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BWFC Guest Article: Aussie Mike's Financial Musin



Thanks for the article, Mike. You've certainly done your homework and Davies and Gartside certainly take a scalding.



I often read comments about the financial turmoil our club was engulfed in when P.Gartside took over the helm in the late 90`s, I remain unconvinced this was the case at all, similarly I have never swallowed the patronising hype that Eddie Davies has and forever will be our financial saviour, someone we should be forever humbly grateful towards no matter what.

I am known for my personal criticism of the aforesaid gentlemen and with good reason, but for the benefit of this article I prefer to leave self opinion aside and reflect on the facts.

In 97 Gartside became Director alongside Brett Warburton, Gartside an accountant by profession while Brett had his MBA from Harvard, I wonder how the clubs fortunes may have changed had Brett been free to take the mantle of Club Chairman instead of Gartside, alas family business interests came first for Mr Warburton. Shortly thereafter Duckworth became Director C. Executive in 98 followed by E Davies joining the board in 2000. We are all aware at this time Big Sam led the club into the premiership from where we enjoyed 11 seasons raking in the Sky money, from which we departed in 2011/12 under Owen Coyle`s failed management. Club accounts indicate at the time Gartside took over we had 8 million cash in the bank and circa` 5 million of debt, in theory we were in the black by 3 million. Fast forward to 2012 and our relegation into the Championship, after 11 years and circa 400 million of Sky TV revenue, the club sat on a meagre 500,000 cash in the bank and 144 million of debt, thus over 11 years we had blown 540 million, that`s over half a Billion - mind boggling.

For an accountant in charge this represents financial failure on a huge unprecedented scale. But these figures alone mask over a far more worrying scenario of financial trickery and exploitation going on behind the scenes. It is reported in 2011 that the 2008 accounts show the club negotiated a loan from E Davies for 4.5 million at 10% interest with a 623,000 arrangement fee, that equates to 15% of the loan itself which is startling to say the least, if you factor in the huge interest the club has paid circa 2 million costs to borrow 4.5 million, that is Wonga territory nothing beneficial or sensible about this deal. In 2012 as relegation hit us the club paid one director ( Duckworth) 858,000 including 100,000 bonus and a 397,000 pay off - why ? the club had previously paid Duckworth & Gartside annual bonuses circa 150,000 +, why again ? Unless rewarding their perpetual failure is entirely justified with debt increasing by around 25 million a year. The club also paid certain Directors 62,000 a year in pension contributions, over a 1,000 a week to a personal pension - which planet are these men on ? Over and above this Gartside received 532,000 in pay for 2010 and he is noted as personally having 18.6 million shares in the club.

All in all these factual snippets illustrate the flamboyant financial benefits certain individuals take from the club while everything around them is burning to the ground, in part I am tempted to consider such benefits have been bestowed on those classed as allies, who have assisted and supported the financial restructuring of our great club to suit the individual interests of one man - our beloved owner Eddie Davies.

As we know virtually all of the club debt is owed to Moonshift Investments Ltd, owned by Fildrew Private Trust, an offshore company registered in Bermuda, both ED family operations. Offshore Trusts have one primary purpose to evade tax and the scrutiny that UK registered companies are exposed to, they are simply self manipulated operations designed to benefit the individuals who run them. Christian Aid, the world wide respected charity that fights poverty have published an interesting report covering the offshore companies that have taken a stranglehold over British Football Clubs, they claim " the deployment of financial secrecy by business entities to minimise tax liability and accountability " " the anonymity of tax havens hides the financial meltdown of our football clubs with club supporters in particularly being betrayed "

Christian Aid studied a wide variety of criteria to formulate what they call an Opacity Score, designed to highlight the reluctance of individual clubs to share information in the public domain and hide the same, for what it is worth BWFC received a score of 83 from 100. In summary they state " financial secrecy comes at a price jeopardising the very existence of a club, the financial crises created can destroy a club which for generations previously sat within the very heart of the community it serves " " transparency now sits in an unmarked grave, we cannot trust what we cannot see " " tax havens are washing stations for dirty money, the intangible figures placed on player values hide the murky waters " This report provides much food for thought.

