At Bees United we are used to dealing with the understandable concerns of supporters about our plans for the future of our Football Club. Not surprisingly, a number of fans are sceptical about the involvement of supporters in the management of our Club and how we intend to deal with the major challenges that face a Club such as Brentford.
What is also noticeable is how many of these questions are along common, or at best similar, themes. We would like to share these issues with supporters of Brentford.
If you have a question that you would like to see answered, please email Bees United.
What is the significance of the recent donation to Bees United from Martin Lange?
On the 25 June 2001 Griffin Park Stadium Limited sold the freehold land and buildings at Griffin Park to Brentford FC Limited.
Concurrent with this transaction, Ron Noades company, Altonwood Limited, transferred 25% of their shares in Brentford FC Limited to Martin Lange’s company, Marlborough House Investment Holdings.
From that date, the Altonwood shareholding by itself was no longer sufficient to benefit from the tax relief available from the surrender of taxable losses by Brentford FC Limited. The club accounts indicate that approximately £3.3 of losses have been surrendered to Altonwood in previous years with a potential tax benefit of up to £1m arising therefrom. Altonwood have considered these monies to be a return of the reported £850,000 paid for the initial acquisition of their shareholding in the club.
At the instigation of Bees United, a consortium of corporate shareholders holding more than 5% of the shares in the club was organised to claim tax relief.
The three parties to the consortium are Altonwood with a reduced 60% shareholding, Marlborough House Investment Holdings with a 25% shareholding and Kingsmead Parks with a 7.5% shareholding (a company under the control of Peter Wheatley, the son of the past Chairman Eric Wheatley).
Both Martin Lange and Peter Wheatley entered into an arrangement with Bees United to donate any tax benefits received to the trust from the 2001/2002 season forward. Altonwood are dealing with the board of directors of Brentford FC directly with respect to the arrangements for return of tax benefits to the club. Bees United have been advised that tax benefits received by Altonwood form 2002/2003 will be returned to the club.
Martin Lange donated a tax recovery of £13,089 to Bees United last month. These funds have been lent to the club by Bees United bringing the total loans to date up to £293,000.
These funds together with the anticipated recoveries from Kingsmead and Altonwood come at an important time for the club as we struggle to get to a position of financial stability.
The losses for 2002/2003 are much lower than 2001/2002 so future tax recoveries can be expected to be much lower. We remain hopeful that from 2003/2004 the club will not incur any significant losses, so again the tax recovery, while significant, is a short term benefit for a limited period of time.
How are Bees United Loans Secured?
Bees United maintains two funds i.e. the Loan Note fund and a general fund. Loans to the club to date include £80,000 from the Loan Note fund and £213,000 from the general fund.
The Loan Note holders agreement requires that the monies be used either for the making of secured loans or the purchase of shares in the club. These loans to the club are secured by a charge on Griffin Park.
Bees United loans to the club from the general fund are currently unsecured. This policy puts the trust in the position of being the major unsecured creditor at the club.
Many recent football club administrations have come about as a result of the presentation of a winding-up order by the Inland Revenue for unpaid PAYE or from other creditors such as Customs and Excise for VAT, the police or stewarding companies etc.
When a company is presented with a winding-up petition the directors will frequently seek an administration order to stay proceedings and reorganise the businesses affairs.
The appointment of an administrator does not automatically result in the sale of assets to pay creditors. If a business is viable but has run into short term cash flow difficulties the administrator will seek to enter into a creditors voluntary arrangement (CVA).
The secured creditors can remain intact without any reduction in their debts while the business is reorganised. The unsecured creditors will vote on the terms of the CVA i.e. the amount of any debt write off and the terms for repayment of the reduced debt.
Bees United as the major unsecured creditor can effectively control the outcome of a CVA and if necessary override the objections of other creditors, should such a circumstance arise in the future.
The importance of maintaining the club as a viable business cannot be over-emphasized. It is the key to the protection of the club at Griffin Park until the new stadium issue can be resolved.
We hear a lot about fundraising for Bees United – bucket collections, Walk to Wycombe, Bike to Brighton, regular standing orders and so on – how does this fundraising affect the club?
The club has been on the brink of financial collapse for several years. Income from the play-off finals in 2001/2002 kept the club going towards the end of the season and during the close season.
Bees United launched it’s fund raising campaign in June 2002 to prepare for the coming crisis.
