Sheffield Wednesday Wait & Wait

Sheffield Wednesday Wait & Wait

By on Aug 24, 2010 in English League Football, Latest | 5 comments

If Sheffield Wednesday ever want to get back to the Premier League, I suppose it makes sense to start acting like a Premier League club, and an established one at that. Unfortunately for long-long-suffering Wednesday-ites, their club seem to have chosen Liverpool as their role model this summer. Worst season in years? Check. Interminable takeover saga? Check. Involvement of annoying Americans? Check. Prospective bidders in the papers every other day? Check. Proof of funds from said bidders? Yeah right. Stasis at the very top of the club? You betcha. Former West Ham chairman Eggert Magnusson interested in a takeover? Oh, don’t be ridiculous, not even Wedn… ah.

Wednesday’s board have made so little progress in their recent search for new investment that they must have taken the summer off following all the takeover fuss which accompanied their last-day relegation from the Championship in May. After the considerable to-do over former chairman Lee Strafford’s resignation and the even more considerable to-do over American investors Club 9 Sports’ failed bid for the club, the board could have probably done with a rest. They appointed ancient Wednesday legend Howard Wilkinson as temporary chairman, so they must have been tired. Of course, Wednesday’s board have been around so long they might well have thought Sgt Bilko was still ‘cutting edge.’ And, more seriously, they’ve been around so long that their reluctance to give up the chains of office makes Tom Hicks and George Gillett at Liverpool seem transient. Chicago-based “sports and media advisors and investors” Club 9 Sports never quite took no for an answer when their May bid for Wednesday was quite rudely turned down.

Stafford had been a driving force behind Club 9 getting involved. But he’d resigned over the investment stalemate (and – if his contribution to a debate at the June Supporters Direct conference is a guide – much, much more). So the remaining directors felt more comfortable saying “Foxtrot Oscar” to the Americans, especially as Club 9 were making no secret of the £400,000 “management fees” they would charge the club for their untested expertise. Club 9 came back with what they claimed was an improved offer in early July. Their original offer amounted to $5m invested in two tranches. Their improved offer did too. Spokesman Robert Beal, when faced with the obvious question, said there was “a confidential clause in the offer sent to the club which means there IS an increase.” But, of course, he couldn’t elucidate, because it was confidential.

However, the offer quickly morphed into an “immediate balance sheet improvement of £9.5m,” with Club 9’s claim that Wednesday’s bankers Co-Op were living up to their name with a £6.5m write-off of the club’s £25-30m debt. Wednesday’s board, claiming they had the full backing of the Co-Op for their view, again rejected the offer, again quite rudely, accusing Club 9 of “making noises in the media…while we focus on negotiations with credible, long-term investment partners.” Curiously, they added that they couldn’t accept any offer of less than £5m up front, yet quite happily claimed they could carry on without any investment anyway. “I’m not sure how that works,” noted Club 9 “advisor” Dennis Hobson, a well-known Sheffield ‘personality’ to whom I shall return. “But where’s the winding-up petition from HM Revenue and Customs?” I hear you cry. Well, here it is. On July 23rd, Wednesday were served with a petition over £550,000 of unpaid taxes, an action described by local MP David Blunkett as “extremely unhelpful”, now that a Labour government was no longer the beneficiary.

The inevitable transfer embargo followed. But Wednesday were still allowed to sell players, and did so in order to pay the bill before they were due in court on August 11th. Goalkeeper Lee Grant was immediately touted as the club’s fiscal salvation and eventually sold to Burnley for £1m. £300,000 of this was used to wipe out past PAYE debts, although by the time of the court hearing it was clear that Wednesday weren’t paying on-going PAYE (Pay-Sometime-After-You-Earn, if you like) and the £300,000 was downgraded from the whole debt to “a very substantial payment of the debt.” Wednesday also agreed to a staged payment of the £250,000 VAT owed and had successfully begged “other” creditors not to add their claims to HMRC’s petition. And Wednesday’s court representative, Hugh Groves, a barrister with Enterprise Chambers in Leeds and, handily, an insolvency expert added that “there are also very serious and advanced negotiations for the sale of the club” – effectively promising that PAYE and VAT would come to those who wait.

