Friday 24 August 2007

Reality Can Be Uncomfortable

These thoughts were put together before I saw those attributed to Alan Pardew regarding the possible fresh investment in the club, which play down any thoughts of an outright takeover. I was going to just bin them, but the link from Forever Charlton was already up, it's Friday, and what the hell ...

Contrary to some other blogs, I have been surprised by the absence of speculation/comment following confirmation that the club has engaged Seymour Pierce to explore fresh funding options options, up to and including a full takeover. I take this to be positive, something akin to a fully-merited mark of respect for (and confidence in) Richard Murray and his board.

I imagine a number of bloggers have a problem with this one. Any informed insight into likely developments has to come from those with close contacts with the club and/or Murray personally. Clearly there are confidentiality issues here and others will quite rightly not compromise their contacts and personal confidences. So I do feel it's important that anyone spouting off on this one clarifies whether or not what they say is informed or purely speculative. For my part I have no contacts with the club, have absolutely no way of knowing what Murray in particular is thinking, and to the best of my knowledge have never met any of the board. So what follows is entirely speculative (which is a much nicer phrase than total bollocks).

What concerns me is a possibly strong element of wishful thinking in what is being written elsewhere. Because we have confidence in Murray he will do nothing that ... etc. We all know what we want - someone with enormous amounts of money ready and willing to hand it over to the club in return for: well, nothing. We don't want to move, we don't want the style of management to change. We just want the dosh. Doesn't sound likely, does it, especially given our collective failure to unearth new famous/wealthy Charlton supporters in recent years (I haven't given up entirely in my hopes of one day buying the club, but I'm not sure that the current or future owners will agree to my precondition of playing centre-forward)?

What is missing is some inside assessment of why there is a perceived need for fresh investment - and why now? On the grounds that if something isn't broken don't fix it, and bearing in mind that the club is not operating from a position of strength (compared with a year ago), the possibilities would seem to be: one, the club has a real financing crisis; two, the board feels that the time is right to investigate fully whether there are options available that would make sense for the long-term development of the club; three, Murray and/or other key figures have decided for whatever reason that they want out.

A full-blown financing crisis has to be seen as the least likely of the three. In that event the news would surely have been of fresh interim financing, either with a new investor or bridging finance while the club looked for new owners, or of talks with a view to debt restructuring. What is more likely is that the process of repositioning the club following relegation is prompting some reassessment by the board of what is possible regarding long-term development without fresh funds.

That said, according to Companies House the next set of accounts for the plc are due by end-January 2008. The last filed accounts were to end-June 2006 and the figures for last season are surely going to be awful. Everyone is surely aware of this, given the transfer and wages policy adopted, plus extra spending on management. As and when the accounts are released questions could be asked about the club's viability and the extent of subsequent cost-cutting. But the assumption has to be that the money raised with the sales of Bent, Young and Diawarra, plus the savings on wages from those released, mean that the club is not facing a fire-sale.

So is the board just assessing it's options for the long term? Possibly. It is reasonable to suppose that if we fail to bounce back this season there will need to be fresh financing adjustments for next season. In effect the current board may be saying that it cannot provide the sort of funding needed for a fresh promotion drive and that we are still living beyond our means, with parachute payments not lasting for ever. In this context exploring available options can be seen as sensible (especially as relegation has knocked some £30m off our valuation and a failure to return to the premiership this season or next would surely take off another substantial sum).

I just doubt that this is the whole story. The only personal experience I bring is that of selling a company which I started and had a great deal of personal commitment to (for what it's worth the company subsequently went for flotation that was handled by Seymour Pierce, but it was a long time ago). There had been offers for a few years, all of which I turned down as I was not inclined to sell (at least not for the amounts offered - everything does have its price). But it reached a point where I decided selling was the best option. Then it was a case of just casting around for the best available offer. Once the mental switch in favour of a sale had happened there was no going back.

Again, I have absolutely no way of knowing what Murray and others are thinking. But it's reasonable to suppose that their jobs have become a great deal more difficult - and a good deal less enjoyable - since the departure of Curbishley. Previous years had been about letting Curbs get on with it, with agreed and conservative financing, and basking in the plaudits of being everyone's model development club. We supporters loved it too.

Peter Varney's mea culpa at the end of last season was informative. He said then that he had to take some responsibility for relegation; Murray may feel the same way. In truth, were it not for the accumulated goodwill and the appointment of Pardew the closing stages of last season could have been a good deal more uncomfortable for the board. However unfair we did move very quickly from model club to laughing stock. Could this situation have prompted something of a crisis of confidence at board level, or at least a feeling that it is time for new blood?

I do feel that the pivotal point for the club came not so much with the departure of Curbs but about a year earlier. The evident lack of demand for season tickets for the 2005/06 season must have shocked the club's management. All thoughts of further expansion of the ground had to be put on hold - and without a realistic prospect of taking capacity above 30,000 and to a level compatible with premiership stability Curbs' motivation may have started to wane. The England job debacle, following the Murphy/Smertin episodes, may have finished him off for us (and of course there are parallels for Bolton this season). It's a real cliche, but if you're not going forward you're going backwards.

Given all of the above - and the chances are that there is no single overriding reason for the shareholders to be considering options, just factors which tilt the balance - I would be surprised were the appointment of advisors not to result in significant changes to the ownership of the club. The speculation shortly after relegation (the widely-reported rumours then concerned a full takeover by a group of businessment from the Middle East and Europe) quickly disappeared, but this time it just feels different.

There seems to be a general response that a takeover of the club automatically means money invested in new players and/or ground development. It's a reasonable assumption - on the grounds that anyone buying the club will want the valuation of the asset to increase and this has to be through expansion - but no more. The shares in the club constitute ownership of the club and it is the shares that are bought. The money changing hands does not go to the club but to the owners of the shares. Of course any deal can involve fresh issue, or a clearing of the club's liabilities. But more money for Pardew to spend in January is not a given.

There are some other uncomfortable issues. If there is a full sale of the club to outsiders it is inconceivable that they will have the same feelings for and commitment to the history and traditions of Charlton Athletic as the current board. If I was buying the club I would at the least be exploring the options of moving away from The Valley. Again, we may be confident that Murray would never sell to someone ... etc. But it would be a very strange agreement that included a clause always to remain at The Valley.

Before Curbs left the desired 'next level' for the club was ground expansion to cement premiership stability, with a top 10 finish and to be competitive in cup competitions. Last season was all about avoiding relegation. This season is all about bouncing back, by whatever means. But anyone looking beyond this season has to come back to an ability to compete in the premiership and more bums on seats being a necessary condition for this.

If the current board feel that this has to involve fresh blood more praise to them for realistically assessing their options. That sense of reality has to extend to the supporters in the event that some uncomfortable issues rear their ugly heads. And to anyone who has had the time and inclination to get this far let's just add that three points on Saturday and the world will look a much happier place.


charlton north-downs said...

Fantastic post Blackheath and I would agree there is something more than we are being told in snip-its on the Charlton Web-site. My hunch is that Murray and Co feel they have taken the club as far as they can and without further heavy funding they will never achieve their and our dream of moving the club to the next level. This all feels so different to the last relegation and we may have to be patient and hope the team gels sooner rather than later, or we could be in the same boat as Norwich, Ipswich, Southampton and God forbid Palace.

Anonymous said...

we gambled everything we had on Dowie - and lost.
We are prety much finished for a decade unless someone comes in and shakes the whole thing up. I doubt that their motives will be entirely for the benefit of the club - so this talk of a takeover is worrying. But, be calm, hold fast, and fret not, for we have a fans' elected supporter on the board - so nothing bad can happen (sarcasm).