Like other shareholders, along with this morning’s bills I received notice of a general meeting to approve the sale and sale/leaseback of properties in which the club holds interests (approval of course being a formality). I hope I have understood the details, which seem to me to amount to certain directors or affiliates buying the freeholds of the properties concerned and, where relevant, leasing them back to the club. In essence, the club is generating some £1.5m in working capital (ie loss-covering) from fresh commitments on the part of some directors.
The properties concerned are the Aries Sports Ground at Sparrows Lane, the Ex-Charlton Park Rugby Ground in Eltham, and properties in Lansdowne Mews. The first two are to be sold for £1m and leased back to the club, so that there will be no actual impact on training facilities. The third, which according to the document were purchased on a speculative basis in 1999 and 2005 (presumably related to expansion plans for The Valley), are to be sold for £0.5m, with the club retaining a right to repurchase them at some future date if appropriate). In addition, to help with the transactions, Derek Chappell has made a short-term loan to Charlton Athletic plc of £0.5m and the directors who invested in the corporate bond issue have agreed to defer the interest due on those bonds for the current financial year.
First off, if there were any remaining doubts these are not the actions of a company that is preparing to go into administration (which given the news concerning Southampton is clearly welcome - damn it, a few months earlier this might have made a difference). I would be inclined to view the news as further evidence that there is nothing to be gained by such a move, given that the bulk of the club’s debt is to current directors and the bank, with bank loans secured against The Valley (such that administration would involve the sale of the ground), and that players' contracts are now ring-fenced. Second, the moves amount to fresh commitment of funds to the club from some of the directors. They are receiving assets in return, but hardly ones that offer any opportunity for short-term gains.
With the club announcing the prospect of redundancies among staff as a result of the loss of parachute payments, it is worth keeping in mind that the directors are once more putting their hands in their pockets to keep Charlton going. It is sad to see the announcement of prospective redundancies, but hardly surprising. (What is sad is the need to follow employment regulations such that it is no longer possible to simply confirm redundancies, however painful for the individuals concerned; instead there has to be the pretence that it is only ‘risk of redundancy’.).
And when reports and comments cite the figure of £10m for cost savings resulting from the loss of parachute payments, let’s not forget that the actual cuts will be higher as a result of relegation. At the AGM it was indicated that relegation would mean an additional £3m having to be found. It is possible that the fresh injection of £1.5m will form part of the £13m, but just as possible that anticipated losses this season and next have been revised up since the AGM and that this will mean that the amount will be swallowed up. It is fair to assume that news of an additional cash injection is not in anticipation of a bid for Ronaldo.
None of this should be surprising, but in all comments on players we want to/should keep, management changes etc it has to be kept in mind that the next year or two for Charlton are about survival, pure and simple. We are fortunate in having a board that is committed to the club, but there seems no realistic prospect of a sugar-daddy coming our way in the near future, the economic environment means that season ticket sales and revenues from matchdays and merchandising are going to be severely hit, and in any event relegation brings its own consequences. Even from my sixth-form business studies I remember that the primary goal of a company is not making a profit but survival.
No, the news that Charlton have won a prestigious award for community efforts doesn’t set the pulses racing. But in the current environment it is only through doing all possible to retain the backing of the local community and supporters that survival prospects can be maximised. Whether its the entirely welcome Fans Forum, the possible recreation of the supporters club, or other initiatives it isn’t the time to be cynical about initiatives which may not revolutionise our prospects but which hopefully will contribute to us coming back stronger, however long it takes.