Esablade
Never knowingly wrong.
- Joined
- Jan 5, 2014
- Messages
- 17,842
- Reaction score
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- Banned
- #181
So, following on from yesterday’s look at perhaps the most critical period of our recent history when we reached the Prem in 2006.
We established that the Blades had the smallest wage increase by percent of the promoted teams with United increasing spending by 48%, Watford by 78% and reading by 108%.
United’s wage bill was listed as £22.4 million, second lowest in the league:
http://news.bbc.co.uk/1/hi/business/7424134.stm
Reading’s increase may look very large, but we have to remember that a new three year TV deal came into force the season we went up, bringing the Blades, Reading and Watford around £20 million of income from TV alone.
Chelsea had the highest wage bill of £132.8 million.
http://news.bbc.co.uk/1/hi/7423254.stm
McCabe felt the current squad was good enough to stay up and was actually looking to reduce the wage bill, despite it being the second lowest in the league. Warnock was tasked with ‘wheeling and dealing’ to get the necessary players in/out, with Nugent appearing to be his no.1 target to play up top with Hulse.
Warnock did have money to spend in January, ‘probably’ around £7 million (under the proviso of reducing the wage bill and to include all fee's, cost's and wages) McCabe confirmed: "If we're adding the £5million from the loan note allocation, plus the budget left over from the beginning of the season, he probably has something like £7million.
This £7 million comprised £2 million remaining from the summer transfer kitty and £5 million to be raised through new funding by way of an issue of loan notes to generate £10 million pounds for the club.
“The issue of the Convertible Loan Notes is conditional on the passing of the
resolutions, which are to be proposed at an EGM and it is proposed to issue the
Convertible Loan Notes to the Scarborough Investors, a group of investors
comprising Scarborough Property Company plc, SDG Caledonia Limited and
SDG Property Holdings Limited, all of which are companies directly or indirectly controlled by Kevin McCabe, his immediate family and/or related trusts, inapproximately equal amounts.”
“the Company shall pay interest on the principal amount of the Convertible
Loan Notes, together with any accrued but unpaid interest, at 3 per cent. per
annum above the base lending rate of the Bank of Scotland from time to time
(calculated on a day to day basis)”
In July 2006, funding of £10million was secured from the Bank of Scotland for investment in the first team squad. At that time, the Bank of Scotland confirmed that no further debt would
be provided to the Group for the funding of football activities. Since the start
of the 2006/2007 season in August 2006, results on the pitch have left the Club
in 16th position in the Premiership, three points outside of a relegation
position, and the Directors are of the opinion that further investment in the
first team squad is required in the transfer window in January 2007 to improve
the chances of retaining Premiership status. In the absence of any further
funding from the Bank of Scotland, the Scarborough Investors have agreed to
provide funding of £10 million before expenses by conditionally agreeing to
subscribe for the Convertible Loan Notes. It is proposed that up to £5 million
of the proceeds received from the Fundraising will be invested in new players
for the first team squad by way of transfer fees and additional wages.
I’m guessing these are the much debated ‘10% interst rate loans’ often brought up in discussion's on McCabe , the RBS base rate was around 6-7% at this time…not entirely sure here…?
The other £5 million raised through the loan notes to the club was put towards, ‘diversification’ and ‘to invest further in our off-field revenue streams.’ in order eventually, fund the first team and running cost's.
Two new joint ventures were to be used of this, United Scarborough Developments Group Limited and Sheffield United Realty BV.
“The first of these will focus on property development opportunities in the UK. The second continues our property activities in China where we will aim to capitalise on our strong network of contacts in a region where we already own a football club and where we believe there are considerable opportunities.”
http://www.investegate.co.uk/sheffield-united-plc--sut-/rns/fundraising/200612060700583250N/
Again, not entirely sure what exactly we invested in but we did buy a ( couple?) of upmarket health clubs dahn scarf around this time, I believe?...and who knows what the fuck we bought in China re: Chengdu Blades.
