear to everyone, does not represent the sustainable financial underpinning for the Club’s strategy that we hoped for and require. The Board met on the 7th May to consider our current financial performance in the light of our qualification for Europe and anticipating the scenarios we faced the subsequent Sunday in the play-off for second place. The Board agreed unanimously on the course of action we must now take in the interests of the Club: 1. That we should give the Management clarity in the player budget to allow them to secure some stability on the field, as we face European competitive opportunities and an increasingly competitive race for the top six. 2. That an increase in the capital available to the Club is essential and that such a capital injection should be pursued as a matter of urgency. The preferred source of that capital would remain the ‘Well Society, however, other sources of capital investment, including the sale of shares to private individuals have to be explored. A number of our competitor clubs have recently been able to raise significant funding from a small number of fans, further weakening our competitive position. 3. That we should set a deadline for the Society achieving the goals that were set on its launch in November 2011. The next intermediate goal we set was for the society to achieve a reserve of £800k by the end of November 2014 in order to underpin the club’s finances and to prove that reaching the full reserve of £1.5m is achievable in the near future. 4. In the event that this first target is not reached the Board has authorised officers of the Club and its Directors to consider alternative routes to achieve the strategic reserve target that the Club requires. In all circumstances we will do everything we can to ensure that the future fan ownership of the club can become a reality. But we will have to consider all proposals put to us. We urge all fans of the club to recognise the reality of the financial situation we face and to do anything they can to assist the club urgently. We recognise that our on the field success and the generally positive culture and atmosphere at the club has meant that there is no perception of “crisis” and therefore no imperative or urgency for many otherwise deeply loyal supporters to join. While we are not yet at a “crisis” position, we are flagging that we require to take action now to ensure the continued financial stability of the club. This action will either mean a substantial increase in resources towards our reserve or a very substantial reduction in our expenditure plans. This latter route would have the inevitable impact of diminishing our competitive capabilities on the field and creating a negative financial spiral. The consequences of this latter route are only too familiar to all supporters of the game in Scotland The Board of Directors continue to believe that the ‘Well Society can achieve its stated aim of raising sufficient capital to acquire and run the club on a sustainable basis. If the target figure of £800k is achieved by November 2014 the plan of fan ownership can be a reality. This can only happen if those who support this aim act now by joining or contributing further to the Society. We therefore ask all of our shareholders, members and supporters to reflect very closely on what we have set out above and to consider their position carefully. We know how much we have to rely on a very small number of people but we are all in the same position. We urge everyone who shares our love for the Club to act. The Board of Motherwell Football Club21st May 2014 Quote Link to comment Share on other sites More sharing options...
insaintee Posted May 21, 2014 Report Share Posted May 21, 2014 They will still be paying way more than us Quote Link to comment Share on other sites More sharing options...
slartibardfast Posted May 21, 2014 Report Share Posted May 21, 2014 As Shull would say. F@&k em!!!!! Quote Link to comment Share on other sites More sharing options...
FTOF Posted May 21, 2014 Report Share Posted May 21, 2014 Looks like their fan's ownership scheme has fallen on it's arse. Quote Link to comment Share on other sites More sharing options...
TsuMirren Posted May 21, 2014 Report Share Posted May 21, 2014 REA was always pushing Motherwell as something to aspire to because they had lots of staff. Never agreed, nice to see things aren't so rosey. Losses, lack of take up and loans aren't what fans groups want to deal with...same as staff cuts and other cloth cutting aspects aren't. 869 is absolutely pish, just nonsense. But then, so's the veiled dig in the statement. If numbers are down, deal with it. Quote Link to comment Share on other sites More sharing options...
