Saturday, 9 June 2012

Mirages of hope

As mentioned in my previous post I'm returning to Franchise's finances and the role of the parent company, Inter MK. I've left it until now for one simple reason - it's basically irrelevant. Why waste time on it then? Well, it does at least help frame what's happening at Franchise, but be under no illusions, what happens at the parent company in no way guarantees anything for the football club itself. Why? Because the fact that Inter MK owns 'Milton Keynes Dons Ltd' does not mean the football club gets access to Inter MK's funds. Like any other football club owned by another company, Franchise is at the whim of its owner as to what funds are sent its way. Franchise has traded at a massive loss for every year of its existence, so Inter MK has been forced to spend a great deal keeping it afloat, but that does not mean it will continue to do so, as I'll explain.

The first thing to understand is that Inter MK is a property development company - that is the category it comes under at Companies House. Businesses have to declare what business they are in and Inter MK is in property development. This may not seem important, but you simply would not believe the number of Franchise customers that can't grasp the fact that Inter MK does not exist to run a football club, but exists to make money from a property development. Understanding this is crucial - although a handful of the usual suspects among the Franchise customers still persist in trying to convince others that Inter MK will support Franchise regardless, but they are either fools or knowingly lying.

The numbers
In the 2010-11 financial year Inter MK, for the first time, made an operating profit - £1.5m. However, its turnover was only £0.7m, the profit largely coming from a "reversal of prior period stock provision" that amounted to £1.35m. What that actually meant was that the company revalued a piece of land as being worth £1.35m more than stated in the previous accounts. And what that means is that all this is largely being played out on paper - we're not looking at money that will ever be trickling down to a football club.

Inter MK had stocks (development property) valued at £13.6m and debtors valued at £10m, £9.9m of which was "Amounts owed by group companies", which, you guessed it, is the football club. What shows up as £10m debt to the football club is £10m that Inter MK is owed. Don't lose track of that, because that £10m isn't going away - Inter MK can't just write it off without it having some big repercussions.

If you think things aren't looking too bad so far, check out Inter MK's debts - £10.5m falling due within one year (including £8.5m of bank loans) and a further £8.6m falling due after more than one year - a total of more than £19m. That's set against total assets of over £23m, but £10m of that is what the football club owes the parent company and we all know Inter MK is never seeing a penny back from a loss-making football club. Take the club debt out of the equation and Inter MK has £6m more debt than it has assets. Ooops.

Let's not get carried away though, because it's not as simple as the back-of-a-fag-packet maths above. Inter MK is clearly capable of servicing the current debts through the ongoing property sales, but it's not an endless supply of land to flog and at some point Winkelman still has to find his exit route. And on that subject...

Don't forget the S106
The last note to the accounts reads thus:

"On 7 November 2011 the Group completed the sale of Site A (MK Retail Park). The proceeds from this transaction have been used to reduce bank debt by £8.5m and will facilitate the completion of Stadium:mk, as required under the S106 agreement attached to the planning permission granted for Site A"

That's right, they still have not finished the stadium and therefore still have not fulfilled the terms of the S106 agreement with the council. More than 10 years after stealing away Wimbledon's football club to facilitate his property deal, Winkelman still hasn't completed his contractual obligations under the S106 and therefore STILL does not have full ownership of the stadium. That's why he's still desperately struggling to make all this happen, because until he finishes the stadium he can't cash in on it properly and clear his exit route. Give the man credit, he had a vision and has spent more than 10 years trying to make it happen - he just shouldn't have killed my football club to facilitate it.

10 years on
Incredible to think that it's more than 10 years since the outrageous decision of the FA Commission and the sequence of events still hasn't played itself out to a conclusion yet... Winkelman still hasn't completed his property deal and so still needs a facilitating football club, which still loses money hand over fist and still clings to the nicked-name of a football club and town that it has nothing to do with.

And what does all this mean for Franchise FC? Inter MK's operating profit for 2010-11 means precisely nothing - there is no extra cash for a still-failing football club, just enough funds (mostly in the form of bank loans or transfer fees) to keep it limping along until the stadium is finished. It has been highly amusing to see the usual suspects claiming things are getting rosier for Franchise because of Inter MK's one operating profit, but it's only themselves and some ill-informed Franchise customers that they're fooling. The grim truth remains that Franchise FC is no better off now than Wimbledon FC was more than 10 years ago at Selhurst Park and with no more guarantee of a future. And that really is the truth, no matter what the spin merchants and lickspittles round Franchise way try to peddle to gullible customers.

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