Coventry City

TF – I want everybody to get the maximum from this call tonight so please ask the questions you wish. I am going to start with some building blocks for the discussions: strategic aims, sporting performance and financial performance and situation today, e.g. Academy, Ryton, Ricoh.

I’ll also be presenting the accounts – although they usually come out in February, but of course they will be unaudited. I thought it would be useful and you deserve some updated financial insight.

Strategic aims – Our aim is to progress through to the Championship. Our ambition is underpinned by having a successful academy, bringing through local talent and having a good solid recruitment process – which comprises bringing in players of the correct age, mentality, physical and technical ability.

We want to co-join the Academy and first-team training facilities on one site. Ryton is not currently fit for purpose for that end. For example, currently, there are no indoor or outdoor 3G pitches. 

The club needs to own its own stadium. The stadium ownership is key. 

Sporting performance - We are disappointed. At the same time last year we were doing very well. We feel we have the right squad and the right mentality to go forward. There need to be two additions to the squad. We saw glimpses at Port Vale of how we can perform.  Nobody feels the disappointment more than the board. 

Financial Performance - We are heading in the right direction.

Financial Numbers - The scare stories circulated by people who simply don’t know our financial numbers are disappointing. I find this misinforming inappropriate and irresponsible.  This is the reason the financial numbers are being released to you tonight ahead of formal release by our accountants.   These are unaudited but I do not expect them to change significantly. 

Revenues:

FY ending (May 31st) 2014: £3.8m

FY 2015: £4.8m

FY 2016: £5.4m

Operating loss last year: £3.8m

Operating loss this year: £1.7m

EBIT/profit after player trading last year: Loss of £1m

EBIT/profit after player trading this year: +£700K

As a business we are travelling in the right direction. 

This business model is not ideal and we need to be breaking even before player trading. The stated aim is to get away from selling footballers when we need to but only sell players when it is the right time for the football club and not because of any short fall in the P/L. Every League One club is dependent on player trading.

TF: Mark Venus wants to present the football model and I think we should indulge Mark in this regard. Mark wants to explain and talk through the budget and how he allocates funds to the different parts of the budget, for example across Ryton and the Academy. Ryton is obviously by far the biggest cost centre; it is where the revenue is spent. Mark wants an opportunity to present his insight and will do this in the very near future.

TF: In effect we are self-sufficient, but as professed it is not a great model. We need to sell footballers every year and I don’t like this position. Although the financial numbers are heading in the right direction, in my opinion we – like all League One clubs – have the wrong business model. We have to trade footballers to make ends meet. 

Our business is at a competitive disadvantage to other League One clubs. Unlike other clubs we only receive match day ticketing revenues.  We don’t get any meaningful match-day food, beverage & catering revenue. We got a paltry £72,000 in total last year which compares like for like with Highfield Road of between £1.3 -1.5million each season. We do not get non-match day revenues. We simply need to own our own stadium because of revenues, as we need to be on a level playing field to every other club. We are at a complete competitive disadvantage now. 

TF: We do get some money for footballers who have been previously sold – we get a trail of income which is player performance related etc. e.g. appearances/goals scored. 

TF: Yes, they are significant. The follow-on trail of potential income for Callum Wilson is substantial. 

TF: Not at all. Let me make this clear, this football club has to player trade every year to make ends meet. I do not want to player trade but due to the business model in place it is simply a necessity. 

CH - How does the board see the model going forward? 

TF: We see the financial performance – overall business loss to profit - as travelling in the right direction. Indeed, we have halved our operating losses season on season. It is critical we access further operating revenues. This ultimately requires us to own our own stadium. 

Away from match-day revenues, we have a joint venture at Butts Park, which is focused on generating non-matchday revenues for the benefit of the football club and Coventry Rugby Club. We put non-matchday events on – although small in scale at the moment, we are investing in its growth. This in itself highlights the bizarre situation the club finds itself in - we are utilising another stadium infrastructure in the city to help develop our business. 

SBA - How damaging was the Sixfields move to the business model?

TF: We were losing a lot more money before we went to Sixfields. We subsequently restructured the business and the cost base. The cost base is firmly under control on the return to the Ricoh. We now need to focus not on costs but revenues. We now need to build the top line. 

TF: Firstly, let us start with the Ricoh position and a long-term deal there. We’d be delighted if we could do a deal at the Ricoh which was economically viable for Coventry City Football Club. Many colleagues have tried to crack the code at the Ricoh but could not because the stadium owners likely need every pound of income generated. I would suggest that the stadium owners are not in a financial position to share the income.  On the one hand, I suspect that the stadium owners need every pound of income to manage their operational cash flow and, on the other hand, I suspect that supporting the bond covenants equally requires every pound of income. 

TF: I try to take care of our own business.  I am not interested in anyone else’s business.

TF: So, Butts park, where are we? We’ve previously developed a scheme which comprises a stadium, residential, a hotel, student housing and retail. The massing exercises and financial modelling shows it works and we have two potential institutional investors interested in the development.  This scheme would be good for Coventry City as a club, Coventry as a City and the community - providing inward investment. 

However, at this time the development scheme will not move forward. There is a political embargo. The club cannot move forward on the site. The council want the owners of the club to stop legal proceedings. I cannot influence this situation at all. I can only focus on the things I can influence and that I can change. 

However, if at some moment in the future – scintilla temporis - the political embargo is set aside or falls away then we would have an opportunity to potentially build-out Butts Park 

In brief, the development scheme is as follows: A stadium that can hold between 23,000-25,000 supporters – dependent on the allocation and number of corporate boxes and lounges. Student accommodation, two bed and one bed residential, 25,000 square feet of retail. However, at the moment, the scheme is simply set to one side because of the political embargo. We can’t take it forward currently. 