TsuMirren Posted May 21, 2014 Report Share Posted May 21, 2014 I'm very much in favour of the 50+1 fan ownership model that has proven to be successful since the Bundesliga was formed in the 60s. The Bundesliga has very strict financial controls. Failure by clubs to meet the criteria result in losing the operating license. It has a proven track record. This requires the governing bodies to take control of the situation. How many more clubs need to go into administration or be liquidated? If the Consortium had chosen to do the same with St Mirren, I'd guess we would have the same issue in terms of uptake. The solution for teams like St Mirren and Motherwell is to CUT the operating costs. Our wage to turn over ratio is way too high. Less money should be spent on the high earning journeymen such as Imrie, Carey, Grainger, Harkins, Djemba Djemba and company and more game time given to our youth development and looking to sell those players on to allow club to grow. f**k knows how much Lennon spunked away during the last 18months. Teams like St Mirren should be building up a financial safety net in the event of a relegation or the loss of a TV deal. Anyone remember the Consortium pleading with the support to retain Oldco in the top league otherwise we were weeks away from administration? The 50+1 is heavily subsidised by local business, usually one major group. Let's just drop the myth now that it's proper fan ownership. The strict controls etc are the way to go. This isn't like say investment in utility infrastructure where sometimes you just need to spend more. You can't just go magic extra money in football, banks have seen the light and fans have been wrung dry. The safety net/float is a necessity...cancelling contracts eliminates that. Quote Link to comment Share on other sites More sharing options...
oaksoft Posted May 21, 2014 Report Share Posted May 21, 2014 The only way to stop clubs getting into trouble is for the authorities to bring in a rule which requires all SPL teams to have a shortfall fund of a minimum of £1 million. Just like the banks. Quote Link to comment Share on other sites More sharing options...
Moustache of Hyslop Posted May 21, 2014 Report Share Posted May 21, 2014 The only way to stop clubs getting into trouble is for the authorities to bring in a rule which requires all SPL teams to have a shortfall fund of a minimum of £1 million. Just like the banks. Comparing a football club with a bank is a bit silly. Quote Link to comment Share on other sites More sharing options...
Reynard Posted May 22, 2014 Report Share Posted May 22, 2014 Motherwells biggest expense is their wage bill. They know what to do. Quote Link to comment Share on other sites More sharing options...
shull Posted May 22, 2014 Report Share Posted May 22, 2014 Motherwells biggest expense is their wage bill. They know what to do. How much were the dafties paying that waster McFadden ? Quote Link to comment Share on other sites More sharing options...
Reynard Posted May 22, 2014 Report Share Posted May 22, 2014 How much were the dafties paying that waster McFadden ? Too much. Motherwell piss me right off. But its up to them how they run their business. Quote Link to comment Share on other sites More sharing options...
oaksoft Posted May 22, 2014 Report Share Posted May 22, 2014 (edited) Comparing a football club with a bank is a bit silly. Sillier than allowing clubs to continue paying wages they clearly can't afford and then sitting back and engaging in handwringing when they inevitably run into debt? How long before we see buckets being held outside grounds for "fundraising"? Any club not operating with a substantial rainy day fund is engaging in financial mismanagement. I'm really not sure how much more obvious this could be. Are ALL football fans so financially incompetent that they can't understand this very simple concept? Edited May 22, 2014 by oaksoft Quote Link to comment Share on other sites More sharing options...
Reynard Posted May 22, 2014 Report Share Posted May 22, 2014 Sillier than allowing clubs to continue paying wages they clearly can't afford and then sitting back and engaging in handwringing when they inevitably run into debt? How long before we see buckets being held outside grounds for "fundraising"? Any club not operating with a substantial rainy day fund is engaging in financial mismanagement. I'm really not sure how much more obvious this could be. Are ALL football fans so financially incompetent that they can't understand this very simple concept? So what? Let them go bankrupt. Thats capitalism. Any assets will be reallocated to other places. The players will all go elsewhere, the staff will find other jobs and I suppose some of the fans will find a new hobby. Quote Link to comment Share on other sites More sharing options...
