SCG at the Directors meeting 02/04/15 (1 Viewer)

[oldskyblue58]

This was published on CovMad

http://www.coventrycity-mad.co.uk/n...tion_in_ccfc_board_meeting_858816/index.shtml

SCG Attending CCFC Board Meeting

Summary Notes of SCG participation in CCFC Board Meeting
Thursday 02 April 2015, 11:30/13:00
Present:
Tim Fisher (Chairman) (TF)
Steve Waggott (CEO) (SW)
Steve Brookfield (Finance Director) (SB)
Laura Deering (LD)
Jim Brown (SCG) (JB)
Peter Ward (SCG) (PW)


The SCG had presented in advance five key issues which were addressed as follows:


SB provided a broad financial overview of operating loss results for the last three years. We discussed the historic performance and also confirmed that losses for the current financial year before interest and tax will be significantly less than the 2013-14 results. It was also noted that the Board will be looking to move to a break even position before interest and tax in the 2015-16 financial year
Player wages budget 2015/16 is again likely to be upper quartile for League 1

SW explained at this point that discussions ongoing with Tony Mowbray (TM) regarding the squad profile and criteria for 2015/16, and benchmarked against other League 1 clubs the player squad budget should be adequate to challenge for promotion from League 1.

PW & JB questioned why this year’s squad had failed to deliver against this target

SW explained the last close season recruitment campaign had failed for 2 key reasons

the expectancy to be playing the season at Sixfields had proved a major hurdle to attract the target players competition had been severe from other Clubs in League 1 who had made significantly higher offers to key players, at levels that are unrealistic and unsustainable; SW gave a couple of examples where players had been targeted, had come to Ryton and been offered and accepted terms, for the Club to be gazumped at the final hour

PW & JB asked what were the key learnings and what would be different this time round

SW stated that a greater depth of targeting would be required, and this has been put in place with TM, whereby 3 targets are identified and pursued for each position required

SW spoke of the level of detail on player profiling to ensure the correct “DNA” is targeted, with a 1st, 2nd 3rd target identified, with special emphasis on the spine of the team

Regarding scouting, SW thanked JB for putting forward the offer on behalf of the Former Players Association. SW explained that this was being considered, however, the scouting network and structure of intelligence gathering has to be a long term commitment with scouts needing to be available every weekend, and not something to be managed on an ad hoc “when it suits” basis; SW acknowledged that there may be some helpful talent within the FPA to assist

SW advised that a number of individuals within his network had already been introduced to TM, and together with TM’s contacts, strong links were in place with a number of Premier League and Championship Clubs

SW was hopeful that these links would help to increase the total number of professionals within the Club, in particular he aims to increase the number of trialists to complement existing academy and youth players, and to fulfil the large number of fixtures when taking into account U18 and U21 commitments

PW & JB asked for clarification about the potential threat to Category 2 academy status

SW reiterated the importance of the academy, confirming that TM is an advocate / believer in youth development and Academies

SW explained the Club’s £1.25million commitment to the Academy, and his determination to maintain Cat 2 status as a fundamental pillar of the model going forward

In response to the question of competing with Wasps for priority share of discretionary spend within the area, SW outlined an intense programme of engagement within the local community, working with schools, various further education establishments and industry via Chamber of Commerce etc

SB gave an overview of the Football League’s process for policing Financial Fair Play, cash flow considerations and the need for CCFC to increase revenues, citing various models in play within League 1 with which CCFC are competing; eg the “benefactor” model versus a sustainable business model

PW & JB asked if SW and SB would be prepared to present this particular topic to the SCG, when a full meeting could be allocated to the subject – important that supporters have a much greater understanding of the parameters within which the Club is working, and the various options available (agreed, target next meeting 22 April)

SW stated this might also provide an opportunity to consult with supporters about stadium configuration for next season, conscious that measures must be taken to improve atmosphere, whilst recognising that some supporters may be asked to make a compromise

TF advised that pricing for next season was still “work in progress”

PW & JB asked for clarification about the recent rumours concerning former manager Steven Pressley. SW confirmed that a commercial agreement had been reached.

SW confirmed there was absolutely no truth in the rumour about theft of the player database

Regarding the new stadium, TF advised that the media had recently reported, accurately, that discussions had taken place with Rugby Borough Council about potential sites for the new stadium; stating that discussions will continue on a commercially sensitive basis

Time constraints meant that Jan Mokrzycki’s extensive list of questions was deferred, TF advised he would endeavour to answer those questions in writing as far and soon as possible

Date for next Board meeting – 15 June 2015

 

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[oldskyblue58]

find some of it reasonable explanation but kind of what you would expect to hear, other parts do not seem to add up, other parts seek to deflect attention whilst other parts try to justify past comments by recent events. Sorry but I can not help being highly sceptical on anything the club's directors say

The part about player recruitment whilst plausible does beg the question what have you been doing before and isn't this (with exception of Sixfields factor) what every other club faces? Could we have come back from Sixfields sooner? Why wasn't the scouting system in place like we were told.

