Championship Finances – The dilemma facing #Charlton Athletic #CAFC
It’s hard to believe that less than twelve months have passed since Roland Duchatelet acquired Charlton Athletic, through his ownership vehicle Staprix.
So much has happened since Charlton became a part of the Belgian’s network of clubs; a bewildering influx of loan players who, overall, proved not to be fit for purpose, the departure of club icons, including Manager Chris Powell, a successful fight against relegation under interim Manager Jose Riga, the arrival of a second new Manager Bob Peeters, the installation of an expensive new pitch with an effective drainage system and undersoil heating, the summer makeover of a tired looking Valley Stadium.
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Asking former Supporters' Directors to do teapot impressions is a novel approach.....
Evina, Gower, Hughes and Church in the summer. Followed by Koc, Nego, Thuram, Parsysek in January. And Tudguy of course.
For sure Riga managed to get something from Sordell, Ajdarevic and Reza - in fact enough to keep us up.
Fortunately the summer arrived and the 2012-14 squad could be dismantled. None of those above, save Church are at Cafc. What's interesting is that for the same FFP loss of £2.6m we are now mid-table.
But the rebuild is not finished. It's clear to all, especially after we had Coquelin on loan, that the first team squad needs more quality to push on. I wonder what additions we will see in January? I would welcome Ajdarevic and Watt, but if that's it then there isn't much ambition for the season. Alternatively get the right striker in and a win vs Blackburn and we could be looking at another cup run?
The most worrying part for me is the revelation that we need to raise a further £1m net through transfer dealings to stand still. The only players we have that might fetch that sort of money are probably Vetokele, JBG and possibly Gomez and I'd be disappointed to see any of them leave.
It is very difficult to see how we can get anywhere near to breaking even in this division, more so if there are plans for big investment in the training ground & academy.
http://www.decathlon.co.uk/forclaz-500-mens-hiking-fleece-navy-blue-id_8189204.html
Gower was a horrible decision, although I don't know what he cost. Church was a necessary one because we had one striker going into the final week of pre-season. The then owners wouldn't or couldn't give Powell money for better.
The detail missing from Mundell Fleming's article - much of which I agree with, as he knows - is the removal of £1m in 2012/13 wages for BWP and Fuller and a second £1m and more in savings from Taylor, Button, Kermorgant, Stephens, Wagstaff, Haynes, Smith (and Alnwick, although as above he was not in the 2012/13 budget). This is not speculation. We know that money was taken out. We know what they cost, from the document leaked to VOTV.
That's what makes the operating costs baffling, as I set out a month ago, especially if the exceptional item of £500k which sits outside the like-for-like figure is paying off Paul Hart, Martin Prothero and various more junior employees made redundant last summer.
If these player departures were necessary - and clearly some like BWP needed to move on - to try to reduce expenditure it makes no sense that ultimately there were no savings yet the outcome was much worse. Ordinarily you'd put that at the manager's door, but in this case it must be clear to even the most recalcitrant of Powell's critics that the January signings were not his choice.
FA Cup bonuses are part of the answer and the cost of Sordell I don't know, but it suggests that not only were the January six largely useless they were also relatively expensive (especially because they only had a half-year effect on the numbers) because the other signings can't have been. Can they?
"The clear implication is that any savings made on the playing side during the summer of 2013 were then reinvested, both during that summer and in January this year, some of which would have been on loan signings.
Given that further salary savings were made in January, with the sales of Kermorgant and Stephens in particular, this is, perhaps, an alarming conclusion given that the club still found itself in a desperate fight to avoid relegation.
If nothing else, the results demonstrate the profound difficulty of breaking even in the Championship while remaining competitive on the pitch."
As you suggest, it's far from clear how the numbers might have worked, but what is beyond doubt is that we must have made a number of poor value for money signings.
It's speculation on my part obviously, but I suspect that the Club's management made at least two important errors of judgement last season.
First, we know that by the summer of 2013 the then owners were looking to sell the Club. Presumably, they positioned it as being established in the Championship. While waiting to find a buyer, they probably thought it sensible to minimise losses in the meantime. However, its at least possible that they were misled by our 9th place finish the previous season and felt they could release a number of expensive players and replace them more cheaply. Hence, taking a calculated risk that even though this might weaken the squad the risk of relegation would be manageable.
In reality though we were a bottom third side, which had diced with relegation, but which had "outperformed" and was flattered by the final table. We had not been the ninth best side in the league. There was no room to weaken the squad.
It's possible that they'd already smelt the coffee before the summer ended and reinvested more of the money saved than initially intended. Michael Slater's bold cost cutting ambitions may have collided with the real world even before the season began.
Second, it might be that when Roland Duchatelet acquired the Club his immediate objective was not financial prudence, but survival in the Championship. The sale of Kermorgant, Stephens and Smith was not necessarily inconsistent with that priority.
The real error of judgement was in underestimating the standard in the Championship and, as importantly, the type of player needed. The money then spent both on permanent signings and on loan players may have been viewed as a short-term measure to ensure survival, with the plan being for the long-term strategy to kick in during the summer. The Club was then thrown into turmoil when it became clear that the new players weren't good enough. We survived by the skin of our teeth.