Moustache of Hyslop Posted May 22, 2014 Report Share Posted May 22, 2014 (edited) Sillier than allowing clubs to continue paying wages they clearly can't afford and then sitting back and engaging in handwringing when they inevitably run into debt? How long before we see buckets being held outside grounds for "fundraising"? Any club not operating with a substantial rainy day fund is engaging in financial mismanagement. I'm really not sure how much more obvious this could be. Are ALL football fans so financially incompetent that they can't understand this very simple concept? The comparison between a football club and a bank isn't just silly. Its ridiculous. I'm not disagreeing with your first paragraph above but your original post which states that football clubs should have a large shortfall fund like banks is nonsense. And your second paragraph above is lunacy. Football clubs don't harbour people's savings. Football clubs aren't needed for the running of the economy. They do not require a shortfall fund. If they go bust then they go bust. The only person who appears to be financially incompetent in this thread is you. Edited May 22, 2014 by Moustache of Hyslop Quote Link to comment Share on other sites More sharing options...
Lord Pityme Posted May 22, 2014 Report Share Posted May 22, 2014 Now can everyone see we dodged a bullet with Atkinson's Folly..? Hearts fans are next in line for a big shock, many of them haven't twigged they are tied in to bankrolling the club as and when Budge & Levein fancy. Quote Link to comment Share on other sites More sharing options...
flyingscot Posted May 22, 2014 Report Share Posted May 22, 2014 So Motherwell have paid out too much, not got enough income in and made losses including some big 6 figure ones. No doubt their poor cup record will hurt them too- 1 round of the Scottish- a defeat to Albion and 2 rounds of the league cup- away to Livi and a defeat to 10 man Aberdeen at home. Surprised only 800 folk are paid up members of their fans group- but I don't understand how it operates. Quote Link to comment Share on other sites More sharing options...
oaksoft Posted May 22, 2014 Report Share Posted May 22, 2014 (edited) The comparison between a football club and a bank isn't just silly. Its ridiculous. I'm not disagreeing with your first paragraph above but your original post which states that football clubs should have a large shortfall fund like banks is nonsense. And your second paragraph above is lunacy. Football clubs don't harbour people's savings. Football clubs aren't needed for the running of the economy. They do not require a shortfall fund. If they go bust then they go bust. The only person who appears to be financially incompetent in this thread is you. OK fair enough. You are correct. Football clubs should be left to their own devices. As fans we shouldn't care if clubs overspend and therefore financially dope their way to trophies, cups and bigger financial prizes for finishing higher up the league. It's only fair that the likes of Man City can simply borrow indefinite sums of money. It's only right that Motherwell can rack up nearly £1 million in losses to secure a lucrative 2nd place and the European slot which goes with it. It's only right that Celtic can simply buy anyone in Scotland they feel like. During the 2000's that had no effect on our Scottish game whatsoever and the league title was spread around amongst many clubs in a highly competitive and absorbing series of seasons. No drudgery at all. Frankly WGAS. I've seen the light. The governing bodies should just allow the cheats charter to continue. The race to mass financial suicide should continue unchecked. After all as Reynard says, once all our clubs go bust we can simply start watching tiddlywinks on Sky instead. Edited May 22, 2014 by oaksoft Quote Link to comment Share on other sites More sharing options...
oaksoft Posted May 22, 2014 Report Share Posted May 22, 2014 So what? Let them go bankrupt. Thats capitalism. Any assets will be reallocated to other places. The players will all go elsewhere, the staff will find other jobs and I suppose some of the fans will find a new hobby. I wonder who decided capitalism was the be all and end all of our society. Quote Link to comment Share on other sites More sharing options...
TsuMirren Posted May 22, 2014 Report Share Posted May 22, 2014 Sillier than allowing clubs to continue paying wages they clearly can't afford and then sitting back and engaging in handwringing when they inevitably run into debt? How long before we see buckets being held outside grounds for "fundraising"? Any club not operating with a substantial rainy day fund is engaging in financial mismanagement. I'm really not sure how much more obvious this could be. Are ALL football fans so financially incompetent that they can't understand this very simple concept? i understand it, it's also why I felt Lennon had to go. Quote Link to comment Share on other sites More sharing options...
