Question Should we blame the 'Consortium' ?

[bilbyboy]

Interesting theories!

I should point out I'm not the consortium but I know key people. Forgive me if I can't shed more light than I'm able.

Some history. The consortium were not around until it became clear last autumn that there were very serious financial issues at the club. In fact, around September/October, I discussed with a couple of people privately who I had "met" on ShrimperZone whether they knew of any wealthy fans who may be able to step in to help to save the club if it was going to be necessary. The aim was to put people together who had the interests of the club at heart if the club needed saving.

The consortium that was formed contained lifelong fans (although not exclusively - it contained some other business associates of other members of the consortium).

Like any lifelong fan, they didn't want Southend United to go into administration. I can certainly put to bed the theory that they were somehow motivated by any sort of vendetta!

They made an offer when it became apparent that the club was sailing very close to the wind in terms of the HMRC debt. If we all put ourselves back six months or so, if you'd listened to the official statements you wouldn't have believed there was any problem at all, so it was only near to the hearings that it became apparent how serious things were. After the liquidation petition was changed to an administration petition, they decided that they couldn't sit back and watch any more.

They didn't know how much money Ron Martin had behind him. For all they knew, he could easily have paid the HMRC debt off through his own funds. What they wanted was for the debt to be paid and for the club NOT to go into administration as that would have unravelled all Tilly and Brush's good work (little did we all know then just how bad things would turn out as the season has progressed).

At the time, they said that they wanted one of two things to happen: either Ron Martin to come up with the money and avert administration; or for him to allow the consortium in as an alternative.

There have been recent posts from some people suggesting that the consortium may not have existed or that we don't know who they are. The details of some of the members have been published, and you can go back to the Echo at the time to find out more. They certainly did exist! And I can also confirm that Anton Johnson is not amongst their number, so we can put that theory to bed too!

After administration had been averted, they then decided that they still wanted to be involved. Out of the public eye, they made an excellent offer for Ron Martin that would have seen him walk away with a seven or eight figure sum. However, Ron was not interested, as was his prerogative as owner. He thought he could take the club forward, and he probably still believes that. So that was that. We are left with Ron Martin in charge.

I can confirm that they would not just hand over money to Ron Martin to do whatever he likes with. Business people don't make money by just frittering it away. They would want to be properly involved if it's their money. And it's still the Ron Martin show. They offered him a very good deal to walk away and he didn't take it. So what next? If Ron needs help, he should have asked for it. But he turned their good offer down, so what more can you do?

If the worst happens and there's blame to be attached, it's not to some people who were willing to put money in to try to take the club forward, but to the person who has presided over an annual loss of £2.4m on a turnover of £5m, and everything else that has occurred at our club recently.

I find it hard to imagine how people willing to put money into our club could be blamed, especially when it would be with the aim of saving its very existence. People may well now question their tactics and whether with hindsight (just like criticising Tilly's tactics) we can give our own opinion of what they should have done at the time, but it was their money that they were willing to invest, so again that was their decision as to when they did things in public and when behind closed doors. And most people don't know the full picture so it's hard to make a judgement either way. I can assure everyone, though, that like any fans they wanted what was best for the club.

They are certainly not the ones who should be blamed for the mess the club's in.

Absolutely brilliant, it makes things concerning the consortium etc so much clearer, i only have one problem with what you have stated, and that is the sentence that states "that like any fans they wanted what was best for the club". This is past tense, therefore does this mean that they no longer WANT what is best for the club? Sorry to be so pedantic but with everything that has been/is going on with the club then i, like so many others am hanging on to every word.

Thanks Elstree, where would our heads be without you.

 

[CC51DAS]

EB, I would like to make a couple of things clear if I may. At the outset of this thread, I said I am not looking to exonerate RM and so I am accepting that the plight we find ourselves in is essentially of his creation, albeit under difficult circumstances.

I had also heard that there was a deliberate element to the actions of the 'Consortium' who were acting out of spite towards RM. You clarified that point last night and I accepted your comments.

That said, with the benefit of hindsight it is beginning to look as though one option which mey have enabled the club to continue, admittedly in a less than desirable manner, may have been denied and the situation may have been complicated as a result.

So, accepting that the 'Consortium' has acted with the best of intentions, where do they stand now ?

