Stockport County’s Critical Run-In

By on Mar 13, 2012 in Latest, Non-League | 4 comments

Saturday afternoon’s match against Cambridge United could be classified as a missed opportunity for Blue Square Premier club Stockport County. A crowd of 5,957 turned out at Edgeley Park to see the team beaten by a single goal, with the crowd swollen well above its usual levels by a reduced ticket price offer of just five pounds for adults and one pound for children. The result left County in sixteenth place in the league table, five points above the relegation places with eight matches to play but, while the likelihood of a second successive relegation for the club remains slight, there some cause for the club’s supporters to be wondering whether all the next few weeks will be amongst the most important in the club’s history.

Relegation from the Football League can be a significant culture shock for a club to have to absorb, particularly when we consider that the playing standard at the top level of the non-league game can be considerably higher than many anticipate it will be. Stockport aren’t the only former Football League club struggling in the division this season. Indeed, if anything, the club relegated alongside them last season, Lincoln City, are having an even traumatic time of things this time around. But while Lincoln were financially stabilised – at least in the short term – by a cash injection of half a million pounds into the club earlier this season, Stockport County were filing heavy losses with Companies House for the 2010/11 season.

The abbreviated accounts published by the club don’t offer a great real of good news for those who go looking for it. They confirm a trading loss of £865,000 over the period of the year to the end of June 2011 – the twelve months immediately after the club exited adminstration - set against a total share capital of just £250,000, with the clubs auditors qualifying their report by stating that, “…these conditions indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern.” It should concern all supporters that this is a club which only exited administration in 2010 after more than a year with its future hanging in the balance and is already starting to incur heavy financial losses again. Lessons from the club’s previous difficulties, it could be argued, were not being learnt during the club’s first post-administration season.

The protracted tale of how County came to end up in the mess in which they found themselves in 2009 is one that we have covered on this site before. The club’s final season in the Football League, however, saw the club lose two managers – Paul Simpson and Ray Mathias, although Mathias’ sacking in favour of Dietmar Hamann, which came just six weeks after he was given the job on a full-time basis in the first place, came at the start of July last year, which may have missed the end of June deadline for this set of accounts. Hamann’s appointment at the club coincided with the arrival at the club of the Liverpool based Tony Evans. Evans had – briefly – big plans for the club which included considering moving to a new ground. Within three months, however, he had left the club after falling into disagreement with claub chairman Lord Snape over  a sum of £200,000 which Evans felt existing shareholders should contribute towards the running costs of the club and the make-up of the consortium itself.

He resigned his position in the middle of September, with the club having made several new signings to rebuild its squad following relegation from League Two. With Evans having left the club, Hamann’s position was always going to be in question, and it was very little surprise when he departed the club in November, to be replaced by the club’s popular former manager Jim Gannon. Gannon’s time in charge of the club hasn’t been particularly successful by any stretch of the imagination – his third match in charge of the club again ended in a 7-0 loss at the hands of Grimsby Town, which led to Gannon commenting that, “I am limited in what I can do in terms of changing personnel”, a statement which hinted at the financial constraints under which he is having to work at present. Still, at least the return of Gannon to Stockport might bring a little stability to a club which had five managers in the two and a half years between his departure and return.

With the arrival at the club of Spencer Fearn, it seems possible that the club’s commercial operations may also now take an upturn. Fearn was a former director at East Stirlingshire in Scotland and was subsequently involved in a failed attempt to take over Sheffield Wednesday while the club was in serious difficulty in 2010. Fearn’s biggest inititative is a massive reduction in the cost of season ticket prices at the club. The cost of an adult season ticket has been reduced to £120.00 from the start of next season, but this will only apply if the club sells 5,500 of them by the middle of May, at which point it will have made the amount of money from season ticket sales that it made before the start of this season. If the club is unable to, the price will revert back to normal prices, although supporters will not be compelled to buy at the higher price.

Of course, there are risks attendant with such a policy. Kettering Town have found this season that offering reduced season ticket prices to supporters can have a significant effect on cash-flow into the clubduring the season, and the club will have to be watchful of the way in which it spends any money that comes into the club. The flip-side to this, however, is that bigger crowds at Edgeley Park would also bring benefits of their own and would give the club a lump sum of cash which could be used on reducing its  liabilities elsewhere and on investing in the playing squad. It certainly seems like a more prudent way of managing the club’s finances than the hints at what might have been expected under Tony Evans.