TF: Yes, we are in political embargo – we have done what we can do for now. We can’t get excited. 

TF:  Yes, of course.

TF: What we’ve done is discuss with all the teams, including Coventry United, and encouraged them to play there in the interim as it proves that football can be played at BPA. 

TF: As I understand, there were leaked Council emails suggesting so, but I have divorced myself from the politics of Coventry.

TF: They read the papers and understand the situation. However, the owners of the club are on a very separate legal track with the council. I can’t influence that, as boring as it sounds. We have to assume at some stage in the future all this gets set aside or resolved and that’s the only assumption I can work to. 

TF: I understand that. I have to communicate the club’s business to our supporters I’ll be doing that with anyone I can and I am willing to be open to everyone. We want to improve communication. The animosity towards the club’s owner in my personal opinion is quite inappropriate. We have to communicate as a club and drag the football club away from legal and political fights.

TF: If we were to go ahead, our planning team thinks it can be done within three years, but that would require all parties in the city to work together. 

TF: In simple terms. The political embargo would need to fall away, then take the planning proposal forward, then if approved we can move the scheme on. We are not in control of the situation and therefore not assuming that it will necessarily happen. 

TF: Do I think ACL/Wasps would say no to a short term rolling deal at the Ricoh? I suspect not. However, we have not asked that question. Due to the legal situation they’ve opted to step away. I would be hopeful if the political embargo falls away, then a short-term rolling deal at the Ricoh would follow. 

TF: Putting Ryton into council local plan – We do want to move to a site that allows us to co-locate the academy and the first-team. Can we please set aside the notion that this is some sort of asset-stripping exercise? So we are all clear, in terms of land value then we have not discovered oil beneath Ryton - so we are not talking a huge uplift in value. We are talking a value that will allow us to buy another site and set up a basic infrastructure to facilitate a new training ground. 

There is a strict planning control in place. Sport England don’t allow you to sell sports facilities without having somewhere to relocate – so we have to identify and secure the new site before they allow planning on Ryton. 

Mark Venus attended the planning meeting as he is a director of the club and, of course, he was stepping in for me. 

TF: We spoke about potentially moving the training ground there and also creating a local community coaching hub for children.  

We are currently focusing on securing business continuity for the academy to ensure we can retain our Category 2 academy status. The Coventry Sports Foundation is currently helping the club to secure its academy position in Coventry. I suspect that the CSF would be very disappointed if it couldn’t help preserve the city’s football academy and if we lost the Cat 2 status. 

TF: We’ve got a preferred site and we are negotiating. Again, in terms of timeline, we have to recognise, it is a long process for planning.  

TF: That’s a very reasonable comment and we want to be open of course. 

TF: Very good point. Absolutely right.

TF: There is no blanket ‘ban’ on the Coventry Telegraph – they can report on the club, go to football matches. Two things need to be known – I had a phone call with the editor on 6 September and the call minutes record that Mr Perry clearly stated that the newspaper remained impartial and would not be partisan. Mr Perry made the explicit point that the Coventry Telegraph would not be calling for new ownership. In fact, we have had numerous previous complaints around reporting which the club felt was not fair or accurate. 

Whilst we are not going to blanket ban the newspaper the club was so disappointed with the way the newspaper behaved. We suspect that by calling for a change of ownership in a small number of days after reassuring the club he would not be calling for such, the Editor didn’t act in his own regard, we are quite sure that such an immediate volte face would have required his Trinity Mirror bosses at Canary Wharf to support and sanction this. In terms of etiquette, I didn’t even get the courtesy of a phone call from Mr Perry to explain his 180 degree turn. 

TF: To move back to his consulting career, nothing untoward or exciting – left of his own accord. 

TF: Following Chris’s departure, we have retired the MD shirt. Mark is the technical director and a director of the club so he has responsibility to the shareholder that the business is run in a fit and proper manner, so he is involved with finances and operational side as well as football. However, his time is predominantly football, certainly at the moment first-team football.  

TF: Very regrettable. Tony was a gentleman and very open. I think he was getting frustrated with the situation because he couldn’t repeat the impact of the first part of last season. He reflected on his position and took a decision to step away.  

TF: The sense I got at the time was that Mark Venus who has known Tony for many years, had a number of discussions with Tony and knew it was likely best we let him leave and spend time with his family. 

TF: It’s a great idea, challenge we have is EPPP is fastidious on its requirements; we may have many problems with that split site arrangement. In terms of multiple sites we are working with the Football League EPP advisor, Dave Wetherall. My suspicion is we may end up across two sites, one of which may be a university, but who knows. Most importantly we are looking for a solution. 

TF: It is not on the cards. We are not looking to move the club out of the city. When we reviewed Butts Park as a potential solution we recognised it was in Coventry and every time I talked about opportunities outside of the city people said it should be Coventry City IN Coventry. 

However, we will do what we have to do to preserve CCFC. We do not want to move out. 

The one thing I will say is: fans have a right to protest and can shout what they like such as ‘Sisu out’, but could I encourage people to reflect what they think negative chanting does for the lads on the pitch – do they think it is motivational?

My sense is state your position about the owners and let your feelings be known but please, once the first whistle goes, encourage the team. Second thing – If I hear “if we go into administration that’s a good thing.” Really? That’s not a smart option. Let me be clear, all this anti-ownership protest hurts the football club and hurts the people who work at the football club.