Fans Forum, Thursday 21st May 2020, 15:00.
Hartlepool United Football Club
Present: Mr Singh, Mark Maguire, Ian Scobbie, Andy Johnson, Pauline McSweenie, Kevin Mcelhone, John Pearson, Richard Ward
Club Update (MM/RS):
The club is lacking clarity from the National League regarding the plans for the coming season though MM is in regular contact with the NL Chief Executive. HUFC were asked to give their thoughts about how to close out the current season’s competition and have done so, but the final call by the NL is dependent on the EFL decisions and government advice regarding Coronavirus. It remains unlikely that the NL play offs will take place, not least because at least one of those teams has released players, but this is only a ‘best guess’. More important is the plan for the 20/21 season which would allow season tickets to go on sale and planning to take place.
Mr Singh has invested >£2 million and the coming season will need at least another £0.5 million through next season based on the projected budget. The club have had to cut jobs of popular and high-quality staff, but it was simply impossible to retain these roles without increasing the losses further. The situation with coronavirus has accelerated the forecast for next season leading to the difficult but necessary changes. The roles will not be replaced by lower cost staff but by unpaid volunteer support. League funding in the NL is £82k per season comprising £58k from the EPL and the balance of some commercial funding. With such low levels of financial support, it is necessary to change the existing model to a new era of non-league football comparable with other teams at this level.
The club is responsible for the redundancy payments to the staff who have left the club and proposals regarding the making and timing of payments have been made to those affected, based on the cash flow availability of the club at this difficult time.
Inherited a ‘mountain of mess’ when taking over the club and this has taken substantially more time and money to resolve than had ever been expected. RS was aware of potential issues and had been warned of this prior to the takeover, however, with time so short for the club’s future and with help from Jeff Stelling RS took a gamble. The first overhaul began with the squad and replacing bad contracts made prior to the takeover with sensible contracts before then moving onto changes on the business side. Ideally things would have happened sooner but now more than ever we must compare our set up to those in our league and look ahead from here (e.g. backroom support size, travel arrangements, match day staffing).
Financials and Commercial:
The coming season it is necessary to look at how people can work together as we cannot go on with losses as they are. A lot of work has taken place behind the scenes at how can the club be taken forward, but it needs others to share the burden.
The club have never ignored investment advances from any potential investors and there have been a number of discussions but it was felt that, for a variety of reasons (including financial, personal history) these opportunities would have made the club more unstable and were not progressed.
RS accepted the club was still loss making but it was now a ‘clean business’ with none of the spurious claims that have dogged the club since the takeover.
There was a long negotiation with Sage prior to the takeover to agree a means for Sage to recoup some of their £1.8 million investment. There was a charge on the ground held by Sage until Mr Singh had made sufficient loans to the club to pass the agreed threshold. This level has now been exceeded and contact made with Sage to complete the discharge process. The only payments payable to Sage are promotion and EFL place retention-based payments and these are small compared to the much higher league funding gained on promotion. No payments are due to Sage based on Cup runs or player sales so as such nothing has yet been paid. The maximum ca. £350,000 value on the accounts is a mathematical estimate based on what might potentially occur but cannot be called in by Sage without thresholds being reached.
Equity Participation Scheme (AJ)
The club has considered how people can work together and is to offer a 10% stake in the club for £200,000 as part of an ‘equity participation scheme’ and this was introduced to the group as a high level, low detail idea for investment by partners with feedback welcome. In the short term this would:
- Create a clear bond with supporters
- Reduce the unsustainable burden on the Chairman
- Promote individuals to offer time and skills as volunteers
Longer term the plan is to:
- Improve the long-term financial structure of the club
- Return to the EFL
- Redevelop the stadium
- Reduce the club’s debt
The intention is to issue new shares in HUFC with fixed voting rights and subject to meeting a minimum investment level for board representation. The shares would be governed by a new shareholder agreement. Currently Clarence 18’s investment is held as a loan (at zero % interest) but participation equity would be matched by equity investment by Mr Singh.
The first £200,000 investment would be followed by three further EPA investments of £200,000 in the 21/22, 22/23 and 23/24 seasons and this is not currently caveated on which league the club resides. The club is flexible as to how this investment might be managed, though multiple smaller investments would not all automatically receive a seat on the club’s board. By opening the investment potential across the fan base and around local businesses this would remove the reliance on high net worth individuals while still strengthening the balance sheet.
The club will make an official announcement regarding this proposal and will invite direct feedback from fans which can be reviewed as part of the Fans Forum.
PMc noted that due to restrictions on people movement it will be very difficult to consult widely with fans. RW noted that community investments have been made by Supporters Trusts in other clubs and were established nationally by the government and football association to facilitate this type of interaction.
The club will also launch a secondary offer for higher net worth individuals as part of a ‘President’s Club’ for a unique supporter experience.
The 20/21 budget has been agreed in principle but remains subject to national issues associated with coronavirus and Mr Singh must understandably protect his core businesses as a priority through this difficult time.
Volunteering will be a necessary part of a new lower cost base model for the coming season and this will encompass both individuals and local companies providing skills and services. There is work ongoing to identify the exact number of people who will be required both during the week and particularly on match days, but where payments and cash handling is required then these will still likely be paid positions so that each person can be held accountable for the role. AJ noted that there appeared to be abuse of the ticketing system with far more on the day concessions tickets used that would be expected and that issues such as this would dictate where reduction in staff numbers and unpaid volunteers can be applied.
AJ and MM are looking at how those involved with the club can be restructured to put much greater focus on commercial income and one option is to bring in additional support, potentially on a commission basis. The average spend on match days is much lower than would be expected and this is a really important area for improvement.
The shirt design for next season is provisionally in place and MM is working with the sponsors to finalise the sponsorship agreements for the new season. Some O’Neills staff are on furlough and manufacturing has been redirected to producing PPE for the health service so there is not yet an immediate intention to launch this despite other clubs having done so. It is hoped that the annual shirt reveal will somehow still be able to take place at which time the club expects a significant number of shirts to be purchased.
Season tickets could theoretically go on sale as other clubs have done, however, our club don’t feel this is the right thing to do while there is a lack of clarity on when the season will start and how the matches might take place. While taking deposits is also a possibility it is MM’s belief that a coordinated, well publicised campaign to sell tickets will maximise uptake when the time comes, and by not launching these too early it does not bring forward revenue from next season towards this current difficult time. This is the same reason as for not pulling forward next season’s EPL solidarity advance from the National League (which is typically paid in August).
All agreed that Dave Challinor is the man to take HUFC forward and has a top-level understanding of this level and how to progress. MM said that DC had moved the team forward and it was disappointing that we did not get chance to finish the season under his leadership. He has a 2.5-year deal and has been supportive and understanding of the difficulties the club faces with a player budget for 20/21 and for player recruitment given the lack of clarity for the NL future.
Measures need to be put in place to assist those who have reduced mobility to reach seats in the Cyril Knowles stand. This is a job on a list to do to ensure that all fans can comfortably attend matches.
The club are certainly looking at ways to appropriately remember Doris Ford and her contribution to the club and to do something in her name and honour.