The reality of Stockport County’s position is difficult, but not insurmountable. If losses have been cut back to something approaching a sustainable level and the club can go into the summer looking forward to regular crowds in excess of 6,000, then the possibility of challenging for promotion next season doesn’t seem like a wholly unrealistic one. What is critical, however, is that the five points between the club and the Blue Square Premier relegation places doesn’t shrink any further. Few things would be more likely to have a direct hit on the continued viability of a club like Stockport County than a third successive relegation into the Blue Square North. This dread scenario, however, would surely be the same whether the club was seeking to entice huge crowds to the club for the start of next season. When almost 6,000 people turned out for their loss-leading match last Saturday, the local populace confirmed that the interest in their local club is still there. It’s now down to the team to prove that it merits that extra support.

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    4 Comments

  1. A good article, but to fully appreciate the problems the club faces you must add the issue that the club no longer owns its own ground and indeed has to pay rent to even play there – this asset stripping and the relationship with the new owner (google Kennedy & Sale Sharks) is the heart of many of the problems. The club gains no matchday income from hospitality & the like – so big crowds are great for atmosphere but don’t help if gate income is not up. Also (I think) next season sees the financial parachute payments cut before they end the following season. The only rays of hope are that the local council at last seem to be offering some real help and the club is finally getting some people on the staff who have the skills to turn things round – Gannon is a proven manager supported by most fans and Fearn seems to understand marketing and the importance of the only key asset the club has – its fans.
    If a club like County can’t make a go of it at this level with the fan base it has, it questions the whole of the current financial model used in the lower leagues.
    I also must mention the lack of interest in the local media for covering club issues – I could go into detail, but the refusal of the local BBC radio station (Radio Manchester – the clue could be in the title) to even mention the £5 ticket offer is a good example – I contrast this with the approach taken in the south west where Radio Devon could not be more supportive of their teams Exeter, Plymouth & Torquay.

    SteveF

    March 13, 2012

  2. Just to add, Gannon isn’t the manager – he’s Director of Football (fully in charge of the first team), so while he’s restricted by the finances, as a director he is fully incolved in revising the budget. As a qualified accountant he should know what he’s doing, so things should be balanced out by the start of next term. We’ll be rid of a lot of deadwood, and Gannon’s shown before that he can produce a side of young, talented and above all cheap players when given the time (take note, Port Vale!).

    Regarding the potential cash-flow issues, frankly it’s worse at the moment. County are constantly trying to find money here & there, living a hand-to-mouth existence, such as getting ground rent deferred (or, as Sale Sharks announced it, ‘waived… definitely not a dliberate mistake by them to make themselves look better. Oh, no.).

    The big problem with that sort of thing is you’re got definite money going out (wages) but you can’t guarantee money is coming in, especially with postponements due to bad weather. It doesn’t help when your local police force charges you £11,000 for policing a game… and the only trouble that occurs is caused by over-zealous policing, but that’s another matter.

    Having the big chunk of money settled and in the bank by May would surely be a better option. It’s there already, you know what you’ve got to work on, and best of all it’s all earning interest.

    I’m not sure that we’ll hit the 5,500 target, but that’s probably just a ploy to get people to sign up by a certain time. If it gets to, say, £500k worth of STs sold then I can see them still running with it – otherwise you have to start again, and you can’t be certain of raising that much when they’re sold at full value.

    Sean

    March 14, 2012

  3. Given that Hartlepool have operated the season ticket scheme mentioned for the 2011/12 season, does anyone know if they have been happy with it?

    PAUL EKE

    March 14, 2012

  4. @Paul Eke – regarding the way it’s run at Hartlepool – well, it’s boosted the crowd figures, and presumably that’s also increased figures for food sales, programme sales etc. The situation is though that our owners have consistently covered our losses for many years now, and presumably had done their sums to cover any additional shortfall. IOR (the owners) have been around for more than a decade, and while the reasons why they keep putting into the club are a bit of a mystery (smart money is that they get a tax break for owning a loss-making company, plus a bit or Rich man’s Plaything), their track record means there’s not many concerns about them covering the loss.

    Where it’s different for Stockport is that there doesn’t seem to be any way of covering any shortfall. So they have to effectively make the guaranteed money from the season tickets last a full 12 months – £500-600K may sound like a lot, but when you think that’s an operating budget of £50K per month, you’re talking that even if it mostly went on the playing budget it’s a squad of about 20 full-time pros on about £500 a week average. By the sounds of things, other matchday income is fairly minimal as much of it goes to the ground owners. You can do it if you’re running a very tight ship, but I doubt it would actually be enough for a title challenge in the Conference – you’d be hoping for some decent cup draws to bring in additional income to allow other players to be brought in etc., or alternatively you’d be operating at a loss – which is partly how so many clubs end up in difficulties…..

    Albert Ross

    March 15, 2012

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