In July 2002, the Chairman, Ron Noades, and the board of directors entered into a preliminary agreement of sale for Griffin Park. The initial proposal was vetoed by Martin Lange but with the caveat that the veto would not be exercised, if there was no alternative to administration. The transfer of Darren Powell to Crystal Palace on August 5 that year bought a few more months of time.
A strong start to the 2002/2003 season and a cup run to the 4th round of the FA Cup saw cash flows improve sufficiently to get the club through the winter.
At the end of 2002, Bees United entered into discussions with Ron Noades, with a view to seeking alternatives to the club’s proposals for ground sharing at Kingsmeadow from the start of the following season. The focus of these discussions were the assertion by Ron Noades that Brentford FC could not survive at Griffin Park and would continue to lose money until the club eventually failed and was forced to sell it’s ground. Bees United put forward the view that given an element of relief on the interest costs that were being paid, the trust members could carry the club through while it’s finances were reorganised.
By way of compromise, in Spring of 2003, concurrent with the loan of £100,000 to the club, Bees United secured the appointment of two additional directors to the club board and the formation of an executive committee comprising of the clubs Managing director, Gary Hargraves together with BU’s then chairman – John McGlashan and the trusts finance director – Stephen Callen.
The immediate priority of the executive committee was to address the underlying causes of the clubs financial difficulties i.e. its operating deficit. A budget for 2003/2004 was prepared, based on an average attendance of 5500, requiring cash funding support of £340,000 to see the club through the season.
The trust committed to providing £240,000 of the funding requirement and a further £50,000 was advanced by the new Chairman, Eddie Rogers. The remaining shortfall has now been made up by the recent transfer of Paul Smith.
If attendance’s hold up for the remainder of the current season, the club expect to breakeven at the operating level i.e. before income from transfers and interest costs.
Achieving a breakeven operating position is not only important for maintaining the club, but also has a significant bearing on our ability to negotiate interest relief on the current debt.
Altonwood has no interest bearing debt with the club, but is does have £2m in cash tied up in supporting the club’s overdraft. It is this funding that has been the focus of the trusts representations to Altonwood on interest relief – either by lending the funds directly to the club interest free or by way of preference shares with a fixed dividend to be paid, if and when profits arise on a sale of Griffin Park.
To consider such a proposal, there needs to some tangible benefit to Altonwood, beyond the current position of waiting for the club to effect a sale. The benefit lies in the prospect of the club refinancing without a sale of Griffin Park and thereby relieving Altonwood and Ron Noades of the guarantees in place on the club’s overdraft.
With the club in a position to cover it’s operating costs, the focus of the trust and it’s fundraising can move to refinancing and debt repayment. Bees United anticipate that supporter funding (including Bees United and Lifeline) could be ring fenced to support a commercial mortgage of circa £2.25m.
The £2m balance of the bank debt would have to be carried by Altonwood for a period of time or until a sale of the ground was concluded.
Altonwood have not at any stage accepted responsibility for any part of the club’s debt and remain anxious to secure the release of the cash and guarantees supporting the club’s overdraft. The funding support of Bees United members has stayed the drastic measures proposed by the former board to bring this about and provided the opportunity of working towards a long term settlement.
We hear a lot about Administration, there are plenty of other clubs that have gone into Administration and are still trading quite successfully – QPR, Leicester etc?
QPR came out of administration with a £10 million pound loan at 10% interest. They were able to keep going with the money from their ground share with Fulham over the last two seasons but are currently relying on bringing in outside investment to see out the rest of this season –even with record season ticket sales and attendances.
Leicester came out of administration after raising about £5m from local businessman, but have lost control of the new Walker stadium as part of their refinancing and will be back in the mire if relegated from the premiership this season.
Brentford’s total debts of approximately £7m are made up of £6.5m of secured debt and £0.5m of unsecured debt. Bees United are the major unsecured creditor and would control the outcome of any creditors voluntary arrangement following an administration.
The appointment of an administrator would cost the club a few hundred thousand pounds with little or no benefit.
The administrator would be paid first and the secured creditors would either be paid by selling Griffin Park to the highest bidder or the business would be returned to the directors with the secured creditors intact and perhaps some reduction in the unsecured creditors, not necessarily enough to cover the costs of the administrator.
The danger of administration is that the veto held by Martin Lange on the sale of the ground would be invalid against the administrator.
