The best way to ‘facilitate a competitive team’

Tim Fisher, CEO of Otium Entertainment Group Ltd, the preferred bidder to take Coventry City out of the administration process has a difficult task ahead.  On the one hand, he has to maximise the income for the club to comply with obligations under the new Financial Fair Play (FFP) regulations which the Football League claim will be strictly enforced.  This must be balanced with the need to encourage reluctant supporters to travel outside of the city boundaries to the newly imposed home down the M45 at Sixfields in Northamptonshire.  Attendances have been falling since SISU took over in 2007, from an average of over 20,000 to around 11,000 last season, the lowest average in thirty years.  Even the expectation of an all time low of 3,000 should the relocation go ahead is now being downgraded.  The Coventry Telegraph quoted Fisher today

We are working now to make keep the cost of following the club to Sixfields as low as possible because there are fans who want to come to matches. We hope, in time, more will follow but our planning and budgeting facilitates a competitive team on the pitch [my italics].

The numbers simply do not add up to facilitate a competitive team.  FFP regulations impose a limit on the total wage bill to 60% of income.  CCFC Ltd official financial reports show income for the club, which when broken down by attendance figures, are in the region of £25 per head for the past four seasons.  If this continues next season, the club is looking at an income of around £2 million and a budget of £1.2 million for playing staff.  As has been pointed out on social networking sites, Yeovil Town managed to gain promotion to the Championship this year on a similar budget, but they remain the exception rather than the rule.  Anything is possible, but unlikely when a transfer embargo is in place and the squad contains only one recognised central defender.

One of the main sticking points for SISU is the access to other forms of income from the soon to be former home at the Ricoh.  The only source of income the club receive from match days is in the form of ticket sales and Fisher consistently points out the need to gain access to the food and beverage income.  Whilst no details of the agreement between the owners of CCFC and Northampton Town have been released, it is fair to presume that the commercial income gained from the deal will flow back into the club and the squad.  Just how much is that actually worth?  The majority of clubs are under no obligation to record such detail and so do not publish a breakdown of the revenue received at all.  Fortunately, there is one exception.

Scunthorpe United publish very detailed information on the different streams of income received.  In their accounts to June 2012, the club’s income totalled £3.3 million and is broken down into numerous categories.  For example they received just £7,667 from friendlies. The documents state that matchday catering accounts for £90,000 of the overall total, an additional £43,000 from the Iron bar and another £278,000 from the restaurant.  The average attendance for the corresponding season was 5,257.  Obviously Scunthorpe have a very different set up to the Sky Blues at the Ricoh, but Glandford Park is comparable to Sixfields in capacity and design.  Scunthorpe has executive boxes, whereas Sixfields will have, once the re-development is completed, but not in the first season of the ground share.  So Scunthorpe gained £411,000 in total from food and beverage sales – that is 12% of income and on a total attendance figure of 131,000 around £3.10 a head.  If Fisher’s predictions on attendances come close, the club can expect an income, in addition to ticket sales, in the region of £235,000 in the following season at Sixfields.  If the club offer an incentive of anything greater than £3 per ticket in order to encourage fans to attend, then this access to match day income will be less than the same 3,000 attending games at the Ricoh without any discount or incentive.  Yet Fisher stated that

Of course it’s a commercial risk, but the risk of staying at the Ricoh without any access to long-term revenue streams would be far greater.

The ‘NotOnePennyMore’ campaign has been gathering apace over the summer, where supporters of the club, backed by the Sky Blue Trust, are insisting that the only way to for the club to remain in the City is to engage in non-violent protest and resist from purchasing any club merchandise as a show of strength and intent.  A deal to remain at the Ricoh looks unlikely, with SISU refusing to negotiate with ACL, the landlords at the Ricoh, until it recognises Otium as the owner of the golden share and the club.  Whilst part of the campaign is to remove the current regime, if the club were to remain in Coventry then a proportion of these supporters would be likely to attend games.  The gates may be as high as 7,000.  At £25 per head, this would bring in a total income of around £4.4 million for the year which would allow a staffing budget in the region of £2.6 million.  The turnover for the club increases by over £2.2 million by staying in Coventry rather than relocating to Northampton. The playing budget improves by around £1.4 million, an increase in the region of 45%.  Not only is moving to Sixfields a commercial risk, it is a risk to the status of the club in the third tier of English football.  The rental figure of £400,000 at the Ricoh was allegedly agreed in principle by the two sides during negotiations around Christmas 2012 and could form the basis of any future agreement.  Re-opening negotiations with ACL facilitates a competitive team that Fisher claims to desire. The only risk to Fisher in restarting negotiations is losing face, whilst the risk in refusing to is to put the long term viability of the club in serious doubt, both off and on the field.

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4 Responses to The best way to ‘facilitate a competitive team’

  1. David Penn says:

    I guess the biggest unanswered question is how strictly the ‘spineless’ Football League will enforce FFP.If they don’t, then presumably SISU can still fund the club ‘unfairly’ for a while. My guess is that Fisher’s arithmetic goes something like this.

    1. 11k currently attend Ricoh at £25/head = £2.75m
    2. It would cost £0.5m – £1.5m to play there with no matchday revenue
    2. If 7k go to Sixfields that generates £1.75m
    3. The loss of £1m income is counterbalanced by much cheaper rent + matchday revenues at Sixfields
    However, in the more likely scenario that 3-5k turn up at Sixfields, then it all goes wrong…unless FL allows SISU to stump up extra funds.

    What a mess

  2. Mike55 says:

    Great blog as always, though not sure about getting to Northampton via the M42! That would seem to be the long way round!

  3. alan brushett says:

    It seems strange how these logical arguments seem to bypass Mr Fisher! I have it on good authority that the deal for F&B on matchdays is 50%to CCFC.

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