Also curious how the 1.25m spent annually on the academy sits within the costs reported say in the 2014 accounts.

Is this upper quartile player budget what we do spend or what we could spend? Is it the budget or the SCMP budget?

I assume because they do not know which division we will be in they can not set ticket prices yet. If that's the case how have they set next years budget?

Interesting also that we should look at profit before interest not overall results. Wonder how much is expected to be charged for interest 2015/16?

I wonder if they will break even next season and what that means for the playing squad

In a meeting to discuss budgets etc were PW & JB sufficiently well versed in finances to properly understand or challenge? No disrespect meant to either by that comment

Pity Jan's questions were not addressed, somehow I am not surprised but lets be charitable and see if there is a proper reply. Perhaps the Trust will put them and the TF replies out to its members

 

[martcov]

I thought the discussions with RBC came to nothing. Dös "continuing" mean "give me a Bell if something comes up"?

 

[Noggin]

With no real talent to sell and poor crowds it's hard to see how break even and top 6 spending squad can coexist. I suspect if they do it's only by weasel language.

you've gotta love the confidence in "should be adequate to challenge for promotion"

 

[The Reverend Skyblue]

I just sick to death of all this SCG shite.
Its back slappingly irrelevant and meaningless.

God I bloody hate comittees, just a pointless waste of time, it just gives Fisher and Waggot a medium to pedal their shit

 

[John_Silletts_Nose]

Laura Deering appears to have not been minuted as making any comments, does she just have a listening brief on behalf of Joy Sepalla? Does this show some mistrust between Joy and Fisher/Waggott

 

[AJB1983]

I like how 2 years after saying a new stadium will be built they have only started talking to a council over 'potential' sites....
I.e. "What have you got that we could build a stadium on?"

 

[Broken Hearted Sky Blue]

I wonder if Mr Ward who was present at the SCG meeting on the 5th of March,when the SCG were told that the owners had been in talks with Rugby Council,asked how come the meeting with RBC wasn't held until the 11th of March? Of course my friend at the council could have got it wrong:thinking about:

 

[sw88]

I'm no accountant (far from it and the following rambling will confirm this) but if we want to break even by 15/16 would this not mean they plan to write off / do that 'share' thing to even more debt? As even with the 'share' thing in place, surely it doesn't mean we are now in a better financially operating position, and we will still fall into debt at some point of each if annual year?

 

[Godiva]

I'm no accountant (far from it and the following rambling will confirm this) but if we want to break even by 15/16 would this not mean they plan to write off / do that 'share' thing to even more debt? As even with the 'share' thing in place, surely it doesn't mean we are now in a better financially operating position, and we will still fall into debt at some point of each if annual year?

He says break even before interests and tax. As interests are being accrued to the debts/converted to shares and tax is zero, in reality he means break even cash-flow wise. In other words no more money from ARVO. It does mean no more loans and no more debts. That seems to be the plan.

 

[Nick]

Laura Deering appears to have not been minuted as making any comments, does she just have a listening brief on behalf of Joy Sepalla? Does this show some mistrust between Joy and Fisher/Waggott

*Macho Mode On*

Nah she is just well trained

*Macho Mode Off and carries on washing up*

 

[Godiva]

Interesting also that we should look at profit before interest not overall results. Wonder how much is expected to be charged for interest 2015/16?

I wonder if they will break even next season and what that means for the playing squad

As interests are being accrued to the debts/converted to shares it makes sense to look at profit before interests as this in reality means cash flow result.
How much they charge in interest is not really an issue as it's accrued to the debts or converted to shares - and the value of those will be determined when they sell. Till then it's paper money. Probably propping up the investors accounts.

I don't think the squad will be diminished or of poorer quality next season. The cost cutting has been in motion for years now and hopefully finally match the incomes. I think it will be down to TM to attract the necessary replacements and to get the players to play like a team. We have been there before though every time we replace the manager, so let's wait and see if it happens.

 

[rupert_bear]

If Mowbray is allowed to sign or borrow the players he wants in the same calibre as
Gavin Ward I am confident we can challenge at the business end of this division, the secret will be to keep Steve Waggott a mile away from selecting who we sign

 

[SkyBlueSid]

In a meeting to discuss budgets etc were PW & JB sufficiently well versed in finances to properly understand or challenge? No disrespect meant to either by that comment

Just for clarification, Jim Brown used to be a director of a very major bank in the City of London. I've known Jim for many years and have no doubt he could run rings round the lightweights that run our club when it comes to finance and accounting matters. He is the ideal person to be attending board meetings, I suggest.

