With the kind permission of Thorne in the Side – the Brentford Fanzine – we are reprinting here a recent interview with Bees United’s chairman David Merritt, taken from Issue 63 of the magazine.
When Thorne in the Side ran an interview with the club’s financial director Alan Bird in the last issue of the fanzine about the club’s current financial standing, it again raised a huge response from our readers. Naturally questions on Bees United’s tenure were raised, Matthew Benham was a large focal point of the interview and the on-going sustainability of the club was again questioned by the fanzine to Alan Bird.
In fairness to Alan Bird, as he clearly pointed out, he was not criticising the trust Bees United but was simply quoting factual information which was published and made available to all Brentford supporters long before the fanzine brought it out into the open.
To some this interview was angled as a slur towards Bees United on behalf of the fanzine, so it is important that both Nick and I gave Dave Merritt, the chairman of the Supporters’ Trust, an opportunity to answer those questions posed in the last issue and to allow the Trust to give their opinion on such subjects.
Again, both of us at the fanzine have nothing to apologise for when it comes to the type of questions we ask and the style in which we ask them. Fanzines have over the past decade dwindled in numbers due to the fact that many had become mundane and predictable and frightened of asking the questions that everyone was asking down the local boozer prior to kick off. There’s no point in dancing around issues and both of us never have and never will. Maybe if that day does come please let us know and we’ll call it a day, but until then Thorne in the Side will uphold the sole reason that they were formed over three decades ago to challenge and provide an alternative voice.
Again, as you will see below, we pull no punches and ask for straight answers to straight questions but we honestly feel that by asking direct questions and, perhaps to some, questions that may be perceived as being a tad aggressive, this allows Dave Merritt, on behalf of the Trust, the opportunity to counteract any such questions that may be deemed as counterproductive or angled against the Trust.
As you will be aware Thorne in the Side ran an interview in the last issue of the fanzine with the financial director of the club Alan Bird. Many who read the article thought that this interview was angled at criticism of Bees United. Is that how you read it and what were your opinions on the article?
I didn’t see it as criticism at all; I thought it was a sensible article and that Alan was on form.
In fairness the figures quoted in the fanzine (about the £500k loss for last season to May 31st 2008 and the total debt now being £9,058,674) were in the public domain well before we ran the interview so why do you feel that the readers of the fanzine were so shocked about the current financial status of the club?
I don’t really know. They were first in the public domain when I published the set of Bees United accounts some time ago and it spelt out pretty clearly that the results of the football club were pretty appalling and the statement gave those exact figures.
The interview really did get a huge reaction. Everybody was amazed at the figures and didn’t quite realise the financial state we are currently in. Is that reaction a fair one or is it in your opinion an over reaction on behalf of our readers?
Well I am torn here. I feel that the reaction is totally fair because the severity of the issue is of great concern and one that I as a supporter take very seriously. Although I do struggle a bit with anyone who says that they are ‘surprised’ by those figures because to be frank, those figures have been pretty consistent for a number of years. The club consistently loses money year after year and although this year’s loss of £500,000 is big, it wasn’t so long ago we effectively lost £1 million in a year. I‘m not trying to justify those figures but I am a bit amazed that people thought it was new news.
To be fair with your fanzine, perhaps it takes an outlet like that to get the message across as those people obviously haven’t seen the various BU statements issued over the years. As long as the message gets through some way or other I am happy.
Alan Bird stated that Bees United had quoted that it was their intention to run this football club on a break even basis and that the club must be sustainable. Who made this statement and when was it made and is this something that Bees United still seriously believes is possible taking into account the recently published losses?
There are a couple of separate points I need to get across. Firstly, I wasn’t around when BU took over the club, I joined the Football Club board around eighteen months ago, so I wasn’t there when the business case was put together and the deals were done with the investment directors.
I did participate in an informal way by speaking with the people who were trying to make a deal, and actually brought down a colleague who has experience of mergers and acquisitions to give some independent advice. I remember he clearly said that ‘If you buy a company, it needs to be profitable and if it’s not currently profitable, you have to make it profitable…’
The response from the room was ‘How do you make a football club profitable?’ and he replied ‘If you can’t make it profitable then don’t buy it.’ Now that’s a comment on general business, not specifically Bees United, but if you don’t break even, somewhere down the line you will run out of cash. That applies to ALL ownership models.