How “advanced” these negotiations are remains remorselessly unclear. How “serious” they have been is, sadly, less unclear. Having had their second offer for the club rejected, Club 9 went ballistic…and public. On July 30th, they told all in an open letter to “Wednesday Fans, Supporters, Allies and Interested Parties.” Having received an “oral commitment” from a board member (un-named) that “the board had agreed to accept our current offer, subject to substantiation of financial wherewithal”, Club 9 were most upset not to even receive the courtesy of a direct reply by the deadline they’d set. As a result of this and “the board’s…repeated failure to provide accurate disclosures pertaining to the details of our negotiations” Club 9 made their open letter decision. The accompanying press release was a damning indictment of what they saw as the Wednesday board’s strategy “to sell as many players as it takes (no matter what value they extract)” to pay their various bills/debts. “Rather than accept (our) offer…the board continues to dodge, detract and delay.”

The board had made repeated reference to other potential bidders, especially one un-named, apparently American party. Rob Waugh in the Yorkshire Post, the journalist who had done the most digging and exposing of past failed Wednesday bids, noted that “the board believes the would-be investor(s)’ unwillingness to court publicity – in contrast with other recent suitors – underlines the seriousness of their interest.” Club 9, having none of that, claimed: “There is no evidence of other ‘interested parties.’ By now, we suspect fans and supporters have grown tired of hearing about these proposed investors bringing pots of gold.” They set out in considerable detail what they were going to do, how much they would ‘invest’ doing it and when. And they directed supporters to their web-site, where further details awaited of how they were going to implement “the turnaround” in Wednesday’s fortunes and how they could justify management fees which were still part of the package.

The fees bit was relatively easy. Having scant regard for commercial confidentiality, Club 9 said “the current CEO of Sheffield Wednesday is believed to be paid £220,000 per annum, which is more than half the annual £400,000 annual management fee that (we) would receive.” And “the current CEO… has no past experience in sports, entertainment or venue management or marketing and no experience involving the sport of football,” in contrast to the, un-named, “executives that Club 9 will bring to (the club) who have worked with major league teams and venues in America and have deep (!) experience in corporate sponsorship, ticket sales, event production and…” so on, for a long list which included “corporate turnarounds.” The detail of Wednesday’s proposed turnaround, however, was chock full of the sort of management psychobabble which led to the ruination of many service-driven organisations in the 1980s and 1990s (he says, from the bitterest personal experiences). Amid some common sense, phrases such as “establish metrics to measure goals and integrate them into financials,” kept appearing – an interesting task for those involved in essential but non-money-making roles.

There would be an “organic approach” to player acquisitions “from outside Europe with a particular emphasis on the Americas.” A permanent seat license program” would be offered. Marketing would be “aggressive” subject to “incentive compensation.” And staff would be “eliminated” (ulp!) if they weren’t “the best… or willing to become their best.” “Their best” was defined in an utterly meaningless paragraph entitled “Institute culture of winning, success and leadership.” Among the gems here were “bad attitudes, bad work ethics and bad language are not welcome” (f**k off), “subterfuge, political games and disloyalty are unacceptable” (after all, we don’t do such things…er…) and the best: “failure is not an option,” which paid scant regard to the vagaries of promotion and relegation. All deals with such as “local media” and local “vendors/suppliers” would be “renegotiated” (i.e. “cut,” regardless of worth). The “mass discounting of ticket prices” would be “eliminated” because “discounting (i) devalues the ticket price (surely the point?), (ii) causes purchase delays (how?), (iii) eliminates a sense of urgency (answers on a postcard please) and (iv) should only apply to seniors, young children and (God Bless America) the military.” And a senior vice-president would be put in place to “oversee the day-to-day implementation of best practices from the US.” In other words, the American way – which is working so well throughout the world – or the highway (Gawd, I’m doing it now).

But the current board weren’t dismissing Club 9 because of this headlong descent into w**kerdom. They were doing so simply because, as Club 9 themselves put it: “this board has no intentions of addressing the current and serious plight of the club if it means giving up control.” And in that psychobabble-less statement, Club 9 nailed it. Club 9 also had the backing of “prominent local businessman” the afore-mentioned Dennis Hobson, who was equally forthright in his assessment of Wednesday’s plight, couching it in terms which would resonate with any Owls fan: “Sheffield United have left us miles behind.” He added: “There isn’t enough money in the world to mend Sheffield Wednesday the way things are now. The problem is they think they just need more money. They (just) asked me what I could put in and said the football side takes care of itself and the boardroom is a separate entity. “I said: ‘If I had £100m do you think I would give it to you to spend at Wednesday?’ I think the board are oblivious to reality. They reject everyone who wants to come in but offer no change themselves. It’s a disgrace.”