As for Mr Ward, I have no idea!

 

[Jack Griffin]

Just for clarification, Jim Brown used to be a director of a very major bank in the City of London. I've known Jim for many years and have no doubt he could run rings round the lightweights that run our club when it comes to finance and accounting matters. He is the ideal person to be attending board meetings, I suggest.

As for Mr Ward, I have no idea!

If he is that good why not appoint him as a non executive director, lord knows the club needs some independent thinking its leadership.

 

[torchomatic]

I thought we hated him now because he signed the open letter asking for a public enquiry into the Wasps' deal?

If he is that good why not appoint him as a non executive director, lord knows the club needs some independent thinking its leadership.

 

[Jack Griffin]

I thought we hated him now because he signed the open letter asking for a public enquiry into the Wasps' deal?

Everybody makes mistakes.

 

[oldskyblue58]

As interests are being accrued to the debts/converted to shares it makes sense to look at profit before interests as this in reality means cash flow result.
How much they charge in interest is not really an issue as it's accrued to the debts or converted to shares - and the value of those will be determined when they sell. Till then it's paper money. Probably propping up the investors accounts.

I don't think the squad will be diminished or of poorer quality next season. The cost cutting has been in motion for years now and hopefully finally match the incomes. I think it will be down to TM to attract the necessary replacements and to get the players to play like a team. We have been there before though every time we replace the manager, so let's wait and see if it happens.

You see looking at it the interest or debt that way raises all sorts of questions in my mind. One of which is what benefit is there to CCFC in doing all these "paper" transactions? or if you know you cant get full value back why keep adding to the burden? or If you know that you cant get full value on debt or interest then the correct thing in terms of the investors is? But there are lots of other questions.

The total wage bill to 31/05/14 was 5.5m to get that within a breakeven situation I reckon requires shaving 2m off it if Turnover is say 6.5m. That I would think has to impact on the playing budget. And what if turnover isn't 6.5m (that's the figure in the 2013 accounts when average crowds were 10948 I believe we are well below that and could be even lower next season). The other costs tend to be reasonably fixed and with 1.25m committed to the academy apparently there is only one cost available to cut significantly. At this stage I do not share your optimism as to quality and TM hasn't committed to CCFC next season either. As you say wait and see

 

[Godiva]

You see looking at it the interest or debt that way raises all sorts of questions in my mind. One of which is what benefit is there to CCFC in doing all these "paper" transactions? or if you know you cant get full value back why keep adding to the burden? or If you know that you cant get full value on debt or interest then the correct thing in terms of the investors is? But there are lots of other questions.

Maybe it's not for the benefit of the club, but the investors? I think I said something like 'propping up their assets'?
If it doesn't hurt the club - which I can't really see it does - then I won't waste time on that.

But maybe there is a benefit to the club? Converting debts to equity increases the SMCP budget, so that could be one benefit if they decide to ride on the limit and then TM needs just one more player? I know you will immediately point to the fact this would hurt to cash-flow balance, so why not just inject new equity? And to this I have no answer.

The total wage bill to 31/05/14 was 5.5m to get that within a breakeven situation I reckon requires shaving 2m off it if Turnover is say 6.5m. That I would think has to impact on the playing budget. And what if turnover isn't 6.5m (that's the figure in the 2013 accounts when average crowds were 10948 I believe we are well below that and could be even lower next season). The other costs tend to be reasonably fixed and with 1.25m committed to the academy apparently there is only one cost available to cut significantly. At this stage I do not share your optimism as to quality and TM hasn't committed to CCFC next season either. As you say wait and see

I agree, but without full access to the current books all we do is speculate. Your previous point about the SCG is valid - they should be able to ask these questions to the board and be able to weed out the nonsense to make sure the numbers actually stack up. If turnover is £6.5m then the wage bill cannot exceed £4m (SMCP) unless the owners convert debt to equity. So wage bill must surely be significantly lower than 2013/14.

 

[oldskyblue58]

Maybe it's not for the benefit of the club, but the investors? I think I said something like 'propping up their assets'?
If it doesn't hurt the club - which I can't really see it does - then I won't waste time on that.

But maybe there is a benefit to the club? Converting debts to equity increases the SMCP budget, so that could be one benefit if they decide to ride on the limit and then TM needs just one more player? I know you will immediately point to the fact this would hurt to cash-flow balance, so why not just inject new equity? And to this I have no answer.



I agree, but without full access to the current books all we do is speculate. Your previous point about the SCG is valid - they should be able to ask these questions to the board and be able to weed out the nonsense to make sure the numbers actually stack up. If turnover is £6.5m then the wage bill cannot exceed £4m (SMCP) unless the owners convert debt to equity. So wage bill must surely be significantly lower than 2013/14.

