1) Is this a good deal for us? What’s in it for Matthew Benham?
Yes it is. The club has had its interest payments cut by over £150,000 per year. In addition the repayment dates have also been put back. Apart from the overdraft at Barclays Bank, the only interest-bearing loan that the club now has is the loan from the council – for which Bees United has been paying the interest bill.
There’s nothing in it for Matthew. There have been no deals done for shares, control of the club or anything else.
2) So who is Matthew Benham?
Matthew is a life-long supporter of Brentford who wants to keep a low-profile and doesn’t want to give interviews to the press. Shortly after last year’s takeover Matthew did give an interview to an unofficial supporters’ website and most of that is reproduced in the Carlisle United match-day programme.
3) What is the small print of the deal done with Matthew Benham?
Matthew’s loan is secured by a charge over the ground like any other secured lending to the club. Other secured lenders include: Bees United (BU), Barclays Bank, Hounslow Council, John Herting and Eddie Rogers.
The loans that Matthew Benham has taken over are to be repaid in the first place from 50% of net transfer fees received (over and above those budgeted by the club) and 50% of any surplus cash over £250,000 that the club generates in any financial year. The BFC board are satisfied that these conditions do not put an onerous burden on the club noting that we would probably need something like a FA Cup draw away at Old Trafford to provide excess cash over £250,000.
4) Why don’t we go into administration, other clubs have come out of it ok?
If Brentford were to be placed into administration, the administrator would be responsible for safeguarding the assets of BFC, and also to seek a buyer for BFC as a going concern. If sold as a going concern, it is more than likely that the new buyer would inherit the same position as Bees United including the assets (e.g. Griffin Park), but also taking on the debts.
It is possible that the buyer might be able to use any accrued tax losses of BFC against that buyer’s other businesses tax liabilities, which might make the purchase of BFC a more attractive proposition than it may presently seem.
The administrator will take his fees (which will be in the hundreds of thousands pound range) – for conducting the administration – out of the initial proceeds paid by the buyer; it would be hoped (indeed, it might be a condition of the sale in the first instance) that the buyer would also have sufficient funds with which to allow BFC to continue trading.
The real risk however is that the administrator does not find a buyer on a ‘going concern’ basis – if this is the case, then the assets will be realised (sold), and the resulting proceeds distributed (paid) to the secured lenders and unsecured creditors of the company. If the assets realised are more than the debts/creditors, then after paying off the administrator, any remaining funds will then go back to BFC.
At the present time, the value of Griffin Park – the main asset of BFC – is about £10 million and we would have about £7 or £8 million indebtedness, so the club might be left with a small amount of money to play with. This scenario assumes that no players are sold and consequently there would be no incoming transfer fees.
There is also the very real possibility that their individual contracts may have (had to have) been paid up by the administrator, which could leave the club not only without its own ground, but also with no first team, and virtually no money either – very much a ‘doomsday’ scenario. Then there is the automatic ten point deduction for club’s entering into administration.
Other clubs have done well out of administration because they have had different circumstances – their liabilities have exceeded their assets. In that scenario administration may be a good option for the club, but it’s a bad one for the creditors as they don’t get all their monies. This is why there is now an automatic ten point deduction.
5) What is the exact level of debt? How much do we now owe?
The club’s debt is now:
Directors with loans £3.8m
Hounslow Council Bank overdraft (at Jan 2007) £0.2m
Third party debt £4.5m
Bees United £1.4m
GPSL £1.3m
Intra-Group debt £2.7m
Total debt £7.2m
The club has a £500,000 overdraft facility on which the current balance is around £200,000. The overdraft helps with the management of cash-fiow ebbs and fiows throughout the season.
When the Bees United takeover happened last year, Matthew Banham agreed to provide a “standby” loan facility of up to £500,000. This option has not yet been taken up and, in an ideal world, would remain untouched However, it is there if we need it in an emergency.
Currently unused borrowing facilities include the remaining £300,000 on the overdraft and £500,000 standby facility. If these facilities are used the club’s total borrowing will rise to £8m.
6) With the club not paying off the £250,000 loan written off by Ron Noades that was due this month, can’t we spend that on a striker?
The club’s borrowings have been reduced by £250,000, it doesn’t mean that we have that much extra cash. If we couldn’t arrive at a deal with Noades that suited us then we would have had to pay him from Matthew’s “standby” loan which, as per the previous answer, is for emergencies only.
7) What are the club doing to minimise the costs incurred by mistakes off the field?
There is no doubt that there have been mistakes made off-the-field since Bees United first had directors on the BFC board. However there has been considerable progress in cost reduction. The ongoing costs of running the club have been reduced by over £660,000 this season compared to last year, in the following areas:
1) Stewarding & home match costs: £106k
2) Pitch & stadium maintenance: £55k
3) Training ground costs: £33k
4) Football in the Community, Youth & Centre of excellence: £32k
5) Administrative & commercial staffing: £119k
6) General overheads: £116k
7) Amortisation of transfer fees paid & depreciation of fixed assets: £85k
8) Interest costs: £120k
The interest cost saving is before the additional saving which will occur following the deal with Matthew Ben-ham. Despite these savings that have been made there are other areas that are below budget, including the club shop and the Princess Royal. In addition attendances have been considerably lower than we anticipated. Overall the club’s current annual costs still exceed basic income levels by approximately £500k.