Bees United still thinks that the most important thing is the long term security of the Football Club, and to achieve that you have to operate sustainably and break even on average.
In the long term you must make sure that the income received does not fall below the costs, otherwise sooner or later Brentford Football Club will not exist.
And do you therefore believe that the day will come when we can achieve that break even basis?
As I stand today, I think it will be difficult, as the club is now and given the situation in football, to break even and to maintain a half decent playing squad.
I think that the football authorities have to look at the fact that football in general is not run in a sustainable way. We have four teams with point deductions in our division which makes it no longer a sporting competition but a ridiculous financial equation. They’ve put a lot of thought into dealing with clubs who go into administration, but no effort to try and help them stay out of it. They need to try and make sure that the competition we watch is on a relatively equal playing field.
You’ll always have rich clubs and poorer clubs but if they are rich then it needs to be because they have real money coming in – large attendances, good sponsorship deals etc – and not just because they’ve borrowed from a bank or have a rich benefactor who will at some stage simply ‘pull the rug’.
I think that there are ways that Brentford can become closer to that ‘break even’ target, but if you are asking if I have a business plan that creates a break even figure for the immediate future, in this division, and still maintain a good playing squad then the answer is no.
That’s not to say that I’m moving the target, the target always has to be that, but you are in danger of killing the patient if you cut to the bone straight away and go for break even say for next year, and I don’t think anyone would suggest that we should do that.
In that interview Alan Bird stated that ‘Bees United has presided over a subsidiary living way beyond its means’ – What is the official line from Bees United on that?
I haven’t got Alan’s interview in front of me but the blunt answer to that is that the Football Club absolutely HAS been living way beyond its means.
And so does BU take responsibility for that?
The football club is majority owned by Bees United, and we have our representatives on the Football Club board, so we’ve been “responsible” ever since the acquisition.
Just to be clear, BU remains consistently profitable – it’s the Football Club that has incurred the losses, and therefore increased the debt levels from the already-substantial amounts incurred by Ron Noades before the takeover…
Bees United put in place a model where we borrowed money to replace the debt that Ron Noades built up, so that was replacing debt from one source with another. So BU inherited a great deal of debt and, with the investor directors, we put in place a deal where we used some of their money to do that. Bees United then put in place a Board of Directors to run the Football Club (which is where these losses are being generated) which includes all those investors or their representatives.
You and I know there have been some major problems that have cost the Football Club money in recent years, but I wasn’t on the Football Club Board or even the BU Board at the time, so I’m not going to play the game of criticising those who went before me. You really need to ask those who were there whether the decisions made were right in the circumstances or not…
But to come back to the question, I think the finances are a nonsense – it is not appropriate for a business turning over about £2m per annum to lose over £0.5m per year. I agree with Alan on that wholeheartedly. We need to look to the future, work out how those losses can be avoided, how the existing debt can be refinanced, and act accordingly. That is what the boards of BU and the Football Club are spending so much time on currently.
Three directors, Alan Bird, Ian Jones and Greg Dyke, loaned Bees United a total of £550k which was due for repayment on the 31st January 2009. I assume that that date has not been fulfilled in repayment of the loan?
Correct. We (BU) are in discussion with all of our investors as to how we can best ensure the future, short term and long term, of Brentford Football Club, and that includes those three mentioned.
When you took the loans from these three people, Bees United must have produced a business plan to prove to them that the football club would be in a position to repay back these loans on the stated date. So why has that not been honoured?
I believe that the business plan that was generated when those loans were taken out was based on the Football Club breaking even or making windfall profit.
The reality is that the club has lost significant amounts of money, and we are in the process of trying to refinance those loans and also the additional loans that have had to be taken out. Those discussions have been going on for a year or so, so it’s not a sudden recent initiative.
With the failure to repay these loans, can we take it that the Bees United business model is not working and will continue to fail in the future? Therefore outside help must be sought. Is that a fair assumption?
No it’s not. Bees United’s objective is to secure the future of the Football Club, so to that degree you are right, we are not yet delivering on that.
Having said that, the Football Club is still here, we are operating, and we are top of the league under BU’s tenureship.