While all of this is history, the key lesson is screaming out at us. The Championship is an incredibly tough division which you underestimate and take liberties with at your peril. There is a risk, I fear, that the difficulty of competing in the Championship on a relatively small budget is still being underestimated, though not by Bob Peeters I'm sure.
One school of thought says that we now need to strengthen to push for a play-off place. That would be nice, but it would be a huge bonus, not the base case. More realistically, Bob Peeters needs to make sure the owner understands the realities of the league we are in and the risks of relying on untested youngsters, no matter how talented they may be.
We're not alone, of course. Many clubs face dilemmas at least as challenging as ours. In many ways we're lucky to have an owner with a vision and the deep pockets needed to stick with his programme. We might just need to patient though and wait to see how he decides to play his hand. We might get lucky, but more likely they'll be significant frustrations along the way.
We had not been the ninth best side in the league.
We finished 9th, clearly making us the 9th best team in the league. There are no extra points for style or flair, the league table can't lie.
I think you're right in identifying Gomez, Gudmundsson and Vetokele as the most valuable playing assets and I would hope they would fetch considerably more than £1m. Fortunately they are young and on long term deals although I do recall Gudmundsson signed a two year deal - so he may opt to stick it out and either re-sign for us or go on a free.
There are two stark choices ahead for the next 18 months - either push on to improve the squad and performances by acquiring talent such as Coquelin and a top striker. Or pad out the squad, sell top players and settle for mid-table... And await more academy players.
I believe that the resale value of the best players will increase with enhanced team performance so there's a clear case to be made for investment in further improvement.
Everyone knows that the three teams securing automatic promotion win a 5% share of one of the biggest sports media deals on the planet so a push for sixth place in 2015-16 makes sense. Should we not win the play-offs we will clearly have players good enough for that level. And doubling FFP loss limits next season is surely going to inflate the market.
Conversely, drifting towards the bottom third of the table will damage player value.
In short, however, we are back to the basic problem that a) we are not going to break even in the Championship year on year and b) the owner needs to invest to chase the Premier League money. Whatever that is, it's not a shiny new model!
A team like Wigan can beat anyone in this league when on song but have been inconsistent hence the lowly league position.
Look at Fulham. Bottom three when they played us but, having acquired consistency, are steadily climbing up the table.
Suppose each team in the league had only played one game. Would the league table tell us how good each team was? Obviously not. How about five or ten? Most people would accept that the league table after ten games tells us something, but very few would argue that it gives us a definitive ranking of true, relative strength.
The common assumption is that over a full season of, say, 46 games, this noise evens itself out so that, as you stated, "the league table doesn't lie". However, as with much so-called conventional wisdom, this casual assumption is wrong.
It can easily be proven, statistically, that the "noise" or "luck" which we readily accept can be a factor over, say, five matches, or even over longer runs of games, also matters over a full season. This is especially so when the differences between each side in the league are relatively small. This can be hard to grasp intuitively, and it certainly is for me, but it's true.
For most purposes this simply doesn't matter. The top two sides in the Championship are promoted with the next four competing in the play-offs, etc. It simply doesn't matter if there are better sides who, somehow, missed out.
However, it does matter if you extrapolate league table position from one season to the next. It's easy to think that last season's results will be repeated, but it's not that simple. If you could, hypothetically, replay the entire season you'd be very unlikely to get exactly the same outcome. Indeed, I've little doubt that there would be some surprising differences.
As to how you decide how good each team is, that's clearly a matter of judgement, though there are some objective measures such as Opta statistics and similar measures which can be surprisingly insightful. The point I was making though was a very simple one. We finished 9th in the table on our return to the Championship, but in my view we were not the 9th best team and, most importantly, should not simply expect, all other things being equal, to be able to repeat that outcome.
If you disagree with that assessment then that's fair enough. I would respect your opinion. However, I would also respectfully suggest that it's not typically a good idea to dismiss another person's view out of hand before you've taken the trouble to understand what they are saying. The fact that we finished 9th did not mean we were the 9th best team in the table or that we'd necessarily repeat that 9th place finish if the season were replayed. I then suggested that this perspective would have been important in the summer of 2013 when thinking about the squad for last season.
I have no idea if the nature of the challenge has yet dawned on Mr D with his network to keep an eye on, in comparison to an owner who would be watching their single acquisition like a hawk.
In terms of Katrien being, as she put it, Mr D's 'eyes and ears' you might reasonably wonder if she had the ability to dissect the challenge initially, and to what extent she has learned, and how well she is able to communicate that learning to Mr D. At present I believe that Katrien, and Bob, and before that Karel and Jose want(ed) Charlton to do well, they are not asset strippers, not Trojan Horse Princes of Darkness, but are aspirational for us.
The major question is, even if the face of Charlton in terms of manager and chief executive appears to be credible, and additionally in my view very likeable, are they actually up to the job working within their present constraints? To return to what I said earlier I believe the first part of being up to the job is to understand fully what the job is all about here in the Championship and here SE London, with all the attendant sweaty details, and heavy shifting needed. How embedded is their understanding and knowledge a year after the takeover?