The Club are now focused on ways of eliminating this deficit and is undertaking a “bottom up” budget for next season, where every single cost to the business will be examined and justified.
8) Why are we spending money on developing Griffin Park if we are still so heavily in debt?
It will probably take us five years to move to a new stadium after the land has been bought. Therefore Griffin Park will be our home for quite a few years yet – but we don’t know for exactly how long. Over three-quarters of the costs of the improvements are being paid for by a grant. The new roof being built over the Ealing Road terrace this season means that the club can move the home end there if it wishes.
9) When will the ‘man in the street’ be informed of the responsibilities of Bees United and Brentford FC? We want to understand the differences.
The BU board runs the Supporters’ Trust on behalf of members and accounts for its stewardship of the trust at the Annual General Meeting of members. The main functions of the BU board are to represent BU members and other supporters of the club.
We do this by appointing directors to the football club board. Consultation with club directors enables the trust to provide an oversight function over club affairs and to exercise its majority shareholder role as guardian of the club’s long-term future. The administrative functions of the BU board include membership administration and recruitment, fundraising and communication with members on trust affairs.
The BFC board runs the football club on behalf of all shareholders and accounts for its stewardship of the club at the Annual General Meeting of shareholders. The administrative functions of the BFC board include strategy and policy development, engagement of executive management, financial administration, budget setting and oversight, risk management and ensuring compliance with relevant legislation in the conduct of the clubs affairs.
10) Are Bees United on the lookout for possible new investors?
Both Bees United and Brentford FC maintain regular contact with persons that may have an interest in the clubs development and are continually on the lookout for possible new investors or sponsors. If you know someone that wants to get involved, please get in touch.
11) Are things progressing on a new ground and do we have any alternatives to Lionel Road?
It is frustrating that we cannot tell supporters all of the substantial progress that has been made on the Lionel Road site. BFC have made an offer for Lionel Road, but it is unlikely that we will be able to say anything meaningful in public until the site has been sold by BRB (Residuary) Ltd who still owns it. The Bees United Chairman, Brian Burgess, has committed to provide an update every quarter – the next one will appear in early February.
The club are currently focusing exclusively on Lionel Road as a potential site for a new stadium.
12) What are the key benefits of a potential new stadium?
The major benefits include the ability to generate additional income via improved sponsorship deals, better catering facilities, increased attendances and potential ground sharing with a rugby club. In addition a new stadium will provide better facilities to our existing fan base.
13) If Bees United own the majority shareholding in Brentford FC, why do we not have a majority representation on the BFC board?
The club already has nine directors on the board, made up of Bees United funders, directors that have loaned that club money, nominees of the BU board and a Supporter Director elected by members.
During the takeover, some of those loaning money to help finance the takeover wanted to make sure that their directorships would be meaningful and therefore an understanding was reached that BU would not fiood the BFC board with its nominees.
This does not stop BU appointing more directors if it feels it has to in the event that the BFC board is deliberately not carrying out the wishes of BU. However BU has excellent relationships with its loan providers on the BFC board and therefore has no immediate plans to change the current situation. Another (minor) reason for not appointing more directors is that there are already nine BFC directors and they may be joined by a Managing Director. That makes for a large board of directors – we don’t wish to make it even larger.
14) How do we plan to survive if we are relegated to League Two?
The biggest impact is likely to be on attendances. Also, payments from the Football League will drop by around £65k in League Two, after taking into account so-called “parachute” payments.
The club is currently examining these issues. The level of investment in the playing squad versus the risk of a further drop in the average gate next season will require careful consideration by the club over the next few months.
15) Since Bees United bought the club we’ve gone from being top in League One and in the Fifth Round of the FA Cup to now rock bottom. Why should I join?
The last twelve months have not been easy – we never imagined they would be – but from the moment the deal was struck Bees United have been working on your behalf to improve our financial position.
The money contributed by many BU members, through subscriptions and standing orders has already helped to pay off a small proportion of the debt. But the interest payments on the loans has been a constant and major drain on resources, and we are also aware of the resentment among many fans that Altonwood (Ron Noades) continued to hold a financial stake in the club. We are all supporters.
This week, with the huge help of Matthew Benham – a life-long supporter – Ron Noades is no longer involved in BFC. This is a fantastic step forward and creates a much stronger platform for realising our ambitions for the club. Of course, it does not reduce the sums owed by much, or the fact that the club is still heavily in debt. But it gives us invaluable breathing space – we hope this is the sort of news you want to hear from BU. It also means that our future is even more in our own hands – your own hands.
We must take advantage of this opportunity.
Please join those already helping, by becoming a member of your Supporters’ Trust, and if possible contributing via standing order.