If RM, despite today's revelations in the Echo, proves to be up **** creek without a paddle, will the 'Consortium' row in to the rescue ?

Or did their interest disappear once RM rejected the lucrative deal to which you refer and, as illustrated by Billyboy, should we now regard the 'Consortium' as being past tense ? - which would of course contradict some of your previous comments on here.

 

[Beefy]

If the worst happens and there's blame to be attached, it's not to some people who were willing to put money in to try to take the club forward, but to the person who has presided over an annual loss of £2.4m on a turnover of £5m, and everything else that has occurred at our club recently.

Thanks for your posts, EB. They've been very informative, as ever.

I'd like to take you up on the above point though, not least because it's one which you have mentioned on numerous occasions over the last year.
For me, the most concerning/surprising thing that the Consortium said back in November was that after the tax bill was paid off they would expect the Club to be free of debt and be able to be self-sufficient. This is why I've always been sceptical about them - how on Earth could they achieve this?

The only way surely that they could not make those sorts of losses on that sort of income would be to slash expenditure. Which is what Ron Martin has done this season to try to make the Club self-sufficient. And we've all seen the consequences. I think a lot of people have taken to the idea of this group of wealthy men bankrolling us to a bright future when from what I can see we'd be looking at living with a perpetually tight belt.

 

[EastStandBlue]

It's something that I've always wanted to hear from the Consortium, Beefy, but something that has yet to be answered. Firestorm made an excellent analysis here:

For the club to be self sufficient we would need to maintain 2007-2008 attendances (ave 8,000) , and reduce wages by about 20% from that season too (which we probably have done by now)

However that assumes that the rental agreement stays the same ,the accounts note a commitment to pay 520k pa rental but states that in practice no amounts have been payable in recent years (the crux there is the word payable which indicates that they have been waived , If they had just been put to one side the statement would have said no amounts have been paid in recent years) and that the unkown "Administration expenses" of 2M will not reoccur.

Were we to incur additional Admin expenses of say 250k and rental of 500k we would either need to cut our wages by a further 750k (almost 30%) to around the 2M PA mark or up our income by a similar amount which would need a ticket price raise and an increase in attendaces.

2008 Accounts had total staff of 95 (7 directors who dont draw a massive salary, 64 playing and 24 establishment and ground maintenance) If we wanted to maximise our income i would imagine that the establiment etc jobs would not be radically cut ) plus I doubt id they are significant earners in the scheme of things.

Were we to maintain a First team squad of 22 (18 matchday and 4 spare, I know its better than we have now) and half a dozen youngsters ,Manager , 3 coaches and a physio
Manager 50K pa
coaches 35K x 3 =105K
Phsio 30K
Youngsters 150 pw = 47K

That would leave about 1.3m pa on players max (taking into account assiciated costs such as Social security etc which runs at about 15% of the wage bill )
An average wage for the entire team of 1100 per week , I doubt whether a squad commanding those salaries would be able to put on performances to attract 8000 gates every week.

And this does not take into transfer fees.

So unless there are some pretty drastic assumptions being made about Rent , Expenses etc, the Consortium are going to struggle to make the club self sufficient unless they have some magic plan for increasing revenue

So, put succinctly, without extra sources of revenue it would be almost impossible to become self sufficient whilst a) remaining at Roots Hall, b) Having a Landlord unwilling to charge no rent and c) being expected to compete at a League One level.

 

[ElstreeBlue]

Thanks for your posts, EB. They've been very informative, as ever.

I'd like to take you up on the above point though, not least because it's one which you have mentioned on numerous occasions over the last year.
For me, the most concerning/surprising thing that the Consortium said back in November was that after the tax bill was paid off they would expect the Club to be free of debt and be able to be self-sufficient. This is why I've always been sceptical about them - how on Earth could they achieve this?

The only way surely that they could not make those sorts of losses on that sort of income would be to slash expenditure. Which is what Ron Martin has done this season to try to make the Club self-sufficient. And we've all seen the consequences. I think a lot of people have taken to the idea of this group of wealthy men bankrolling us to a bright future when from what I can see we'd be looking at living with a perpetually tight belt.

Hi Beefy

Thanks. I'll have a go at answering.

Not sure they said the club would have no debt.

But as to the other bit any business should live within its means - whether that's Man Utd, Portsmouth, SUFC, Yeovil Town, Grays Athletic or a non-football business.