Reynard Posted May 22, 2014 Report Share Posted May 22, 2014 Too often we have seen creditors shafted and players contracts torn up by reckless football club owners. St Mirren have managed to ride many storms throughout our history. What is unforgivable is for the lessons not to be learned by the governing bodies. The SFA and SPFL are complicit in this. History has been repeated at Dundee, Livingston, and looks like Sevco could hit major problems once again. We have seen Gretna, Airdrie, Clydebank and Rangers all shut down taking hundreds of creditors down with them. Strict financial controls should be in place before a club is granted the license to play. Possibly. I think that will come in due course. But in the meantime the clubs are still businesses and who need to act within the rules of business. If they overleverage or get into cashflow difficulties then THEY are responsible for it. If they cant find ways to fund it then bye bye. I accept for the integrity of the league that its no good have loads of clubs in financial difficulty, but competition either in the sporting business or elsewhere will produce casualties. The strong will survive, new outfits will turn up and fill a void, if there is a void to fill. Quote Link to comment Share on other sites More sharing options...
bud77 Posted May 22, 2014 Report Share Posted May 22, 2014 Too often we have seen creditors shafted and players contracts torn up by reckless football club owners. St Mirren have managed to ride many storms throughout our history. What is unforgivable is for the lessons not to be learned by the governing bodies. The SFA and SPFL are complicit in this. History has been repeated at Dundee, Livingston, and looks like Sevco could hit major problems once again. We have seen Gretna, Airdrie, Clydebank and Rangers all shut down taking hundreds of creditors down with them. Strict financial controls should be in place before a club is granted the license to play. Didn't Stuart Gilmour try to introduce financial regulations during all the reconstruction talks last summer and basically the majority of other clubs told him to get tae f**k. The big problem with the league or the SFA introducing these regulations is that these organisations are the clubs themselves, our only real hope is that UEFA seriously extend their financial regulations to cover every FA under their umbrella but that could possibly be challenged under EU law as being a restriction of trade. Quote Link to comment Share on other sites More sharing options...
simondsmfc Posted May 22, 2014 Report Share Posted May 22, 2014 No comment from Dickson on this... I thought we are meant to aspire to be like Motherwell. Quote Link to comment Share on other sites More sharing options...
Kendo Posted May 22, 2014 Report Share Posted May 22, 2014 Stu Dick is hiding under his bed Quote Link to comment Share on other sites More sharing options...
Moustache of Hyslop Posted May 22, 2014 Report Share Posted May 22, 2014 OK fair enough. You are correct. Football clubs should be left to their own devices. As fans we shouldn't care if clubs overspend and therefore financially dope their way to trophies, cups and bigger financial prizes for finishing higher up the league. It's only fair that the likes of Man City can simply borrow indefinite sums of money. It's only right that Motherwell can rack up nearly £1 million in losses to secure a lucrative 2nd place and the European slot which goes with it. It's only right that Celtic can simply buy anyone in Scotland they feel like. During the 2000's that had no effect on our Scottish game whatsoever and the league title was spread around amongst many clubs in a highly competitive and absorbing series of seasons. No drudgery at all. Frankly WGAS. I've seen the light. The governing bodies should just allow the cheats charter to continue. The race to mass financial suicide should continue unchecked. After all as Reynard says, once all our clubs go bust we can simply start watching tiddlywinks on Sky instead. More drivel. To compare a football club with a bank is the statement of a simpleton. Quote Link to comment Share on other sites More sharing options...
oaksoft Posted May 22, 2014 Report Share Posted May 22, 2014 More drivel. To compare a football club with a bank is the statement of a simpleton. Go f**k yourself. Quote Link to comment Share on other sites More sharing options...
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