I now shed the light on the patronising hypocrisy our club feeds us the supporters, Gartside reported in the 2012 accounts " our aim is to get back in the premiership to build on the progress made across the business model, club facilities are one of our biggest assets vital for future revenue generation " really ? and what progress is he referring to ? the main success emanating from the club is the financial benefits he and his directors receive. He talks about our valuable assets of which the De Veres White Hotel is a shining example, why is it the 2012 accounts show the club was unable to pay a 2 million loan repayment to De Veres ? One of the primary legal obligations placed upon the club directors " they must make judgements and account estimates that are reasonable and prudent as they are responsible for safeguarding the assets of the company " Why then following the fire sale of our best players in 2011 such as Cahill, Al Habsi, etc did our directors claim in the 2012 accounts the value of the current squad is placed at 50 million ! - we are talking about the same squad of players we have now, whom we would struggle to get 5 million for. For me this polarises the utter lack of accuracy and the financial abuse prevalent across the club, it has been rampant for years, orchestrated by Gartside and Davies who have taken a leaf from the bankers charter - look after yourself and screw the club and its supporters.

As recently as April this year the Guardian reported on the annual interest paid to ED " 5% interest is a very nice earner indeed under current market forces " reference is also given to how ED cannot cover the debt we owe from his personal wealth, that he must be using institutional loans, subsequently our plight does not sit with ED himself as he will never sacrifice his family fortune on the club, we are slaves to the faceless bodies he has borrowed the money from. Finally I cannot help but recall the press statement made by Coyle to the Telegraph in January 2012 " we are in a fantastic position to progress, come the summer we will be in the best position the club has seen for many years, we sold Matt Taylor & Al Habsi to fund buying Mears & N`Gog " how utterly hollow those statements have become, as a poodle to Gartside, Coyle epitomises everything that leaves a bad taste in the mouth.
The Journalist