There have been obvious successes, and for me the pitch has been an outstanding factor in improving results over last season. As for player churn, and internal running of the club it has been less conclusive. Who will sell us the programmes on Boxing day for example, or will Bob demonstrate that he has a plan to deal with Le Fondre, Whittingham and Gunnarsson, or will he only concentrate on what we're about, and end up with Solly in midfield, and blimmin Bulot leading the line?
If for Mr D success is about making, or at least not losing money, then he has to make cuts like nobody's business, and rely on academy products and selling on any player of value, whilst using Charlton to re-habilitate the likes of Reza or Yoni for the wider benefit of the network and thereby make a saving on his global network wage bill.
Of course Mr D might gamble and make massive player investment to get to the lucrative land of the Premier League, but that is a risky strategy that might not pay off. If the strategy is the middle ground of taking losses whilst making steady progress towards the inevitable promotion, we are in volatile territory. It doesn't take much for the support to be disillusioned if the narrative for progress is, as it seems at the moment, to be so muddied and confusing. Results would be a way of 'making a statement', but so far the statement is very inconclusive and our season could yet end in going in any direction.
On a personal note I believe that rebuilding the assets of Sparrows Lane would be a clear statement of intent, similar to the new pitch, but deeper and longer lasting. A rebuild is expensive yes, but leaving aside the cost for a moment I can't see any negatives at all if we invest in this area, both in terms of working towards a promotion, or working towards developing young players, and even re-habilitating network players. The great thing about the bricks and mortar is they stay long after the rest of us have gone.
Isn't it awkward sitting around wanting to spend a rich persons money on a personal interest, but I can't see as to how more spending from Mr D can be avoided, whatever his secret overall plan for us may be.
I certainly agree with the thread title that we are on the horns of a dilemma.
No one is claiming that finishing 9th one season means you will finish 9th the next. If for no other reason that it is another season where you play different teams with different players and you have different players
what is clear is that the criteria of what makes anyone the best , worst or even 9th best team in a particular season is unambiguous. It is objective, pre-set and long standing.
It's is where you finish in the league after all the games have been played. End of.
otherwise it was an interesting and we'll written article if, as you say, over reliant on some big guesses. But that would have to be the case given the little info coming out of the club.
The gap was again the £3m equity.
FFP allows, as I understand it, a 6m per season loss of which 3m has to be put in as equity. But David Jones has said we had a 2.6m loss.
So could the owner, if he wished and it is his money, put in another 3.4m if he so wished? Maybe I've got that wrong but it doesn't appear to have been mentioned.
also seems odd to use the CL name of a former trust board member rather than their real name. But that is down to the trust just like the strange choice of photo : - )
I don't think Mundell is his real name either..
BTW is that Twitter account in the name of Henry Irving, you?
One of the joys of football is the same two teams of 11 could play a game everyday this week and every result would be different, so to suggest a team finishing 9th this season will also finish 9th next season would be ridiculous, what about new players, new staff, changes in training methods and any number of changes other teams in the league may employ, for better or worse.
Here are two extracts from your post that to me border in the insane:
It's easy to think that last season's results will be repeated By who, exactly?
As to how you decide how good each team is, that's clearly a matter of judgement No, it really isn't, there's a reason promotion/relegation is done based on the league table, not OPTA stats.
Of course luck plays a part but it does so for every team in the league and clearly a team, on any given day can beat a team most would consider 'better' than them. However at the end of the season each team has played every other team home and away, if you finish 9th, you were the 9th best team, no matter how much luck you got throughout the season.
Perhaps if I used the word "strongest" rather than "best" it might help to clarify what I said in the post you initially commented on. The context in which I made the point is also important.
I simply meant that I did not believe we were the ninth "strongest team" in the Championship in season 2012/13. You can disagree with that assessment if you wish but, for the reasons I have explained, it is not an unreasonable thing to say, unless you simply want to define "strongest" by league table position at the end of the season in which case the debate becomes a little circuitous, as it has with the use of the word "best".
I then said, and this was the point I was actually attempting to make, that if Michael Slater assumed, simply because we had finished ninth in the table, that we had the ninth strongest team/squad he may also have believed that there was more scope to cost cut than in reality there was, in my view at least. That was simply an assumption which could easily be wrong, but if true it might help, in part, to explain what happened in the summer of '13. Again, the context in which I said that is important.
Another way of putting this is to say that had you asked me at the end of the 2012/13 season, before we (or at least I) knew anything about what might happen that summer, whether we'd be more likely to be involved in relegation battle or a push for promotion the following season I'd have opted for the former without hesitation. I'm not claiming any prescience when I say that. It was simply my view. If Michael Slater had a different view he may well have underestimated the challenge ahead.
The bordering on insanity bit made me chuckle :-)
Edit PS Have a nice Christmas
I just think it's very unfair to the team to suggest the position was somehow obtained by way of luck and that they probably didn't deserve it.
Merry Christmas to you as well, although I have a feeling Cardiff will manage to mess up both of our Christmas holidays.
What is frustrating is that another two thousand season ticket holders would have addressed that. That annoys me very much.