To be honest I do have some technical questions regarding the disclosures etc but I am not going to put them up on here - I can just imagine the eyes glazing over :laugh:

It seems to me they chose to make Otium worse by adding on internal debt then converted to preference shares saying "ooo look what we have done aren't we good" when in fact the Group picture didn't change at all because of it. The reality is it is still legal debt. Do not see why they transferred paper debt in to Otium at all if it were to benefit CCFC. But I think we both agree the benefit was potentially elsewhere. Then again if the preference shares are infact worthless is there, because the investment report would have to show that wouldn't it? Anyway, we wont get a proper explanation from the club, its done and wont be changed, and in actual fact doesn't affect any potential deal for the sale of CCFC because in my opinion Otium is pretty much toxic and any purchaser would do it through a new company

As to the wages the 5.5m represents all wages not just the SMCP ones so the total could be more than 3.9m. At Sixfields (2013/14) the turnover was 3.75m so say they budgeted that for 2014/15 originally. We also know there were £1m in shares issued in the 2015 year end plus net transfer fees of 2.1m. That's without flexing budgets because of the Ricoh return. With all the loans in, the players we did bring in, are we certain of the final wages figure for 2014/15 being significantly lower? We were told repeatedly that they spent all the budget - well that for SCMP would be 4.11m even without the income boost of the Ricoh. Guess we wait see next February when accounts are filed but something doesn't seem right.

In fact wasn't the 2013/14 SMCP budget (turnover 3.75m plus sale of players 1m less purchase of players 150k plus shares issued 3.295m) x 60% = 4.737m

both years we had competitive and similar L1 budgets and what did we achieve?

I have emailed the FL to ask about loan conversion to equity and if it counts in the SCMP calculation - if I get a proper reply I will let you know. But if it was utilised in the SMCP then why would you do it all in one go.

 

[Godiva]

To be honest I do have some technical questions regarding the disclosures etc but I am not going to put them up on here - I can just imagine the eyes glazing over :laugh:

It seems to me they chose to make Otium worse by adding on internal debt then converted to preference shares saying "ooo look what we have done aren't we good" when in fact the Group picture didn't change at all because of it. The reality is it is still legal debt. Do not see why they transferred paper debt in to Otium at all if it were to benefit CCFC. But I think we both agree the benefit was potentially elsewhere. Then again if the preference shares are infact worthless is there, because the investment report would have to show that wouldn't it? Anyway, we wont get a proper explanation from the club, its done and wont be changed, and in actual fact doesn't affect any potential deal for the sale of CCFC because in my opinion Otium is pretty much toxic and any purchaser would do it through a new company

Not necessarily as no debt of significance is external. The hassle of transferring the GS and players contracts could make it difficult (and we certainly don't need another administration!). So I think writing off the debts and agree a price for the shares would be the preferred process. But I do agree - Otium is toxic as it is.

As to the wages the 5.5m represents all wages not just the SMCP ones so the total could be more than 3.9m. At Sixfields (2013/14) the turnover was 3.75m so say they budgeted that for 2014/15 originally. We also know there were £1m in shares issued in the 2015 year end plus net transfer fees of 2.1m. That's without flexing budgets because of the Ricoh return. With all the loans in, the players we did bring in, are we certain of the final wages figure for 2014/15 being significantly lower? We were told repeatedly that they spent all the budget - well that for SCMP would be 4.11m even without the income boost of the Ricoh. Guess we wait see next February when accounts are filed but something doesn't seem right.

In fact wasn't the 2013/14 SMCP budget (turnover 3.75m plus sale of players 1m less purchase of players 150k plus shares issued 3.295m) x 60% = 4.737m

both years we had competitive and similar L1 budgets and what did we achieve?

I have emailed the FL to ask about loan conversion to equity and if it counts in the SCMP calculation - if I get a proper reply I will let you know. But if it was utilised in the SMCP then why would you do it all in one go.

Didn't we suffer a 'silent' transfer embargo while at Sixfields? One that was not really debated or noticed? In case we did, that would be down to exceeding SMCP.

It's great you have bothered mailing the FL. When reading your post I seemed to remember reading somewhere that new equity counts 100% in the SMCP/FFP calculation, but a reply from FL should clear that up.

Every year we see new accounts and every year we seem to say 'oh well, we'll have to wait another year to make a comparison of this or that'. Problem is that next year will also be different from the previous (Ricoh/Sixfields) - we haven't really had a consistent period while sisu have been here. Must be a nightmare for analysts like yourself.

 

[NorthernWisdom]

If he is that good why not appoint him as a non executive director, lord knows the club needs some independent thinking its leadership.

Hmmm, wasn't the last one of those Labovitch?