You are using language as if these investor directors are these ‘poor little children and we’ve borrowed their pocket money, and we are not going to give it back to them’! Credit them with some intelligence! These blokes are all experienced businessmen, they have all got their money through being good at business, they agreed terms on how they lent their money, and (so they understood and had some control over what was happening with their money) they or their representatives went on the Board of the Football Club.
They are part of the team that has managed the Football Club for the past few years, so it is wrong to suggest that BU have failed and that these poor guys are sitting there saying ‘oh woe is me – where is BU’s money to repay me’. It shouldn’t be a surprise to them at all – they’ve been sitting on the board which has generated these losses, contrary to the business plan which they and BU signed up to.
That’s not being critical of them (as I said, I wasn’t on either Board at the time so can’t comment), but you shouldn’t present it as if they are suddenly surprised that their cash isn’t sitting there in a nice big bank vault, ready to repay them.
Luckily for us I assume that these three people have not called in their loans as of yet?
Correct.
Correct me if I am wrong but these three people could put the club into administration?
Pretty much right. They could call in their loans from Bees United, Bees United would then be legally bound to call in its loans from the Football Club, and Bees United would therefore put the club into administration.
Although that is not going to happen, isn’t it totally unacceptable the manner in which Bees United has managed these loans and the non payment of them on the specified date?
Unacceptable to whom? In what way are you suggesting Bees United mismanaged these loans? Bees United and the investors/their representatives all participated in making the decisions together. We are all responsible for the current situation regarding those loans, and we are all working on refinancing them.
So what communication between Bees United and these parties has taken place since and what are the Trust’s plans to repay these loans?
I’ve been talking to the investor directors pretty much since I became chairman, so conversations had been ongoing for a year or so before January. Ultimately, the loans will be renegotiated when both the investors and BU are in a position to sign a piece of paper to say that the loans are on new terms.
Let’s get to the chase, Matthew Benham has loaned Bees United in excess of £4.5million. The repayment dates are fixed from October 2010 through to January 2022. Do you genuinely feel that the Trust will be on track to meet these repayment dates or will it be a case of adding further friendly debt to the list?
Seeing as we are not making a profit, we will not be repaying that money out of operating profit, so the only solution at the moment is to refinance.
We must be aware that all businesses sit on debt, and refinance that debt – it’s how businesses operate. So the fact that there is a due date isn’t necessarily a problem; it’s a pretty standard occurrence. The problem is that with the credit crunch, debt is harder to come by and when you start to look at the level of debt we owe to Matthew, it will become more difficult to source. Having said that, don’t forget that of the £4.5m debt, a large chunk of it was bank debt that we refinanced that had arisen from Ron Noades.
In a nutshell, we had Ron Noades’ debt that we refinanced with the bank, Matthew kindly offered to refinance the bank debt on much better terms (and since then has lent us more money), and when those debts become due I suspect that we will refinance again.
The only way such loans can be repaid is by the sale of Griffin Park. Is that a true statement?
No, because we would refinance.
So the million dollar question. Has Matthew Benham shown an interest in buying the club and has he made a direct approach to the board of Bees United?
As I said before, we are in discussions with all of our investor directors about the best way forward, and those discussions remain confidential.
Hypothetically, if Matthew Benham had shown an interest in purchasing the club would Bees United have any objections assuming that there is a safeguard against Griffin Park?
I’d repeat what I have just said – all existing discussions with all our investors remain confidential.
If a hypothetical investor made a hypothetical offer on any hypothetical terms that you care to suggest, then first of all Bees United has been and will always be receptive to discussions with investors – we need the cash! Second, we would assess those proposals based on whether they support the long term viability of the Football Club, and, if they do, then either we (the BU Board) would do the deal if it were within reasonable bounds of the current structure, or, if it was a dramatically different deal, then (being a democratic organisation) we would put it to a vote amongst our members, with a BU Board recommendation.
Surely with Bees United unable to fund the club at the current level of cash burn, and the need to be mindful of its current obligations to the likes of those three directors and Matthew Benham, surely the trust are no longer in a strong position if a single buyer was to make a serious offer for the club?
There are a couple of different points in there. Being a majority shareholder it is within our discretion of what offers to accept, so that means that BU are in a strong position because it’s up to us what we do. Don’t forget, when Ron Noades took over the fans didn’t have a say.
In reality if any owner receives an offer, they look at the alternative scenarios and go for the best one, and when we judge those scenarios the fact that we have made big losses over the years means we are wary about making overly optimistic assumptions of how we are going to turn that around.