Why has SUFC not been living within its means?

It may be that the wage bill has needed trimming. It may be that other things were being spent beyond the means. Without seeing all the figures, we can only speculate where any waste/excesses have been. But the simple rule of business (and the consortium consists entirely of successful business people) is that you have to budget properly and spend what you can afford.

I'll give you an example. I asked John Adams the same question once about why we couldn't run at break even like Chesterfield (at the time). His answer was that their ground hadn't had a lick of paint for a few years. Well if that's what's needed, then that's what's needed. Obviously talking small sums there with that example, but it's possible for clubs to break even if they really want to. The trouble is most don't. Most football clubs gamble on achieving success in the future.

Despite the problems that occurred at our club in the mid to late 90s, it seems we haven't learnt our lesson.

Football clubs are notoriously badly managed financially. Why? Because too many are chasing a dream. Yet the numbers say most can't get to the top.

Look at Portsmouth. Imagine if we had the amount of revenue that they had? We could only dream of those sorts of revenues. So why did they get into such troubles? Because they spent well beyond their means. The more revenue many clubs get, the more they spend, but income and spending are not aligned!

How can clubs on much smaller revenues (eg Conference teams) survive? How can a few well-managed clubs (like Yeovil Town I believe) break even? Are they not under the same constraints and pressures as us? Maybe more because their attendances are less.

So the simple answer is to cut your cloth accordingly. Balance the books. If that means having 18-20 younger hungry players who demand less wages than the older pros so be it.

Look at what went right and what went wrong over the last few years.

Tilly managed to mould a great unit in his first three years. We had a decent enough squad size and they were our players, not loanees! They didn't cost the club a fortune. Then the purse strings were loosened (maybe satisfying certain fans' demands) in a way that was not sustainable and without enough thought given to balancing the books, especially if the club was relegated from the Championship. Clarke, Foran, Ricketts, etc. Many more. Maybe money has not been looked after well in other areas too. We can only speculate. You can have a successful team and business by living within your means. Flashing money around doesn't always mean success as Tilly and Webb's excellent spells as managers contrast with Whelan's.

The point the consortium was making was that they would run the club as a proper viable business that did not lose masses of money. This can be done, although it's not the norm in football circles because heart often rules over head (no matter how high or low the club is in the football pyramid).

 

[Beefy]

It's something that I've always wanted to hear from the Consortium, Beefy, but something that has yet to be answered. Firestorm made an excellent analysis here:



So, put succinctly, without extra sources of revenue it would be almost impossible to become self sufficient whilst a) remaining at Roots Hall, b) Having a Landlord unwilling to charge no rent and c) being expected to compete at a League One level.

Exactly. This is the problem that football clubs have. In order to live within our means it either means charging very high ticket prices or keeping expenditure down to a bare minimum. But we compete for players with other Clubs who may well be not living within their means and are either being bankrolled by a wealthy benefactor or are using their tax money to pay wages/buy players.

In the months after we got relegated from the Championship several of the teams which were were competing with (Coventry, Southampton and Ipswich to name just three) were revealed to have massive debt problems, mainly in relation to their obligations to HMRC. Essentially we had been competing with not only a much lower income than almost any other Club but many of those other Clubs had been basically cheating by spending money that they didn't have. If we'd spent our tax money on a new striker or a decent centre-half maybe we'd have stayed up.

Almost from that point we stopped paying HMRC up until November 2009. In order to get back into the Championship we cheated.

The whole system needs a fundamental shake-up to force Clubs to live within their means. Clubs who do what we have done over the last few years and end up in Administration should be relegated at least one division. Sod ten points. But acting like Southend United are the only Club in this position and that getting anyone else on board other than Ron Martin will mean that the Club will be able to compete even in this division without spending money it doesn't have seems like a gross over-simplification to me.

EDIT - only just seen that EB has posted. For the record, I posted this before I read that so if he superseded what I said here then I have an excuse....

 

[ElstreeBlue]

Exactly. This is the problem that football clubs have. In order to live within our means it either means charging very high ticket prices or keeping expenditure down to a bare minimum. But we compete for players with other Clubs who may well be not living within their means and are either being bankrolled by a wealthy benefactor or are using their tax money to pay wages/buy players.

