Plan B anyone

 A stick often used to beat Johnnie was his inability to have a plan B and I think it is safe to say that he has shown he has one by moving to a 4-3-2-1 recently. After Wednesdays ‘Meet the Club Board’ I think it’s time for the club to have one if 50.1 vote fails and the minority investors drop out.

It was thought that Wednesday's meeting could be our December 2019 meeting all over again and it looked that way by the numbers in the 1889 lounge compared to earlier meetings with the club board and Dons Trust, with over 1k people online also watching in. In the end the meeting was a confusing one to analyse as it provided lots of slides with information and then commentary that said it don’t look that bad and we have a plan.

If we look at the bigger picture it's hardly surprising that the board tried to paint a more positive picture as this was being streamed live and was available for any of our investors we were talking to and potential new bond holders, with PLB2 reopening soon. It is important to give both parties confidence even though I always think people with money do there own due-diligence and nobody every gets rich by giving it away. The reason provided for reopening the PLB2 was that we might need some additional bond investment to pay off the current bonds maturing next year, which in itself sounds worrying if you say it out loud.

Many people I spoke to were keen to hear the club rubbish the rumours that ‘Wombles Had a Dream’ discussed on a recent podcast. Indeed, it was felt that the club did this and some people made their feelings known to the hosts of the podcast. Personally I was pleased WHAD discussed the rumours as they were rife before and after the Doncaster game and whilst rumours are simply that, I fully understood why WHAD were concerned enough to air them as they were coming from respected people and also ones that don’t normally engage in rumours. In fact, it felt that these people needed to air these rumours as it was weighing on them knowing the potential challenges around the corner. The club of course never mentioned the rumours or provided any challenges to it but simply provided the information on slides and commentary. For me, these rumours were not rubbished at all, and the clues were there to back up the main message from WHAD in that we have some serious financial challenges.

Craig Cope opened the evening with a recruitment update after the Winter window had closed. This was probably one of the more subdued chats I have seen from Craig and that was natural when he explained that we didn’t really want to lose Harbottle or Orsi, but financially they were right for the club with our budget and that he hadn’t spent an increased budget provided for the window. My take was that we certainly have some financial challenges with us replacing permanent players with loan deals until the end of the season. Naturally, that limits the impact on next season and with rumours about players being told that they would not be getting new contracts were strongly denied by Craig, I think its also telling that we have not extended any player contracts as of yet when clubs around us have been doing that to secure the services of players for next season and beyond. I am sure we would want to do that asap as we have in previous seasons as Craig has built a really strong squad and with the number of players out of contract in the summer, I doubt he wants to do a total rebuild.

Next up was our Managing Director James Woodroof who I think has been an excellent addition to the club as shown in the continued revenue increase since he has arrived. The most noticeable information from him was around ST sales and the plan for next season. He mentioned that there will be a further increase on top of the one for this season and dropped in for me hoping it wouldn’t be picked up that ST sales would begin at the end of this month. I am not saying this was deliberate but it certainly is disappointing information and this was highlighted when a question was asked to him that he had forgotten to add the increase. James mentioned it would be 13% and whilst I was not in the room, I am sure that there was a collective sigh at this. I always judge the entry price for a fan being in the South stand where it is terracing. This year it is already £31 for a matchday ticket increase rising to £33 if brought on the day, so with a 13% increase this will move to £35 and £37 if purchased on the day. Bearing in the mind this increase will be regardless of what division we are in next season, £35 to watch football is becoming really expensive and surely starts to ask questions of fans if paying this is sustainable.

 

The remaining parts of the meeting was down to the nitty gritty of why people attended and it was interesting or what was not said rather than what was said. Inevitably they mentioned that the 50.1 vote will be raised again next month and how important it is that this passes this time. It was mentioned that we are in continue talks from interested investors. The challenge for the board is the investors want to know what shares are available and at the moment we only have a few percent available to the 75% and even if we are able to go lower than that, only 15% is allowed by one investor under the current rules. If we go to 50.1, it will open just over 23% equity which would be naturally more interesting to investors. It was mentioned that we are in discussions with around 8 parties and that some NDA’s have been signed already.

Without going through what everything was said by them in detail, the main take away for me was that 50.1 is desperately needed to provide us with working capital to help improve our stadium capacity, training ground, and general improvements to help us to continue increasing our revenue streams. Certainly, the cash flow slide featured as the main picture for this blog is the one that should concern all members. It painted a bleak picture and showed that we run out of money in the summer of this year. That may sound alarmist as we will have money from ST’s, additional money from PLB2 and a short-term loan facility we have, however that money will also be needed for salaries next season and will quickly get eaten up by the crazy expenditure in the football world. There was an interesting question later around 50.1% and if it was as secure as it is in Germany and Graeme Price made an interesting and honest assessment that clubs do not go out of business down to ownership percentages but go out of business because they run out of money. Well that is us in a nutshell as we know that we lose around £1.5m per year without any Football Fortune and the question I would have liked to be asked is if the cash flow slide was including any projected monies or not as it would make it easier to see when the point of no return is.

League 1 salaries were highlighted as we know we are 23rd in the wages league, but we are £1.5m away from 20th. Port Vale had an 80% higher budget than us which looked mad with how poor they were against us. The highest salary was £17m and owners on average are adding £5m to their yearly budget. Whilst it was mentioned that other League 1 owners don’t want to be spending millions inflating their budgets, the likehood of anything changing soon is highly unlikely and even if a wage cap come in or some type of PSR, any changes would be seasons away and we simply haven’t got the time to wait for this.

It was asked if we have a plan B and the answer was sketchy to be honest and whilst I totally appreciate we don’t want to consider the current plan won’t be successful, we need to have that safeguard surely.

How long have we got to get an investor to come onboard?

Have we got a timeline for how quickly an investor will complete any deal if the 50.1 vote is successful?

What if they drag it out knowing that the longer it goes the more likely we will have to sell 100% of the club?

Have we thought about what going into administration looks like?

If we get relegated this season a 12 point penalty for going into administration would make a double relegation more than likely.

I am undecided if I will vote for the 50.1 and will need convincing in the lead up to it that it is the right move for us with our current financial position. The earliest we can start offering up to 50.1 will be the end of April and we are forecasted to run out of money at the end of the season. Should we be going the full hog and put the whole club up for sale at this point rather than potentially wasting time with 23%, especially if these negotiations drag out and go into next season. You only have to look at how long the Sheffield Wednesday ownership takeover has taken to see that these types of negotiations are complicated and lengthy.

I have always felt we have some excellent people on the board and on the Dons Trust Board and I wouldn’t swap places with any of them with the current challenges, but whilst I accept they couldn’t go full toxic on Wednesday as it was likely that we had investors watching online and probably in the room, I didn’t feel the meeting provided the messaging that was intended to get 50.1 vote passed.

We are probably starting to see the reality of how difficult it is to be totally transparent to the members when negotiations are going on and the club rightly so don’t want to come out and paint the bleakest of pictures.

As I mentioned earlier, the clues were there in the slides if you looked hard enough and the lack of communication of a Plan B is something we moaned about long and hard about on the pitch and now it is time for this to happen of the pitch…