The fundamental point is that Bees United’s position is not really different now than it was when we took over. We are heavily in debt, we are loss making and we still need to make deals with investors.
We could sell up tomorrow – we are losing half a million a year so let’s sell up to someone with deep pockets – but if they come in and also lose half a million a year, you are still going to run out of assets to secure the debt against… is anyone going to lose £500k a year when there is no asset security against it?
The question of ownership is different from resolving the issues with the Football Club. The real issue is with the Football Club and how it consistently loses money.
If you sell out to a new owner and he continues to lose money, he will sell on to someone with deeper pockets. When he loses money he’ll look for someone with even deeper pockets, and so on. One day that chain will break and that will result in bankruptcy and the club will disappear.
It’s nothing to do with ‘power’ or ‘we are Bees United and we own a football club’ – it’s all about trying to find out a solution to make the business sustainable, and we will consider all options to be able to do that.
If a new buyer, and one that was acceptable to the trust, stated that it wanted total control and that Bees United was to ultimately no longer have a say in the running of the club, would that be something that the trust would be happy to accept? In a nutshell would the trust be happy to relinquish control of the club?
By definition ‘no’ – how could we be ‘happy’ to walk away when we would have no ability to deliver our core objective of securing the long term viability of the football club.
We are realistic however. If we were facing imminent insolvency we are not going to die in a ditch to maintain a BU model that destroys the very thing that we are trying to save. So would we be happy? No. If our backs were against the wall and it was the only thing to secure the short term survival, let alone the long term, then obviously we would do it.
We are not in that position so my answers are all hypothetical.
The fanzine stated in the last issue that under the trust Bees United the financial state of the club was spiralling out of control. Is that a fair statement?
No. I can’t comment about before I joined the Board but since I’ve been BU Chairman I think the financial control at the Football Club has improved dramatically, and therefore the control over the finances is getting better and better day by day. We are still losing money so the debt increases, but ‘spiralling out of control’ makes out that it’s accelerating and getting worse, and that is not the case.
We also stated that it was clear, that despite the good intentions, that supporter run clubs and specifically that of Brentford, simply does not work. Was that a fair statement and if not convince those of us that supporter run clubs can work?
No, I don’t think that is fair. The one guarantee with a Supporters’ Trust is that those owning the club will always have the best interests of the Football Club in mind and at heart.
A supporters’ trust is a fans’ organisation. I come from the terrace, I’d much prefer to watch from there now to be honest, and concentrate on the football as opposed to the finances, but whilst we are in this state I also feel duty bound to help and make sure that my children have a Brentford Football Club to support. That’s different from an owner who ‘wants to have a bit of fun’ with a football club, or even owners who have a long term personal/financial interest in a Club.
Currently, most football clubs systematically lose money, and there are only a few clubs that run a tight ship – they sell their best player at Christmas each year, they have small squads, they never really achieve promotion… not very sexy but they break even and survive.
The problem is, the Football League is mainly a collection of clubs who gamble on promotion – totally unsustainable. The media talk about irresponsible bankers – in my view the majority of football Chairmen are far more irresponsible than those guys! At least most bankers can claim that they didn’t understand the complexity or implications of what they were signing up to (not that that makes it right)! The Chairmen and Directors of most of the Football Clubs know damn well what they are doing! I just think it is wrong.
So, to come back to your question, I see little financial difference between Trust ownership and any other type of ownership – they’re all pretty unsustainable at the moment, and rely on borrowing large amounts of money. In terms of motivation though, nothing can beat the long term view of a professionally-run supporter organisation.
How would you rate Bees United’s performance to date?
Fundamentally we’ve not yet met our objectives of securing a long term future for the football club.
I think we have succeeded in the short term – we are still here, and (people have short memories) it wasn’t long ago when someone stood on the pitch and said that we were days away from having to go into administration!
Four clubs have got points deductions for going into administration in our division this season – we are not one of them.
It may not be all our money that has helped achieve that, but BU have negotiated with and found investors, and we’ve arranged financing. It’s an enormous credit to Bees United that we are not one of those four clubs. That’s not trying to take anything away from our investors, but it was equally down to BU to make the deals. Without especially Matthew Benham we would have been right up against it, and we all agree on that.
