BCFC: Which way does the long long road lead?
Blues Trust has been concerned for some considerable time about the long-term future of our great Club. We have always said the fans are the true owners of a football club and those that financially own the club are only custodians. As fans we have to accept different custodians, some good, some bad, but what is unacceptable is the custodians putting at serious risk the future existence of the club. Our fear is that the financial position (over £100M debt) is fast becoming an unrecoverable position. There should be new accounts out soon that will let us look more accurately at the state of the finances; and the income from Jude Bellingham and Che Adams transfers will likely show a profitable year, but our view is that the club still has an underlying loss of over £20 M per year.
The situation is more complex than the scenarios we discuss below because of the web of owners / shareholders, the parent company BSH continuing to shore up the effectively insolvent BCFC to maintain its HKSE listing and the paper value of its shares (Please see the excellent work and explanations offered on almajir.net to understand this).
Promotion to the Premier League (with an increased income of about £110M per year) and staying up, together with a balanced financial plan, appears to be the only way to pay off the debt, sustain the club and become profitable. The essence of this is stated in the recent partial sale agreement of the club to Vong Pech. In that agreement an assumption is made that the position in the Premier League is sustained and there will be no increase in expenditure and wages (although this is described as fantasy by our Financial Analyst from the Football Supporters Association).
Promotion is clearly not going to happen this season and even if relegation to League One is avoided, the financial position will be more severe next season; the Club will still be in the position where promotion to the Premier League is the way to avoid insolvency. How long the owners continue funding (through various means) an effectively insolvent club becomes the question. There comes a point when the debt and financial stress is that high that even Premier League income would be insufficient to turn it round.
Relegation to League One would mean reduced income, the same operating costs (unless there is a fire sale of players) and tighter financial regulations pointing to a faster accumulation of financial difficulties in an already effectively insolvent club. Additionally, the possibility of Premier League income disappears for at least two years. Again, the question is how long would the owners continue to fund the losses and not require BCFC to repay debt / loans to them .
Our fear is that insolvency is inevitable – whether by the owners running out of money, deciding to cut their losses, creditors bringing winding up orders to have CCJs paid or authorities (HKSE / EFL / Companies House) deciding that there have been financial dealings outside their rules.
There is a strong argument for believing that the poor performance on the pitch (for several years now) is a symptom of unrest and failing in the Board room. Over the past few years the Club has regularly…almost routinely… changed players and changed managers, all to no avail. The current squad is good in terms of quality and the current manager has a decent track record at this level. But performances and results are consistently poor. At the same time, worrying reports continue to emerge that employees of the Club at all levels work in a very challenging environment and one which is not conducive to achievement and success. Again, is this linked to the culture from the board room infecting all parts of the Club? In support of this assertion, think about when you have worked for a company where the top bosses are genuinely supportive of you and then contrast this with working for a company where senior management threaten and blame you. Which company gets the best out of you?. Much of the time this is psychological and not on purpose; so this is not about criticising the players, manager and other employees but trying to understand what might be happening.
At the Trust we are doing work to understand and prepare for what would be required if the Club should fail financially. We have in place contingency plans for if the worst should happen, including plans to engage with administrators to find new owners with the Club and its fans at heart.
It is the Trust’s view that a change of ownership would be the best catalyst to emerge from the current sorrow and frustration that all supporters are clearly feeling. However it is very difficult to find a way to promote a change in ownership. It’s true that the louder and more united the fans voice is in calling for a change of owners, the higher the discomfort felt by the Board. However, we know from experience that the existing Board is not minded to share information with supporters and that their ears are mainly closed to the fans. We have repeatedly tried for dialogue but without success. We have found that having a loud voice in Hong Kong can be more effective (our coverage in South China Morning Post) and that complaints to HKSE can have an effect (1875 campaign last year). We also consider that bringing complaints to the attention of the EFL can help to promote further investigation. We will continue to explore these and other routes to ask questions and highlight failings within the Club.
Unfortunately these actions do not promote change in themselves, but the more complaints and the more specific they can be then the more chance of authorities forcing a change. At Blues Trust we are open to any suggestions to promote change and we encourage Trust members and supporters to share thoughts and ideas with us.
KRO – it’s going to be a long long road.
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