If the administrator finds a buyer for Griffin Park acceptable to the secured creditors and negotiates a ground share at say, Loftus Road, he has done his job. He will have maintained the business as a going concern and paid the creditors including perhaps £1.3m to the shareholders of Griffin Park Stadium – a potential windfall for the owners of that company.
Administration can be a lifeline for viable businesses to get their house in order. Brentford Football Club is best served by carrying through the necessary changes itself, to minimise ongoing losses, and steer clear of this insolvency procedure.
How did the transfer of Paul Smith affect finances at the club?
The club expects to gain approximately £190,000 net of fees and costs (including transfer fees for the new keeper) this season from the transfer.
Firstly, subject to attendances holding up, the club hopes to breakeven or report a small profit in its accounts for the first time in 8 years.
Secondly, it is anticipated that we will now end the season with an overdraft of around £4.3m i.e. leaving £200,000 of available funds to pay the bills during the close season.
There is also the possibility of further sums for the club based on appearances by Paul Smith for Southampton.
Why is a new stadium so important for Brentford?
The income we get from matches at Griffin Park is not enough for the club to make a profit after paying wages and all the other operating costs. We therefore need to generate a lot more non-matchday revenue.
Other clubs, with more modern stadia, have higher match day income because they have corporate boxes or hospitality lounges that are modern and comfortable and attractive to sponsors and companies for corporate entertaining. They also get more non-football income from renting out rooms for conferences, selling meals in restaurants etc on non-match days. You can only do this if you have modern facilities. Griffin Park is hemmed in by houses and doesn't have the space to rebuild the stands to incorporate these types of commercial facilities.
Brentford therefore needs a new stadium with modern facilites that can be used to earn non-football revenue every day of the week. This is known in the business world as "sweating the assets".
What plans do Brentford have for a new stadium?
Bees United, the supporters' trust, has been looking for a suitable new site for a stadium as close as possible to Griffin Park. The best available site appears to be at Lionel Road in Brentford, adjacent to Kew Bridge railway station. Hounslow Council support our ideas for building a community stadium and commercial enabling development on the Lionel Road site.
Bees United’s vision is to transform Brentford FC into a genuine community football club, run as a social enterprise, with a stadium that creates a vibrant and sustainable hub used every day of the year to promote sport, health, education and social inclusion and provide appropriate services to meet the needs of local communities.
The adjacent enabling development would provide an appropriate commercial mix of hotel and conference accommodation, entertainment, health and leisure facilities, office space, and private, affordable and social housing.
The vision incorporates the redevelopment of the adjacent Kew Bridge railway station, the construction of new railway and bus stations and a new LRTS to increase public transport capacity and create a major new transport hub for west London.
The adjacent enabling development would provide an appropriate commercial mix of hotel and conference accommodation, entertainment, health and leisure facilities, office space, and private, affordable and social housing.
The vision incorporates the redevelopment of the adjacent Kew Bridge railway station, the construction of new railway and bus stations and a new LRTS to increase public transport capacity and create a major new transport hub for west London.
The adjacent enabling development would provide an appropriate commercial mix of hotel and conference accommodation, entertainment, health and leisure facilities, office space, and private, affordable and social housing.
The vision incorporates the redevelopment of the adjacent Kew Bridge railway station, the construction of new railway and bus stations and a new LRTS to increase public transport capacity and create a major new transport hub for west London.
What was the significance of the recently reported support of the Mayor of London?
The problem with the Lionel Road site is that it is owned by the Strategic Rail authority (SRA), who say that they can't sell it to Brentford because they have already arranged to sell it to a commercial developer who is planning to build warehouses on it.
Bees United and Hounslow Council believe that our plans are a much better use of the land than building warehouses. To be able to buy the site and get planning approval for our scheme we need to convince either the developer who is trying to buy the site or the SRA (or both) that we can offer them a better commercial deal and the planning authorities that we offer more economic and social benefits on the site.
The value of any development on the site will depend on the type and amount of building that gets planning permision. If Hounslow Council were reluctant to give planning permission for a particular scheme, the Greater London Authority (GLA) could have a role to play in influencing the type of development allowed. The GLA would also be interested in the transport benefits of a scheme like ours, which includes a new tranport hub.
The significance of the Mayor's support is that it:
- shows that key decision makers like our propsals and think they are a good use of the land
- adds pressure on the SRA to consider our scheme instead of the warehouses