Writer: aussie mike Mail feedback, articles or suggestions

Date:Sunday October 13 2013

Time: 6:39PM

Your Comments

Sorry, I ran out of room for the heading. It should have read 'musings'. Anyway, enjoy everyone.
bwfc_85
great article mike. informed and authentic, you could of gone on a tirade, but you kept it professional. good on you mate. very good.
bowton_wanderer
Frightening to say the least. Eventually this must come to a head when Gartside and Davies have drained every last drop out of the club. If it is so easy to find out this information why has nobody challenged it? Surely Mike is not the only person who has looked into this and seen what is happening to our club?!
Danfarn80
it would be wrong of me to attack individuals who do not merit the criticism and the confusing financial spread sheets that make up the typical annual accounts are near impossible to translate by anyone other than a professional. Like the rest of you I worry about the club we support, I focus on the financial state as that dictates the options available for the team, can we ever afford to have quality players wearing the shirt ? it looks more unlikely with each passing season. In a nutshell during the good times those in control enjoyed the riches available to them with scant regard for the consequences if it went belly up, having financially adept people in control is no substitute for having those with football brains in charge. There appears to be no accountability for failure, these people continue to line their pockets regardless, do we know for example how many hours a week Gartside puts in for his wages ? no idea. When you think of the millions that flow out of the club each year and the hundreds of thousands going into individual pockets, the one solitary figure in the 2012 accounts that stuck out more than any other - how much the club donated to charity - 3,500 !! ED & PG should hang their greedy heads in shame, they certainly don't need an offshore operation to manage the money they give to good causes. For all the supporters who do voluntary work for charity or rely on charity to support their needs, it may be to help disabled children and family members, our great club is not that great after all, in fact its a disgrace.
aussie mike
The one question I can answer with absolute certainty is the De Veres loan question. The club were involved both in legal action against the hotel for breach of contract (it was basically alleged that they weren't paying the club their fair share) and also in negotiations to take over the hotel, a process which has now been completed at a knock-down price in return for staying out of court. So it looks like it was just good old-fashioned hard bargaining on PG's part, albeit with an evil nefarious backdrop, but that's business for you - you play nicely, you get squished, you play nasty, you do the squishing. De Vere wanted to sell four sites in order to fund the building of 18 new ones, but they didn't get quite as much cash from ourselves as they were hoping and I think it's been scaled back to 15 as a result. As far as charitable donations are concerned, whilst it's true that the amount of cash donated is very small indeed, the club gives away a mind-boggling amount of signed or rare memorabilia to various charitable organisations in and around Bolton. Bolton Lads' and Girls' Club, for example, a club whose basic stated aim is to help disadvantaged children in Bolton and keep them off the streets, get nearly a hundred such items per season, and auctioning them off to the richer businessmen in the borough puts over 100k in the coffers. Youri Djorkaeff's golden boot for top-scoring for us in the 2002/03 season (he actually tied on 7 with Okocha and Pedersen but I never tell people that when they ask about it) is sat on my mantelpiece, and the person who bought it for me (for my 30th, mind) was 400 lighter at the end of that particular charity do - and it was the cheapest item BWFC donated. The biggest one was a full corporate box with all the trimmings for a match, that went for silly money. They could have just set up their own auctions page on bwfc.co.uk, but they're not that cynical.
robmoss2k
Very informative Mike, do you have any figures for the kind of wages we were paying out during the 'BSA Glory Years'? I would be interested to know how that contributed to the amount of debt we are currently in. I understand your point that ED may not be the saviour that some people make him out to be but the fact that he has invested a huge amount of money into BWFC means we have a club to support and you have a club to write articles about. At the end of the day he is a business man no different from any other business man and he is not just going to give his money away for free, it needs to be worth it for him. While you focus on the deficiencies of the owners and chairman, you decline to mention positives like the transfers in that they have sanctioned over the years, players like Djorkaeff/Okocha/Hierro/Campo/N'Gotty/Bobic/Anelka/Stelios/etc that many clubs could only dream about.
moonpig1
to moonpig, we would always have our club, BWFC, regardless of owners like ED, the question to ask under the circumstances is had ED not taken ownership would we otherwise be sat today with 144 million of debt. There is no true answer, however we know accountancy practice over a decade high jacked our illustrious Sky TV revenues and instead of the monies being used to protect the club, decisions and gambles bordering on gross ineptitude, both with managers and player acquisitions alike have created untold permanent damage. The lack of football brains and acumen from those in control, who move figures around on a balance sheet with great aplomb, constantly eroding the quality of the team with every bad player deal they enacted, piling debt on top of debt each season exposed the clear unpalatable truth that they are useless - they are out of control and out of there depth, yet they still persist because the club is the fatted calf that keeps them in the luxury lifestyles, feeding their egos and power base. To run a football cub successfully you need a good manager and good players, the last thing you need is a power mad accountant with business mates and offshore trusts. As for the players other clubs can only dream about I note you don't mention our current squad, nor do you say other clubs would dream to have our debt, if we are talking dreams lets just BWFC has been transformed from a dream into a living nightmare, courtesy of those you seem to applaud.