Yet despite these undeniable truths, the board remain. Club 9 have far from won over the hearts and minds of fans, despite their wordy attempts to claim such a victory. One of their press releases said: “We have had extensive communication with Wednesday-ite (the supporters trust), which is supportive of new investment and are willing in principle to consult their membership by way of ballot on the basis of any legitimate offer which provides the prospect of a better future for the club.” Or, as Wednesday-ite themselves put it: “We have talked to a number of groups and individuals who might be interested in providing a solution at Sheffield Wednesday. (Club 9) are one of those. That’s as far as it’s gone at this stage.” Meanwhile, “the prospect of a better future for the club” could still involve former West Ham chairman Magnusson, who has been linked with the “mystery bidders” in the local press all month, and the national press this week. Amid the turmoil, manager Alan Irvine and his team have made a presentable start. What opportunity they will have to build on this, and who will give them that opportunity, remains as unclear now as it has for much of the last decade. The wait goes on… and on… and on.

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    5 Comments

  1. Excellent article.

    Main investment problem at Hillsborough is £28 million debt, mainly secured against stadium now worth about £6 million!

    Marco

    August 24, 2010

  2. Now Club 9 have given up , the key point of this article is the fact that the SWFC board of directors refuse to budge.

    They refuse to leave, despite their obvious failings which include taking a club well placed in the Premier League with a quite healthy bank balance and turning them into a League 1 club nearly £30m in the red. Their abysmal mismanagement continues to effect an already terminal situation, this season the club is expected to lose at least another £3m even with an estimated average attendance of 24k, which is optimistic to say the least. That fact was revealed even before the WUO fiasco, which came as an unpleasant surprise to supporters during a pre season that at that point had fans feeling good about their club for once due to the new signings and lack of sales…

    The small ray of hope for many, the eccentric but well meaning Lee Strafford was forced out by board room politics which came to a head when he found out the budgets that himself & the CEO Nick Parker had been working with were in fact inaccurate and the FD had been withholding information of a £1.5m shortfall. Lee had to go when Parker (with a £220k PA incentive) decided to back the people who hold the real power in the board room, which includes said FD.

    SWFC will never find outside investment until the deadwood in the board room accept they’re responsible for the mess Wednesday finds itself in and do the honourable thing and step down. Their stubbornness is unwavering though and they will continue to find excuses for turning away the few genuine interested parties that have come forward. Not that there have been many.

    As for mysterious interested parties, well they seem to appear each time the fans get truly restless then the rumours just seem to fizzle out. Funny that….

    DWowl

    August 24, 2010

  3. Good article, although a couple of points should be noted:

    1) One of Club 9′s offers this summer was made on a Thursday, in which they set a deadline for acceptance of close of business Friday (ie the following day). I don’t think any serious business would feel they could analyse and accept an offer in such a short time.

    2) Club 9′s original strategy appeared to be attracting 30000 fans into the ground, then the club couldn’t fail to get back to the “EPL”. (which seems broadly similar to an earlier strategy the aforementioned Stratford pursued) This doesn’t really tie in with the later comments about their attitude to sales and pricing!

    The one thing that appears to have come out of relegation and the Stratford era is the board seem to have accepted things can’t go on as they are, and that we have to seek outside investment. There is an obvious institutional resistance to change at Wednesday – effectively we’ve only ever had one board of directors, which has added and shed people over the decades. This might finally change though.

    Richard

    August 24, 2010

  4. Excellent, well written article. Sums up the eventful life of SWFC perfectly.

    Malc

    August 25, 2010

  5. If you look into the spokesman ‘Robert Beal’ you will find that he asked to represent Club 9 Sports free of charge as he hasnt got 2 pennies to rub together. This guy has been parading himself as a Media company able to sort all kinds of things. when it comes down to it, cant do anything and never will do anything

    Frank Abagnale Jr

    September 5, 2011

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