Monday, 29 August 2011

Stadium ownership and why it matters

One thing it has always been difficult to get Franchise customers to understand is how their new club is in fact no better off than Wimbledon FC was at Selhurst Park, because Franchise FC doesn't own the stadium it plays in. You will encounter no end of stupid responses to this fact, usually based on the ironic notion that Winkelman won't abandon the football club. Explaining to them that that is exactly what most Wimbledon fans would have told anyone asking during the late 1980s and early 90s about Hammam, tends to fall on deaf ears, with the same mantra about trusting Winkelman coming back.

Conveniently, the customers have had a relevant thread in the last couple of days, located here:

It features a number of extraordinarily misinformed and just plain dumb comments about Franchise FC's lousy financial position, but let's pick out the matter of what the football club actually owns, what it owes and what that means for its future. Here's what one, apparently respected for some strange reason, customer said:

"We have the backing from Clydesdale to secure this club for another 12-15 years on the basis of that level of annual loss."

This is the first catastrophically wrong assumption. The football club only has a small chunk of the overall bank loan (which is to the parent company) available to it and that has to be repaid by July 2012. The matter of the football club running out of money is therefore both immediate and pressing. As ever, it demonstrates the inability of some Franchise customers to tell the difference between the football club (a Limited company in its own right) and the parent company (InterMK), which exists largely as a property development company.

Astonishingly, it goes on to say:

"Debt is not an issue, just the ability to service that debt."

Not an issue? It really is astounding how little some people have learned both from the Wimbledon FC saga and from the troubles of other clubs. Their football club has never managed better than losing just under £1m in a year, yet they think a debt that just keeps getting bigger isn't a problem. They also presume that future losses will be reduced, when attendances have fallen and costs risen. Some might call it optimism, but I'd call it reckless lunacy.

So let's look at the football club's accounts again and see what assets it has to justify its position. Remember that the football club's debt (2009-10 accounts) is over £10m. Current assets, including fixed assets (tangible and intangible) and current assets (stocks, debtors, cash at hand) amount to £1.6m. Oh dear. That is a huge gap.

For comparison, bear in mind that in Wimbledon FC's last set of audited accounts (2000-01), the same calculation of assets came to nearly £11.8m. WFC was still trading at a loss that year of course, but just look at the disparity in assets - and WFC didn't even own Selhurst Park! So, what we have in Franchise FC is a football club with virtually no assets at all, other than a few player contracts, which clearly don't amount to much.

This being football, player assets can rise quite quickly, so it's no surprise Franchise has had to cash in its one major youth player development to West Ham recently. The underlying message from the football club's accounts though, is that there's very little for the club to call on - and certainly not the stadium.

Why does it matter?

Here's the crux of the matter... It matters because without assets the football club is literally no better off than WFC at Selhurst, and you can even make a case for it being worse off, particularly because it doesn't have the established youth development program WFC had.

And what of Winkelman? The Franchise customers sole hope is that Winkelman, through InterMK, will continue to prop up a football club that would, without his yearly guarantee of funding (presumably derived from the property deal), have been declared insolvent every year since 2004. Which brings us full circle back to Hammam and Wimbledon FC. We all trusted him once too - near worshipped him for overseeing Wimbledon's elevation to the top flight and FA Cup win. And yet he wasn't, in those days, even as blatant about his property dealings using the football club as a bargaining chip or makeweight as Winkelman is.

Ironically, it will of course be far too late to do anything about it when the majority of Franchise customers realise just how vulnerable a position their football club is in, with virtually no assets and just the whim of one man as to whether it survives or not, but if/when the day dawns that Winkelman tires of his plaything or runs out of money, I doubt there'll be much sympathy for customers who've never shown interest in doing the right thing by Wimbledon fans or even in getting Winkelman to do what he told the FA Commission he would.

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