aussie mike
No one was mentioning debt when we were finishing in the top 8 and in Europe, people were saying spend more, go for the Champions League, people had a go at Gartside for not 'backing' BSA when we were 4th going into January. Now it is why did we spend so much. The PL is a beast and you need a huge wallet to hang on to the beast's tail. A club our size cannot sustain that kind of success, especially after the BSA era when he left knowing that his plan was unsustainable and about to blow any time. Mistakes have been made but the same people who have made those mistakes have also given us among the best times fans of the club have experienced. Would you rather have never gone up and never experienced what we did in exchange for no debt? Everything comes at a cost. What we achieved couldnt have been done without racking up debt, especially for club our size who regularly broke into the top 8. I know the players we have now arent a touch on the ones i mention but i believe that the manager/chairman/owner are now all on the same page with clear plans for the future and strategies to develop our own youngsters and bring in young players cheaply to develop and sell on to become more self sufficient. By the way, i am not 'applauding' ED or PG, i am merely pointing out that the ones you are criticising are also the ones that brought BWFC the best time of my Wanderers supporting life.
moonpig1
Big Sam and his players took us into the premiership when we had no debt, it had nothing to do with PG or ED. When astute football decisions were needed to retain and improve team quality whether through junior investment or player movements in and out of the club, most decisions taken were abysmal failures, taken at critical moments that led to our demise. Spending money is not the issue, it is the reckless bad spending that was wrong, you can spend 10 million wisely and gain the reward out on the pitch, you can also spend 3 million badly and get dreadful results from it - akin to throwing it away, this is what PG has been guilty off many times over and still he remains in place, able to repeat these failings but with less money to do so. It really beggars belief.
aussie mike
Absolutely cracking insightful article Mike. Too many people have their heads buried in the sand. ED is milking BWFC dry under the stewardship of PG. Unfortunately they have us by the short and curlys. If we were unhappy with a restaurant we would eat elsewhere, a supermarket, we would shop elsewhere, wife ..... well you get the picture. However I can only think of two things in life we can't just switch away from when we are unhappy our kids and our football team!!! So as I say they have us where they want us. Its not like we are going to say sod this I'm going to support Preston, Burnley etc. etc. So it means they can pretty much do what they like and get away with it. So when someone has the time and intelligence to call them on it I salute them.
Boltongav
Mike - how many people can you name with a fortune large enough to personally support a football club that can't afford it through ten years' worth of Premiership football who don't have power mad accountants and offshore trusts backing them? I'm afraid it goes with the territory. If you don't have a ruthless willingness to crush all who stand before you in the pursuit of making money, if you can't bring yourself to do what it takes, you'll never get close to having a fortune in the tens or hundreds of millions.
robmoss2k
Back to football matters... it seems we've taken on a relatively unknown French striker going by the name of Basile Camerling. Here's hoping one of the scouts has spotted a blinder, but given that he's already spent some time with QPR and Charlton and come away without a contract, I'm not hopeful. The Zaha rumour train rumbles on, I imagine he'll probably end up at QPR, Forest or somewhere else where they're willing to ignore FFP. And having read the FFP rules and sanctions, I have to admit I think they're completely insane. All but one Championship club in a BBC survey of finance directors at the start of this season said that their club was dependent on principal shareholders to finance operating losses, and the fines imposed if you buy your way into the Premiership will almost certainly lead to immediate relegation, with the transfer embargo rules hitting the following January if you don't go up. Anyway. It also seems Millwall might recall Feeney after only 28 days, so it could be very soon that we see the last of him. Apparently if we can strike a permanent deal before the 28 days are up we'll be able to keep him, but given the precarious proximity to breaking the FFP rules we currently find ourselves in, I suspect we'd have to loan out someone else first.
robmoss2k
Your right Rob - most premier teams operate offshore trusts, a few exceptions have Billionaires backing them while the likes of United use the share market and international marketing to promote their brand product. I don't single ourselves out for any other reason than differentiating between good management and bad management, in our case its firmly the latter due to control resting with individuals who appear to lack a football brain, they say you can fool some people some of the time but you should never be allowed to try and fool all of the people all of the time. If the ship keeps sailing in the wrong direction sooner or later you have to question if the skipper has a clue about what he is doing, I reached my conclusions along time ago. As for the actual football - our destiny this season may increasingly rest on our loan signings and how these individual players perform, oh how the mighty have fallen, god bless our journey we might need his support.
aussie mike
Mike - my point with ED and PG has always been that whilst they're not whiter-than-white, whilst they're not a silver bullet or a panacea, whilst neither are billionaires, I think they've done a much better job than over 50% of other chairmen/owners in the top couple of divisions, certainly with the relative pittance available to them. I don't think they're criminals or leeches, at least no more than the rest of them. They're certainly not Ken Bates or any of the guys who've overseen the Portsmouth debacle. I think you have an entirely understandable problem with the finance and business dealings of football in general but you just want to believe a little bit too much that it's PG and ED, and not a consequence of being an underfunded 2000s Premiership club, that's somehow deliberately landed us in 150m of debt with no way of paying it back in the short-to-medium term and with a load of rubbish players - or perhaps you just don't know that much about other clubs' financial situations? But just look at Blackburn and Wolves who came down with us - honestly, I don't like being where we are, but I'm thankful it isn't worse (and I'm not sure which is - League One, or your players advertising fried chicken). Who out there in England has done a better job than ED and PG with a stadium that holds less than 30,000 people?
