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Fisher answers big questions

23 February 2013

Sky Blues CEO addresses the big questions on rent situation and club's future

With much speculation and comment on the situation regarding rent and revenues at the Ricoh Arena, Coventry City chief executive Tim Fisher has answered some of the burning questions.

What is the state of play regarding rent negotiations?

We were surprised to see media reports saying that the negotiations had broken down. As far as we were concerned they were ongoing.
On the back of those reports, I stated publicly that I felt it was time for an independent, third party mediator to get involved.
We believe our case is right, solid and, to be frank, the only sustainable way forward for the football club, while ACL, the Council and the Higgs believe they are right. 
Rather than fight this out in the media, let’s have someone who understands both football and business who can come in with an objective view and listen to the facts around what is happening here. We can all then agree to work towards a solution set out by that independent party.

Why have you turned down an offer of £150,000 a year in rent?

We have never been offered a rent of £150,000 a year. In fact, we have agreed to pay a rent of £400,000 per year. The £150,000 figure is completely misleading and false. The business rates valuation office has indicated that we might be owed a rebate on the rates we have been paying (because playing home matches does not amount to full occupation for rates purposes) – a rebate that has nothing to do with ACL. The club has overpaid business rates for many years and, for whatever reason, ACL are off-setting this cash rebate against rent in quoting £150,000 a year.
The big point here is that the future of football is going to be around driving in every strand of possible revenues and having access to them.

Why are the revenues so important?

This is where I have to talk about Financial Fair Play and the Salary Cap.
I understand it may not be on the top of the list of priorities for a lot of supporters but it is real and it is happening.
In a nutshell, you are now only permitted to have a total first team playing squad cost (in terms of salaries and fees) which corresponds to a certain percentage of your revenue. So it is vital that we need to increase our revenue to put quality on the pitch, it’s as simple as that. It hasn’t hit us as hard this year as some of our current players fall outside the actual squad costs due to the date they signed their contracts with us. However, next season will be a completely different story as every penny we spend on players will be counted by the Football League and if we exceed our Salary Cap under the rules of Financial Fair Play, we will be immediately be placed under transfer embargo, it’s as simple as that.
So, as I say, we feel we are very close to an agreement on rent but we have to be able to access those matchday revenues. If we don’t, the playing squad will suffer and we will be placed into a downward spiral. People may say food and beverage revenues are not very significant but in the final year at Highfield Road, they amounted to more than £1million.

So how can you access the food and beverage revenues?

It is very difficult. ACL sold the food & beverage business to Compass for millions of pounds. Therefore, the contract on match day food and beverage is with Compass. Herein lies the big problem. We haven’t yet had any consistent numbers on food and beverage, despite numerous requests, and there hasn’t been a conversation with Compass. That is why it is impossible for us to have agreed a deal because until we have those numbers and have those conversations, a deal cannot be struck on how we access revenues.

So why didn’t SISU raise these questions about rent and revenues when they bought the club?

Firstly, the initial deal between the football club and ACL on rent was always going to become a real issue at some stage and everyone involved must share blame on that one. I have looked at the details and it is just an incredibly unfair deal, frankly.
When SISU took over the club, a deal on the stadium should have been a priority but the initial focus was on the team. 
The recent introduction of Financial Fair Play has really focused the minds on what revenues are required. The rules of the game have changed. Football clubs have to show themselves to be solid sustainable businesses that only spend what they can afford and, as I said above, if you break the rules there are severe consequences.
It has always been the aim to get the club on sound footing where it gets closer to break even, but that has become more immediate.

So you admit SISU has made mistakes?

Absolutely and Joy Seppala has apologised for them but none of us should forget that she has put nearly £45 million into the club and continued to fund it without a penny in return; she is totally committed to the club. We want to get back into the Championship as quickly as possible and that cannot be seen in isolation from getting the club onto a sound financial footing, the two now go hand-in-hand. The more revenues we generate beyond season tickets, match tickets, sponsorships, retail sales the more we can put onto the pitch. That is why those additional revenues are crucial to us.
I know some supporters may never like SISU. But the aim of actually getting to a point where the club is less reliant on funding from the owner has to be good for everyone.

And are you really willing to build a new stadium if talks break down and, if so, how can you afford it if you won’t pay the rent?

The ideal scenario is we find an agreement that suits all parties that sees Coventry City playing at the Ricoh Arena in the long term. But if that agreement cannot be found, we have to look at alternatives.
Building a new stadium would require a detailed consultation with fans and would require a long-term finance deal from outside investors. But it would mean we would be in control of our own destiny and our own revenues and it would be far better financially than the current deal on revenues and rent.
As I say, we still believe a deal can be reached and that is why we have called for an independent third party to come in.

Going back to the start of all this, why did you stop paying the rent and not just ask for a better deal?

The football club had been locked into a 49-year rental agreement with no break clauses in to allow a review when circumstances change and, ask anyone in business, they would expect breaks in a rental agreement of this kind. It was in excess of £1 million rent each year and rising per annum.
I had to take a radical position, dig my football club heels in order to focus people’s minds. We were, put simply, a club with an unsustainable financial position, which included that rent. It was way in excess of what the club could afford and the discussions were falling on deaf ears. But when people say we ‘stopped’ paying, that’s not correct because a very substantial sum of interim rent has been paid to ACL.

How much has been paid since the club ‘stopped’ paying?

I think this is a point that has often been missed. There was an account set up for ACL to draw down money from the football club.  When we stopped paying the rent there was more than £500,000 in that account. It has been emptied by ACL. We have since paid over £300,000 in so-called matchday fees or interim rent since the start of the season, thanks to a deal brokered by our financial director and the former chief executive of the Ricoh Arena, Daniel Gidney. Those matchday fees don’t include things such as policing, stewarding, West Midlands Ambulance Service and St John’s Ambulance. We pay for those separately and additionally. So while it’s often said we haven’t paid the rent, more than £800,000 has been paid by the club to ACL since I took the stance last spring.

So have the club’s banks been frozen and what does this mean?

I have read and seen concerns that this could have led to staff, including players, not being paid but we are working as hard as we possibly can to make sure we can still operate and function on a normal basis and that staff are being paid as usual. I know people look upon us as big bad SISU, but we cannot be forced into a deal that is not the right one in the long term for the football club – because that’s just not viable for any party involved. The football club comes first.

What assurances did Mark Robins not receive before he left the club?

Mark knew the situation when he arrived and while, yes, he did want to know what the Salary Cap for next season was going to be, I don’t think the part that played in his departure should be overstated. But, let’s be clear, the candidates for the managerial post now are all asking about Financial Fair Play and Salary Cap. As I said, football is changing and if candidates are asking that question, it shows you how important it is. It’s right that football becomes a more sustainable business but, at the moment, the way Coventry City is unable to access all of the revenues means we are going to be hamstrung next season.

What is your final message to the supporters?

This is not as simple as a rent reduction so to those who just say ‘pay up’ or take the offer on the table, I say: a) we have paid more than £800,000 since this blew up last spring; and b) it’s about getting a long-term deal that means the club can compete with others on a level financial playing field.
I understand that supporters just want a resolution because of the time this has dragged on for but we have to get this right now in the short, medium and long-term interests of Coventry City. As I said before, the club comes first.

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