It’s worth quoting the Swissramble blog here:
As stated earlier, the diversification into non-football activities has not been a financial success. Since 2006, this decision has adversely impacted the financials, increasing the magnitude of Sheffield United’s losses, especially in 2010, when £13.1 million of the total £18.8 million loss came from these divisions, leaving the football club (UK) loss at “only” £5.7 million. On the other hand, the impact was considerably smaller in 2011 at only £0.6 million with football contributing almost all of the £13.6 million total loss.
This was partly due to the directors deciding to sell or dispose of these loss-making businesses. In the last couple of years, they have sold the Copthorne hotel and the Blades Enterprise Centre, though have retained options to repurchase as and when finances allow, and also disposed of their interest in Chengdu Blades. Following the downturn in commercial property, they sold their 50% interest in Blades Realty Limited, while they also sold the Thames Club and entered into an outsourcing arrangement with Compass for their conferences and events business.
http://swissramble.blogspot.co.uk/2012/02/sheffield-united-blades-rediscovering.html
It's interesting to look back on the what if's and maybe's...it appears that McCabe's approach was far too cautious when his chance came, perhaps he didn't trust Warnock with more cash, who, despite his scattergun approach, achieved promotion the previous year when McCabe raised the club's funding levels to those of our rival's after years of scrimping and saving, plodding along in the Championship.
If we'd have invested to the same scale as Reading instead of buying real estate that ended up adversely effecting the club's finances for years to come, if we'd got Nugent in to play up top with Hulse etc....if 'Warnock wasn't out of his depth'
, "if the economy hadn't tanked" etc etc...
Hopefully things have now changed and ambitions are more modest, but still, I'll hold off with my praise for McCabe until (hopefully) we're 2 or 3 years down the line with Wilder and moving forwards instead of stagnating in reduced circumstances each year in L1...but who knows, maybe he will have finally sold the club/secured more investment by that time or the mysterious Princey will have increased his stake and we see this 'next level of investment'?
Last words go to the chief executive at the time, Jason Rockett:
“the Sheffield United business plan is not reliant on Premier League football.”
*Tune in soon for the next instalment of "How not to run a Football Club-The Bryan Robson years."
We established that the Blades had the smallest wage increase by percent of the promoted teams with United increasing spending by 48%, Watford by 78% and reading by 108%.
United’s wage bill was listed as £22.4 million, second lowest in the league:
http://news.bbc.co.uk/1/hi/business/7424134.stm
Reading’s increase may look very large, but we have to remember that a new three year TV deal came into force the season we went up, bringing the Blades, Reading and Watford around £20 million of income from TV alone.
Chelsea had the highest wage bill of £132.8 million.
http://news.bbc.co.uk/1/hi/7423254.stm
McCabe felt the current squad was good enough to stay up and was actually looking to reduce the wage bill, despite it being the second lowest in the league. Warnock was tasked with ‘wheeling and dealing’ to get the necessary players in/out, with Nugent appearing to be his no.1 target to play up top with Hulse.
Warnock did have money to spend in January, ‘probably’ around £7 million (under the proviso of reducing the wage bill and to include all fee's, cost's and wages) McCabe confirmed: "If we're adding the £5million from the loan note allocation, plus the budget left over from the beginning of the season, he probably has something like £7million.
This £7 million comprised £2 million remaining from the summer transfer kitty and £5 million to be raised through new funding by way of an issue of loan notes to generate £10 million pounds for the club.
“The issue of the Convertible Loan Notes is conditional on the passing of the
resolutions, which are to be proposed at an EGM and it is proposed to issue the
Convertible Loan Notes to the Scarborough Investors, a group of investors
comprising Scarborough Property Company plc, SDG Caledonia Limited and
SDG Property Holdings Limited, all of which are companies directly or indirectly controlled by Kevin McCabe, his immediate family and/or related trusts, inapproximately equal amounts.”