In parallel with all this we shouldn’t forget the progress on Lionel Road, which is both resourced by BU people (Brian, my predecessor as Chairman, and Chris, the BU Secretary) and is progressing on the back of BU ownership of the Football Club. It could fundamentally transform Brentford, and it wouldn’t be where it is without BU and our role as majority shareholder.
You have as much time as you want to speak to the supporters of Brentford Football Club via this fanzine to make a rallying call.
Bees United is as important today as it has ever been. If you want to be able to bring your kids to Brentford, whether in two years, ten years or twenty years, then you should sign up and become a member – it’s all about the long term future of the club. It’s democratic, so members get to determine who represents them and what the strategy and approach should be, and ultimately every penny goes into both supporting the club financially and strengthening the voice of the Brentford supporters.
Some people are critical of BU, including the two of you occasionally, but I never can understand the logic of why people would not want to join?
Maybe you are so skint you can’t afford just over a quid a month – a few pence each week? If so, then fair enough – only join if you can truly afford it. Maybe you don’t care about the long term – you just want to turn up on a Saturday and watch a match and you really couldn’t care less about the future? If so then BU is probably not for you.
Apart from that, I cannot honestly think of another reason why people would NOT want to become a member. Maybe you disagree with me about the BU members – the many hundreds of our fellow supporters who have joined, and are therefore voting for their representatives, who are in effect determining the direction both for BU and for the Football Club, and who are ultimately contributing to securing the future of Brentford. Maybe you think that they are going to make wrong decisions? I think you should have more faith – they’re not idiots, and I think they’ll tell right from wrong pretty quickly when given the arguments for and against. If you disagree with a particular strategy or approach, or even object to an individual representing you, then it’s easy to change – you put it to a vote! Remember Graham Hall – it’s all down to a majority verdict of the members. Of course there is one key point – to put it to a vote, or to make your voice heard, you need to be a member!
BU is a very open family – look at the recent batch of elected BU Directors, drawn from all areas of the ground and who have all sorts of different backgrounds and groups of friends at Griffin Park. The one thing that brings us together is Brentford. Everyone who has the best interests of Brentford at heart is welcome, and every penny counts. And if you have the professional experience and attitude (and a bit of time) I’d urge you to do more than just join – help out, stand for election, do whatever you can.
I would encourage everyone who is not yet a member to sign up. I’d like you to be able to think back and say “I helped Brentford when it needed it”.
Thorne in the Side Comment
When the last issue of the fanzine hit the terraces as we have already stated, the interview underlining the club’s financial situation really did cause a stir. Yet as both Alan Bird and Dave Merritt remarked, this really was not new news. The very fact that the fanzine managed to get the point across somewhat better to the fans, if that’s the right term, than those at the Supporters’ Trust, should raise a few questions in itself with regards to BU’s communication methods, especially at a time when they are not only trying to ensure that all the supporters are fully up to date on the plight of the club but also at a stage when they are desperately trying to recruit more fans to the cause, involve more potential investors and ultimately turn this club’s fortunes around.
Sitting with Dave Merritt in a rundown upstairs office at Griffin Park prior to the Barnet fixture really did hammer home the fact that the task being undertaken by those at Bees United is anything but a glamorous one and is done so by sheer dedication and the love of this football club.
Both of us at the fanzine don’t mind admitting that in the past we have let ‘personal’ issues or gripes cloud our perception of the trust, but when Dave Merritt looks perplexed when asked why any Brentford fan would ‘not’ want to join the trust, he really did hit a raw nerve.
In simple terms, there is absolutely no excuse as to why any true loyal Brentford fan should NOT be a member. The bottom line is that the trust, along with the board of directors of the football club, are doing their utmost to keep this club from going to the wall. It is impossible for the trust to please each and every one of us and it is impossible for those on the trust’s board to be the ones of choice for each supporter. But unless we as individuals are big enough to understand the term ‘democracy’ and put personal grudges to one side, then maybe it is us as individuals that are the greater threat to the survival of this football club.
Both of us at the fanzine will continue to speak our minds as and when required, but from ow onwards we will ensure that any ‘opinion’ in the future will be coming from fully paid up ‘Bees United’ members.
Therefore we urge each and every one of you to join us and fill out a membership form for the Supporters’ Trust. If you are not currently members of the Trust, there really is no excuse.