Thursday, 6 October 2011
Much is made by Franchise customers of their new club's 'prudence' and 'sustainability' financially, but as we've seen, this simply isn't true. (http://truthaboutfranchisefc.blogspot.com/2011/08/franchise-finance.html and http://truthaboutfranchisefc.blogspot.com/2011/09/franchise-finance-2.html) The root of the problem seems to be the inability to tell the difference between a self-sustaining club and one 'sustained' by the millions of a billionaire investor. Since the ASDA cash departed the scene, Winkelman has been having to find the cash to fund the football club's huge losses from elsewhere - other retail plot sales, player and manager sales and, of course, the loan from Clydesdale Bank. But there's a big problem looming - he can't keep selling land indefinitely, there's only so much player talent to sell and he can't afford to keep increasing the bank loan. (Indeed, the £5.5m loan is due for repayment in July 2012.)
Something's got to give. We've already seen Franchise FC's star striker sold to West Ham and virtually none of that cash went on buying a replacement. It's no secret where the rest of it has ended up. Check out this article from earlier this year (February) after Franchise had further slashed its wage bill and before flogging the star striker:
There are some juicy tidbits in there, including this:
"Where is the sustainability of a business losing £3million? We try to lose about £1million now and some may say even that’s not sustainable."
'Some may say'? What a curious phrase to use. Since he is the owner of the club via his own InterMK property development company (that's how it is classified at Companies House), either he thinks it's 'sustainable' or it's not. If even he's admitting doubt about the club's sustainability, you know how bad things must be.
What he's revealing here is that at times the club has been completely unsustainable - no surprise there, the yearly assessment in the accounts that the club was only treated as a 'going concern' (instead of being declared insolvent) was because of the parent company guaranteeing to meet the losses each year.
What he's not facing up to though, is that as of the 2009-10 results, the club has NEVER succeeded in losing as little as £1m a year. (http://truthaboutfranchisefc.blogspot.com/2011/08/franchise-finance.html) As Yoda said, "Try not. Do or do not, there is no try." Winkelman may be 'trying' to lose only £1m per year, but he's failed to do that every year so far. He's obviously watched Brewster's Millions too many times!
Remember that Winkelman is not personally that rich - he's no Russian oligarch - so he personally cannot sustain the sort of losses that he's allowed the football club to keep trading at. So, either Franchise FC is going to have to become self-sustaining pretty quickly - something it couldn't manage on gates of 10,000 and it's getting less than 8,000 now - or it's going to have to find a new investor to pour money down the Franchise drain, but this time there'll be no supermarket wanting to avoid planning rules, it will have to be someone who really wants to own a football club. Who knows, maybe Red Bull will want to brand the stadium and take the club off Winkelman's hands?
One thing we can be sure of though - Franchise FC hasn't been self-sustaining ever and even its owner has admitted it's been unsustainable, while suggesting even he thinks it may still be. So, when Franchise customers try claiming their club is sustainable, just remind them of their owner's words... "Where is the sustainability of a business losing £3million? We try to lose about £1million now and some may say even that’s not sustainable."