“the Company shall pay interest on the principal amount of the Convertible
Loan Notes, together with any accrued but unpaid interest, at 3 per cent. per
annum above the base lending rate of the Bank of Scotland from time to time
(calculated on a day to day basis)”
In July 2006, funding of £10million was secured from the Bank of Scotland for investment in the first team squad. At that time, the Bank of Scotland confirmed that no further debt would
be provided to the Group for the funding of football activities. Since the start
of the 2006/2007 season in August 2006, results on the pitch have left the Club
in 16th position in the Premiership, three points outside of a relegation
position, and the Directors are of the opinion that further investment in the
first team squad is required in the transfer window in January 2007 to improve
the chances of retaining Premiership status. In the absence of any further
funding from the Bank of Scotland, the Scarborough Investors have agreed to
provide funding of £10 million before expenses by conditionally agreeing to
subscribe for the Convertible Loan Notes. It is proposed that up to £5 million
of the proceeds received from the Fundraising will be invested in new players
for the first team squad by way of transfer fees and additional wages.
I’m guessing these are the much debated ‘10% interst rate loans’ often brought up in discussion's on McCabe , the RBS base rate was around 6-7% at this time…not entirely sure here…?
The other £5 million raised through the loan notes to the club was put towards, ‘diversification’ and ‘to invest further in our off-field revenue streams.’ in order eventually, fund the first team and running cost's.
Two new joint ventures were to be used of this, United Scarborough Developments Group Limited and Sheffield United Realty BV.
“The first of these will focus on property development opportunities in the UK. The second continues our property activities in China where we will aim to capitalise on our strong network of contacts in a region where we already own a football club and where we believe there are considerable opportunities.”
http://www.investegate.co.uk/sheffield-united-plc--sut-/rns/fundraising/200612060700583250N/
Again, not entirely sure what exactly we invested in but we did buy a ( couple?) of upmarket health clubs dahn scarf around this time, I believe?...and who knows what the fuck we bought in China re: Chengdu Blades.
It’s worth quoting the Swissramble blog here:
As stated earlier, the diversification into non-football activities has not been a financial success. Since 2006, this decision has adversely impacted the financials, increasing the magnitude of Sheffield United’s losses, especially in 2010, when £13.1 million of the total £18.8 million loss came from these divisions, leaving the football club (UK) loss at “only” £5.7 million. On the other hand, the impact was considerably smaller in 2011 at only £0.6 million with football contributing almost all of the £13.6 million total loss.
This was partly due to the directors deciding to sell or dispose of these loss-making businesses. In the last couple of years, they have sold the Copthorne hotel and the Blades Enterprise Centre, though have retained options to repurchase as and when finances allow, and also disposed of their interest in Chengdu Blades. Following the downturn in commercial property, they sold their 50% interest in Blades Realty Limited, while they also sold the Thames Club and entered into an outsourcing arrangement with Compass for their conferences and events business.
http://swissramble.blogspot.co.uk/2012/02/sheffield-united-blades-rediscovering.html
It's interesting to look back on the what if's and maybe's...it appears that McCabe's approach was far too cautious when his chance came, perhaps he didn't trust Warnock with more cash, who, despite his scattergun approach, achieved promotion the previous year when McCabe raised the club's funding levels to those of our rival's after years of scrimping and saving, plodding along in the Championship.
If we'd have invested to the same scale as Reading instead of buying real estate that ended up adversely effecting the club's finances for years to come, if we'd got Nugent in to play up top with Hulse etc....if 'Warnock wasn't out of his depth'
, "if the economy hadn't tanked" etc etc...Hopefully things have now changed and ambitions are more modest, but still, I'll hold off with my praise for McCabe until (hopefully) we're 2 or 3 years down the line with Wilder and moving forwards instead of stagnating in reduced circumstances each year in L1...but who knows, maybe he will have finally sold the club/secured more investment by that time or the mysterious Princey will have increased his stake and we see this 'next level of investment'?
Last words go to the chief executive at the time, Jason Rockett:
“the Sheffield United business plan is not reliant on Premier League football.”
*Tune in soon for the next instalment of "How not to run a Football Club-The Bryan Robson years."
.
