Bees United Financial Forum. 9 February 2004. Venue Stripes Bar, Griffin Park
Panel: Brian Burgess, John McGlashan, Stephen Callen, Joe Bourke, Doug White
Below is a summary of the evening, with highlights of some of the questions and answers. It is not intended to be a verbatim report of the evening
Introduction
Stephen Callen presented his club finance articles from the Swindon and QPR programmes, and discussed the club's accounts over the past three seasons. The projection for this season had been a net loss of £190,000. This was still the case up until December. With the signing of Stuart Nelson the net proceeds from the Paul Smith sale will be just over £200,000; which will cover this loss and allow us to break even for the season – a major achievement.
With audited accounts showing a break-even, and an ability to cover limited future losses, we are in a much stronger position to approach lenders in order to service our historic debt. Back when we were losing close to a million pounds a year few lenders would have been willing to offer us anything.
Lionel Road is at least four or five years away, we need a strategy to survive until then. This may mean a new loan arrangement.
Questions were then invited, and almost all were either on financial matters, or stadium issues. For clarity we have grouped them accordingly:
Questions on Finance
How does a rising interest rate affect out finances?
Stephen Callen answered: With our present borrowing arrangements every quarter point increase costs us £11,000 a year.
Would we consider a mortgage?
Stephen Callen answered: This is something new are investigating. At the moment the guarantee we have in place with Barclays Bank keeps the cost of our borrowing below a normal market rate, but in 12 months time when this guarantee looks like being withdrawn a commercial mortgage may make more sense.
Would we have to pass over to Altonwood any uplift in the value of Griffin Park?
John McGlashan answered: No, Altonwood want the money they have tied up in the club releasing, but under the terms of our option in return for this they would relinquish their shares in the club and thus the ability to profit from the sale of the ground.
Would we need outside investment to fund any ground improvements at Griffin Park?
Doug White answered: A Planning Application was lodged with the Council last week. If we can get this approved then we will have the option to carry out any of a range of improvements. We won't do anything unless it is fundable. We may be able to get up to £1.6M of grant aid. We were able to get external funding for £26,000 of the £30,000 cost of the application design.
Any development on the New Road roof?
John McGlashan answered: No. We have been warned that the roof will need repainting soon in order to prevent paint flaking off and blowing into people's gardens. This will cost £30-60,000 and we would obviously like to be able to combine it with applying a new sponsor's logo, but as yet we have not found one. Various suggestions – airlines, paint manufacturers, Fullers etc. were put forward from the floor, but John assured the audience that they'd all been tried already.
Has there been a recent valuation of Griffin Park made?
John McGlashan answered: No, but there will be imminently. St. George have been persuaded to prepare one for free, with variations for different Section 106 conditions, in order to help progress negotiations with the council on these conditions.
Have we considered special deals on admission in order to try and boost attendances?
Stephen Callen answered: We've considered it, but decided there's no guarantee that it will bring in extra revenue.
The Altonwood Option – how much would it cost to exercise it?
Stephen Callen answered: the simple answer is £2 – £1 each for the shares in BFC Ltd and GPS Ltd. The hard part will be releasing Altonwood's guarantee. Refinancing would be one means of doing this, of course in a sense this doesn't remove the problem, it merely buys more time to realise Lionel Road etc.
How important is avoiding relegation?
Stephen Callen answered: we would get slightly less money from the Football League, and presumably less through the turnstiles. We would be able to pay lower wages though, and we might even get more people turning up if we were doing well in the 3rd Division than if we were struggling in the 2nd.
If we're making a (small) profit, can't we buy a player?
Stephen Callen answered: we have spent £10,000 on a new goalkeeper, we are not planning to spend any more on transfer fees at this time, although there is some slack in the wage bill for Wally to bring in new player(s). There is no guarantee that buying a player would turn our fortunes around.
Doug White added: we have the money from the Smith sale, but we can only spend it once, If it goes on a player or two, and they get injured, or turn out not to be worth their fee, the money has gone; we are using it to ensure the immediate survival of the club.
What uplift in terms of standing orders etc. could we expect to see if Ron Noades and Altonwood were finally and permanently out of the picture?
Stephen Callen answered: at the moment there are benefits in terms of reduced interest payments in sticking with the current financing arrangement. However there would undoubtedly be a benefit in terms of goodwill in being free of Altonwood, as well as the advantage of controlling our own destiny to a greater degree. For these reasons Bees United will consider with interest any offer which might allow them to release Altonwood from their guarantee.
Questions on Stadium Issues
Is Lionel Road feasible and affordable?
Doug White answered: Lionel Road is a large project, and getting larger by the month. We now have an experienced developer (St. Modwen) on board (developed Stoke's ground). They have a relationship with Chancerygate, who have preferred status in acquiring Lionel Road from the SRA. The feasibility of the project will come down to Town Planning and Finance.
On the Planning side the letter from Ken Livingstone would be a great comfort to any developer. The fact that the SRA have not responded to it could be taken to mean they are considering their position, so as not to prejudice the chances of realising an exciting project at LR. The scale of our project, and the number of boroughs affected will mean that it will inevitably go before the secretary of State. We have already lobbied MPs though. We have managed to get our developers to bear the initial costs for feasibility studies, consultancy etc. These could easily amount to £500,000 before we even have a
Planning permission.
On the finance side the developer is drawing up a 'menu'. It is projected that the 'shell-and-core' stadium which they will provide us with will cost £18-20M, and they need to make sure they can create enabling development to pay for this. At present there are two rough schemes being prepared, one by the club's architects and one by the developers. Doug would like to see them continue to develop schemes in competition with one another.
The developer is talking to retail agents, as well as hotel and leisure consultants to assess the viability of the scheme. We would be looking to fit out the available space under stands etc. using the proceeds from the sale of Griffin Park.
An optimistic timescale might be that we could get Planning permission within two years, and build the stadium in another two.
Would we consider groundsharing at Lionel Road?
Doug White answered: Yes, we would be actively looking to share with one and hopefully two rugby clubs. We wouldn't be actively looking to share with another football club, but it's not something that can be ruled out completely.
Is Feltham Arena a dead duck?
John McGlashan answered: No, nothing is ruled out at this stage. However we'd rather stay in Brentford, either at Griffin Park, or Lionel Road, than play in Feltham.
What about if QPR move (say to Hayes or Hillingdon). Might we share?
Brian Burgess answered: We would hope that our own new stadium would be full enough with ourselves, one or more rugby club and the other leisure and community uses we are planning. That is the most viable future for Brentford.
What loss are QPR forecasting?
Brian Burgess answered: We don't know, although it could be considerable.