robmoss2k
off the top of my head clubs who did not have the benefit of spending the 550 million we did, nor premiership status across the last decade , Swansea, Cardiff, Crystal Palace, Hull, Watford, Forrest, Southampton, Reading, to name but a few who when attempting to strengthen their team actually got it right yes- no N'Gog or Sordell in their line ups, nor did they offload established quality players to find the same group doing the business in the premiership for another club ( WHU) I note your point about the relative pittance available to them, 550 million is a useless sum. As for being thankful its not worse lets park that to one side and review it in another 12 months
aussie mike
Crystal Palace, Watford, Forest and Southampton have all been on the brink of financial ruin in the near past so to compare us is unjust, we are in huge debt but not on the brink of going out of business. Hindsight is a wonderful thing, the players 'doing the business' for West Ham' were finished for us, who could have known they would be revitalised, should we have kept them on the off chance? Mistakes have been made but they are trying to make things right by running the business right, very late yes but they are trying, they employed a young manager with good ideas and a long term plan and are prepared to stick by him, stability will breed good results and improvement.
moonpig1
Crystal Palace entered administration in 2010 and were docked 10 points for doing so. Hull entered administration in 2001, and were locked out of their ground by bailiffs and threatened with liquidation, whereupon they were bailed out at the last minute by Adam Pearson. Southampton entered administration in 2009 and were docked 10 points. Swansea were in such financial and administrative turmoil in 2001 when they were sold to MD Mike Lewis for 1 that they were almost ejected from the Football League and banned at all levels - it was only the creation of the Supporters' Trust which kept them in business, and they were on the brink for four full years. Cardiff City had Sam Hammam in 2000 and over the course of the next 6 years brought them to the brink of administration, and would rather they had entered administration were it not for a 590,000 back-hander that the new consortium had to pay him. Once he took his money, the club were saddled with 40m of debt, which was being chased (unlike ours), and they spent the next four years trying to clear up the financial disaster. In 2010 they lost the play-off final to Blackpool, and in that same season had had to sell players and assets at knock-down prices in order to avoid TWO winding-up orders from HMRC. It was only benefactor Datuk Chan Tien Ghee paying off the club's debts which got them out of the mess - and that was in return for the Blues' strip being changed to black and red. Watford were on the brink of administration in 2002-03 after the collapse of ITV Digital and again in 2009-10 following a period of reckless spending by Aidy Boothroyd. Nottm Forest were also on the brink of administration in 2002-03 and were bailed out by then-owner Nigel Doughty, who personally threw 100m at the club over 13 years to paper over the financial cracks. Reading have been kept afloat by John Madejski throwing around half his personal wealth of 250m at the club during his involvement and if he left they wouldn't last a season before going into administration and possibly liquidation. All your examples have either someone incredibly rich making sure that the club can spend more than it earns, or simply borrow to spend more than they earn and end up in the administration merry-go-round. And yes, 550m is a relative pittance when the "safe" Premiership clubs had approximately 1.3bn each to spend during the same 10-year period (by which I mean those who inhabit the UEFA Cup places most seasons - not Champions League, that's a whole different world). All football clubs from the lower half of the Premiership downwards for a very long way have screwed-up finances - the purpose of FFP is to solve this, but we really, genuinely are one of the more sensible teams in the Football League.
robmoss2k
What a sad state of affairs for professional football in general, a pyramid of self greed with everyone trying to get to the top motivated by esteem, ability, self realisation and the financial riches on offer for those who succeed. Enjoy the feast while it lasts and be prepared for the consequences thereafter.
aussie mike
Really interesting reading and there are many questions to be asked that the board will never answer. A Friend of mine has been complaining for years about the poor hand dryers in the gents at the Reebok and the fact that there is only 2 units in each toilet. He received a letter from the club recently stating that they are changing them but it will have to be done over a period of time due to the costs involved!!! So, you look at the money poured into poor performing personnel and compare that to the cost of hand dryers for the ground. Its like a comedy show and in the majority of my dealings with the club, nothing is every straight forward or efficient.
d3rks
Now we're on the same page Mike! The ridiculous nature of football in the first decade of this millennium has come home to roost for many clubs, with the ITV Digital saga sending many clubs spiralling out of control - look at Stockport County, for example - and saddling others with problems which they aren't capable of fixing. That debt is stuck with us now, as it is for many others, until such time as someone comes in and pays it off for us. Football is a right mess. FFP may be an irritating side-issue for many, but it has to enforce clubs in debt making a profit to pay the debts off sooner rather than later or all the efforts will have been in vain.
robmoss2k
 

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