In the months after we got relegated from the Championship several of the teams which were were competing with (Coventry, Southampton and Ipswich to name just three) were revealed to have massive debt problems, mainly in relation to their obligations to HMRC. Essentially we had been competing with not only a much lower income than almost any other Club but many of those other Clubs had been basically cheating by spending money that they didn't have. If we'd spent our tax money on a new striker or a decent centre-half maybe we'd have stayed up.

Almost from that point we stopped paying HMRC up until November 2009. In order to get back into the Championship we cheated.

The whole system needs a fundamental shake-up to force Clubs to live within their means. Clubs who do what we have done over the last few years and end up in Administration should be relegated at least one division. Sod ten points. But acting like Southend United are the only Club in this position and that getting anyone else on board other than Ron Martin will mean that the Club will be able to compete even in this division without spending money it doesn't have seems like a gross over-simplification to me.

EDIT - only just seen that EB has posted. For the record, I posted this before I read that so if he superseded what I said here then I have an excuse....

I agree with you, Beefy. I think football needs a shake-up from the highest level.

But each club should also be responsible for their own actions. As you say, they should be automatically relegated if they have "cheated" by not acting responsibly.

What I'm saying is, it's been proven that it's still possible to achieve and compete by spending wisely rather than flashing the money that you don't have to chase the dream. Spending money doesn't always buy success.

 

[Beefy]

Hi Beefy

Thanks. I'll have a go at answering.

Not sure they said the club would have no debt.

But as to the other bit any business should live within its means - whether that's Man Utd, Portsmouth, SUFC, Yeovil Town, Grays Athletic or a non-football business.

Why has SUFC not been living within its means?

It may be that the wage bill has needed trimming. It may be that other things were being spent beyond the means. Without seeing all the figures, we can only speculate where any waste/excesses have been. But the simple rule of business (and the consortium consists entirely of successful business people) is that you have to budget properly and spend what you can afford.

I'll give you an example. I asked John Adams the same question once about why we couldn't run at break even like Chesterfield (at the time). His answer was that their ground hadn't had a lick of paint for a few years. Well if that's what's needed, then that's what's needed. Obviously talking small sums there with that example, but it's possible for clubs to break even if they really want to. The trouble is most don't. Most football clubs gamble on achieving success in the future.

Despite the problems that occurred at our club in the mid to late 90s, it seems we haven't learnt our lesson.

Football clubs are notoriously badly managed financially. Why? Because too many are chasing a dream. Yet the numbers say most can't get to the top.

Look at Portsmouth. Imagine if we had the amount of revenue that they had? We could only dream of those sorts of revenues. So why did they get into such troubles? Because they spent well beyond their means. The more revenue many clubs get, the more they spend, but income and spending are not aligned!

How can clubs on much smaller revenues (eg Conference teams) survive? How can a few well-managed clubs (like Yeovil Town I believe) break even? Are they not under the same constraints and pressures as us? Maybe more because their attendances are less.

So the simple answer is to cut your cloth accordingly. Balance the books. If that means having 18-20 younger hungry players who demand less wages than the older pros so be it.

Look at what went right and what went wrong over the last few years.

Tilly managed to mould a great unit in his first three years. We had a decent enough squad size and they were our players, not loanees! They didn't cost the club a fortune. Then the purse strings were loosened (maybe satisfying certain fans' demands) in a way that was not sustainable and without enough thought given to balancing the books, especially if the club was relegated from the Championship. Clarke, Foran, Ricketts, etc. Many more. Maybe money has not been looked after well in other areas too. We can only speculate. You can have a successful team and business by living within your means. Flashing money around doesn't always mean success as Tilly and Webb's excellent spells as managers contrast with Whelan's.

The point the consortium was making was that they would run the club as a proper viable business that did not lose masses of money. This can be done, although it's not the norm in football circles because heart often rules over head (no matter how high or low the club is in the football pyramid).

Thanks for the answer. For what it's worth, I agree with you. But a huge number of football supporters, not just at Southend United but at Clubs up and down the Country, would not. I said on here in the summer that I found it simply staggering that people were calling for the Club to throw hundreds of thousands of pounds on the likes of Theo Robinson and Michael Raynes when the accounts showed a £2m+ loss and Ron Martin had already said that the 08/09 would likely tell the same story. I was shouted down.

Football fans aren't interested in hearing about their Club being financially prudent. They pay their £20 twice a month and want to be entertained by that. They want to see their Club compete at the top of the division and if they aren't doing that then they will vote with their feet.

