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The 200% Podcast 13: FOUL!
The Power Of Discretion And Why Guidelines Are… King
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Tranmere Rovers & Cheltenham Town Stare Into The Abyss
When Chester City’s Stephen Vaughan won permission to start this season in the Blue Square Premier, there were several gasps of disbelief. While the issues relating to the financing of football clubs are seldom a black and white issue, there seemed to be little question that, in having an application to enter into a CVA successfully opposed by HMRC during the summer, they should not by any rational logic (and certainly not under the rules of the league in which they play) have been allowed to start the season.
The decision to dock them twenty-five points but to allow them to play on was a classic fudge, the equivalent of applying a sticking plaster to an amputated leg. The authorities spared themselves the indignity of having to play a season with an odd number of clubs, Vaughan got himself theoretically endless time to try and arrange alternative financing for the club and everybody was happy. Everybody, that is, apart from those that considered Vaughan to be far from a fit and proper person to run a football club.
Chester’s start to the season hasn’t gone according to plan, either on or off the pitch. They have won just two games from their first thirteen in the league and are currently on -14 points. They are still twenty-four points from safety and would only be in seventeenth place in the league without any points deduction. Crowds have slumped to around 1,000 and there remains no sign of any sort of investment that may just give the club a fighting chance of staying up this season. The supporters remain in a state that seems to be not far short of civil war with each other. It doesn’t sound like it’s much fun to be a Chester City supporter at the moment.
Their situation took a turn for the worse after Tuesday night’s 2-1 home defeat by Forest Green Rovers. Setting aside the fact that winning a home match against Forest Green Rovers should be the bare minimum requirement if they are to stand any chance of staying up this season, the match showed up fundamental, institutional cracks in within the club which seem irreparable. There was a fight in the dressing room between two players at half-time, and this morning manager Mick Wadsworth (not a man that is unfamiliar to financial crises, having been previously been involved with Carlisle United during the 1990s, Scarborough and Gretna before going to The Deva Stadium) departed from the club yesterday with some telling (if somewhat garbled) words about the atmosphere at Chester City at the moment:
This place is full of negativity and it’s really difficult. I’ve not known an environment like it. I know I’ve got to change it and we got to change it and I appreciate that and I take that responsibility but it’s so negative at times it’s very wearing. We were rubbish first half and good second half, it was as simple as that. We gave ourselves too much to do. We knew how we wanted to start and we talked about that and didn’t do it. I never want to be negative against the lads because they are a great bunch. But we said and they said we didn’t have one player in the first half that was on top of his job.
Considering all of the above, this week might not have been the best week to make public the exact extent of their current financial plight. At Chester City, though, common sense doesn’t seem to be a commodity that is much in supply, so perhaps it is no surprise that this peculiar message turned up on the clubs official website on Tuesday – a website which, it should be added, doesn’t appear to have been updated in any other respect since the start of the new season. The spreadsheet that comes with it makes for fairly horrifying reading, although it is worth wondering aloud why it announces a profit as a loss and, more significantly, the question of how the “the 09/10 Profit and Loss account” (the website’s own words there) can be calculated in September 2009.
Let’s be generous, though, and imagine that these are projected figures for this season (after all, they take the £30,000 “gift” from the Premier League into account and that was definitely arranged since the start of this season) and that they are for the whole season. The figures reveal a club that has been trying to arrange a CVA but is still paying fifty per cent over its annual turnover on wages for players, full-time staff, management & support staff and YT scholars. It pays £23,000 per year in “overheads” for those scholars. There had better be some great young players in there – they’re costing an arm and a leg.
On top of that, there is over £100,000 on “football overheads”, but this is listed quite separately to almost £90,000 on “match day costs”. There is also a cheeky £135,000 that is being paid on “general overheads”, although what these are is also not explained. The bottom line – quite literally – is that, if these figures are correct (and it is almost impossible to believe that they are), Chester City Football Club is currently making a loss that is almost the same amount as its annual turnover. To put that into perspective, let’s quickly take some figures from elsewhere. Manchester United had an annual turnover of around £300m last year. If they were following Chester’s example, they would have made a loss for that year of around £600m, and they would have paid out about £450m in wages.
It’s difficult to believe that these figures are true, but this raises a further question. If they’re not, then who put them on the club’s official website? A disgruntled employee? Stephen Vaughan, in the hope that he can dissuade HMRC from issuing a winding up order against the club by demonstrating that there would be no realistic prospect of a dividend from such a petition? Whatever way this is spun (and, considering that the clubs official website has hardly been otherwise updated since the summer, it’s likely that it won’t be spun at all), it is bad news for the club. Whether these figures have any truth in them or not and whomever made them publicly available, that such a thing could happen at all can only indicate Chester City is in a state of complete and utter disarray from top to bottom.
Ian began writing Twohundredpercent in May 2006. He lives in Brighton. He has also written for, amongst others, Pitch Invasion, FC Business Magazine, The Score, When Saturday Comes, Stand Against Modern Football and The Football Supporter. Ian was the first winner of the Socrates Award For Not Being Dead Yet at the 2010 NOPA awards for football bloggers.
Whut, you forgot the announcement to turn their stadium in a stupidly large ‘sports hub’/’Old Trafford equivalent’/’Wembley of the North’.
Until recently the poll on the otherwise dead website was ‘Do you support the new management team?’ – perhaps the vote went against them.
It’s time to end this nonsense.
This is all very odd. The spreadsheet published on the Chester City site shows a Football League parachute payment of £215,500 yet the administrator’s report used to support the CVA shows that Chester City would be getting a discretionary parachute payment from the Football League of only £13,000.
Anyone reading these projections would conclude that in the early part of the season Chester would be able to pay its debts as it would have the income from the parachute payment of £215,500 and the season ticket sales of £46,212.00, but with the level of outgoings it would run out of money fairly quickly. Far from dissuading HMRC to issue a winding up petition, the projections should serve as an inducement to issue at the earliest moment should it be necessary.