Besides, no one rewards Clubs for living within their means. If anything they are punished. Why bother to only spend what you can afford when you can spend someone else's money and when they start wanting it back just take a ten point reduction. Job done.

The whole system is ridiculous.

 

[EastStandBlue]

I'm sorry Elstree, a lot of what you say makes sense, but that's an extremely simplistic way of analysing a method to make us self sufficient.

Cutting back on costs attributed to maintaining the Stadium will save pennies, not pounds, in our situation and assembling a squad that consists mainly of young players is a recipe for disaster. We played a squad that mainly consisted of reserves and youngsters in the JPT trophy against MK and were embarassed.

We simply wouldn't be able to assemble a squad capable of competing at this level on the budget needed to be self suficient.

Clubs like Yeovil survive because they own their facilities, it's as simple as that. They also live food to mouth and rarely pay fees for players, but owning their stadium and training grounds is paramount to their survival. If you examine the clubs that have either flirted with or suffered administration at this level or below (Rotherham, Stockport etc) it's because they had no facilities and were seeing large amounts of their turnover vanish because of rental payments.

 

[Homer]

Have the consortium approached RM with an offer that would include the two parties splitting the share of the club? If not, why not? With RM and his companies owning the majority of the land pivotal to the club's "future", He becomes pivotal to our future and if members of the consortium were truly fans of the club, surely they'd be willing to negotiate such an instance where they can provide Martin with necessary finance for a reasonable share instead of ousting him outright?

been in contact with RM over this weekend and had a long conversation with him today,i raised the question re the conortium and had they been in contact at all

the answer was no

 

[A Century United]

So what this comes down to is:

1. We bite the bullet, accept our lowly status and live within our means (assuming, and it's a massive assumption, that the consortium can afford to buy Roots Hall and then not charge us any rent), ending up like Orient knowing that we can never progress further up the pyramid, or

2. We hope that RM's plans finally pay off, and we move to a new stadium with extra revenue streams (assuming in this case that RM holds true to his promise of SUFC sharing in the income, but remembering also that the Stadium can generate income from conferencing, etc as at Col Ewe), giving us the hope of future progress?

Sorry Elstree, there is simply no choice here. With no prospects of playing at a higher level under the consortium, and your business plan described above means that would be pretty much inevitable, the fans would leave in droves and it would be a slow but inexorable decline. Backing RM may be the riskier option, but at least it holds out the hope of a decent future for our club.

 

[CC51DAS]

EB, I would like to make a couple of things clear if I may. At the outset of this thread, I said I am not looking to exonerate RM and so I am accepting that the plight we find ourselves in is essentially of his creation, albeit under difficult circumstances.

I had also heard that there was a deliberate element to the actions of the 'Consortium' who were acting out of spite towards RM. You clarified that point last night and I accepted your comments.

That said, with the benefit of hindsight it is beginning to look as though one option which mey have enabled the club to continue, admittedly in a less than desirable manner, may have been denied and the situation may have been complicated as a result.

So, accepting that the 'Consortium' has acted with the best of intentions, where do they stand now ?

If RM, despite today's revelations in the Echo, proves to be up **** creek without a paddle, will the 'Consortium' row in to the rescue ?

Or did their interest disappear once RM rejected the lucrative deal to which you refer and, as illustrated by Billyboy, should we now regard the 'Consortium' as being past tense ? - which would of course contradict some of your previous comments on here.

EB, you don't seem to have responded to this - rather the thread is heading off down a different track.

Are the 'Consortium' past tense ?

 

[Yorkshire Blue]

So the simple answer is to cut your cloth accordingly. Balance the books. If that means having 18-20 younger hungry players who demand less wages than the older pros so be it.

Is that not we've been doing this season?

We've filled our squad with younger, hungry players - and I don't just mean Anthony Grant who's in need of some more KFC - we've used cheaper loan players, we've had youth team players on the bench. We've cut our cloth accordingly and sold our leading goalscorer (we'll always be a selling team).

And Ron Martin has been absolutely slated for it. This above all, is what he's been criticised for. There were very few voices of discontent when we were wasting £1m on Peter Clarke and probably £0.5m on Richie Foran. Make no mistake, the protests are above all about what's happening on the pitch.