The Financial Underbelly: AFC Bournemouth

Posted by on Jun 19, 2015 in Financial Underbelly | 8 Comments
The Financial Underbelly: AFC Bournemouth

For the fourth in our series charting the financial background to a range of clubs, we have called upon Chris Lines, @narrowtheangle on twitter and purveyor of the blog of that name. Here, Chris turns his attention to the club that finished atop the Football League pile in May and one that has garnered more than a few column centimetres since.

AFC Bournemouth’s recent promotion to the Premier League was widely likened to a fairy-tale. For a young manager like Eddie Howe to bring a small and unglamorous club right through the divisions (either side of a spell at Burnley), when they’d been facing relegation to the Conference and very probably extinction when he took over in 2009, is little short of astonishing.

But not everybody likes a feel-good story, least of all supporters of some of the traditional ‘bigger’ clubs in last season’s Championship. While Bournemouth’s clinching of the Championship trophy (and, in case you didn’t know, it’s that same lovely old trophy that Liverpool lifted all those times for winning the First Division) was largely greeted by genuine well wishes from fans of other clubs, there have been more than a few snippy comments that the club has bought its way to success, dived and cheated its way to the title, and so on.

While the grapes of disappointment are invariably sour, hopefully this article will go some way to debunking a few somewhat flimsy fictions. But it will also consider whether any of the accusations are valid.

“They’ve got a dodgy Russian owner”

Yes, Bournemouth do indeed have a mysterious and wealthy owner in the form of Russian petrochemicals trader Max Demin, as well as a couple of other Russian businessmen on the board (Alexey Panferov and Mikhail Ponomarev). How rich and how mysterious Demin is, fans aren’t totally certain. I’m sure David Conn will endeavour to tell us in The Guardian this season and I’ll undoubtedly be an interested reader.

Having made his millions in the oil-rich central Russian province of Tatarstan, Demin was for five years at the start of the last decade an assistant to the general director of sixth largest oil company in Russia – the key words in that sentence being ‘in Russia’. We know that he is the founder and single director of Wintel Petrochemicals Ltd, a company registered Woking since 2005 and that he’s pumped approximately £25m into the club. Matt Lawton, writing in The Daily Mail last month, quoted figures from Finance Magazine (a publication about which I was unable to find much information) that Demin was “worth around £100m in 2011, having been worth somewhere in the region of £160m three years earlier”. Lawton’s Russian sources said that Demin also has links to a bank and insurance companies, though they did also dismiss him as a “junior league tycoon” compared to oligarchs like Roman Abramovich.

In a Russian TV documentary screened 18 months ago, Demin said he had taken over a “rustic club without ambitions or aims … no normal commercial department or financial department, no normal restaurant. Everything was at a fairly low level”. And that’s pretty much the only quote you’ll find from him talking about the club.

But while not a great deal is known about Demin, he does appear to have become a genuine fan of the team. He has a house in the area, brings friends and family to games and appeared so merry during the post-match celebrations on the night the Cherries sealed Premier League football that at one point he nearly snogged a lady of advanced years in the directors’ box. In short, while Bournemouth fans would undoubtedly like to get to know Demin a little better, they’re markedly less frosty towards him than when he first bought a stake in the club. If he was any other nationality, you wonder if the average armchair neutral would be as wary of him. But based on his track record so far, I’ll take shy and retiring every day of the week over some berk throwing his weight around, trying to change the club’s colours or even its name.

Perhaps fans’ initial cautiousness was because on arrival he felt too closely linked to Eddie Mitchell, the club’s former chairman, who fans were ultimately glad to see the back of when Demin later bought him out. Mitchell’s company had built Demin’s Sandbanks home and it was Mitchell who introduced Demin to the club and convinced him to get involved. With Mitchell now pleasingly out of the picture and Demin evidently keen to invest (not only in the playing squad but also the whole infrastructure of the club), fans are increasingly appreciative of his presence. Howe has complimentary things to say about him, and that’s good enough for most Bournemouth supporters, whose trust in Howe runs deep. Supposing Demin privately does harbour a desire to sell the club for a fat profit in future, he’s going about it in the right way so far and thus fans won’t complain if he were to leave the club in a much healthier state than he found it.

“So many penalties… it’s not normal”

While this article is largely dealing with off-field matters, it’s worth addressing the diving/cheating issue. Ask most Championship fans and they’ll tell you that Bournemouth had an exceptionally large number of penalties given in their favour in 2014-15. And they’re right. Sixteen of them to be precise. But it’s misleading to say that they were all won through diving or cheating. One of them, won by Harry Arter against Middlesbrough, clearly should not have been a penalty. Whether Arter’s fall was caused by momentum or dishonesty, only he knows (replays are slightly inconclusive), but it certainly shouldn’t have been a penalty. Adam Smith’s sudden loss of gravity against Blackburn (a game Bournemouth lost) was probably clearer cut. But really those are the only two definite non-penalties. Yet the person most of the vitriol gets directed towards is striker Callum Wilson.

When it comes to the spot kicks Wilson has won (of which there have been several), rather than dive, what he appears to be sensationally good at is making sure he gets fouled. Sometimes you think he’s got a decent angle for a shot and he’ll delay for a split second, knowing the foul is coming. Of course, this tactic only works if you’re extremely confident you know what you’re doing. Wilson has that confidence in spades. Plus, if you score the penalty, and particularly if the other team goes down to ten men, then it’s far more valuable that just getting a shot on target and hoping it goes in. And if you’re wearily shaking your head at that, I know how you feel. It doesn’t sit brilliantly with me either. Most of us are purists and would happily see a striker try to shoot every time. But while I do sometimes wish he’d just bloody shoot, drawing a foul is not diving, rather it is outfoxing your opponent, regardless of how much it annoys those in the stands. And Wilson’s not bothered what I think in seat J14 munching on my Rollover hotdog. He’d rather go home with three points. As Half Man Half Biscuit sang: irk the purists, it’s a right good laugh.

He’s also a brilliant player. And when you’ve got four of the most creative midfielders in the division, plus the deep-lying Kermorgant, all trying to slide through balls in between defences to make the most of Wilson’s searing pace, it’s no surprise that the Cherries get more penalties than other sides. You try catching Callum Wil… oh, too late, ball’s gone and you’ve run into his thigh. Unlucky, fella. Penalty kick and thanks very much.

Whether Bournemouth hold on to him this summer or he seals a big-money move elsewhere, one thing I can predict with some confidence is that Wilson will not be a popular player with other teams’ fans in the Premier League. Despite being blessed with blistering speed, raw power and a clinical eye for goal, his greatest asset may well be his cunning. He draws genuine fouls that were never even in the defender’s mind and is one of the wiliest footballers you’ll come across. I’ll stop short of saying he’s categorically not a diver, as that prediction would have the potential to bite me on the backside next season, but it’s disingenuous to say the penalties he was awarded this season came as a result of conning the referee. Plenty of you will not warm to him next term but he’s very good at what he does.

“They’ve bought their way to the Premier League”

Back to off-field matters, then. Have Bournemouth thrown silly money at their promotion push? Have they spent beyond their means on transfers? The short answer is no. The long answer is more nuanced.

By their own rather quaint standards, Bournemouth have spent pretty big. An outlay thought to be between £2.5m and £3m on Wilson was a record transfer for the club. But let’s not get carried away here. Bournemouth have only spent more than a million pounds on a player twice in their history. The other was Tokelo Rantie, and, while the likeable South African is very popular with fans, he can hardly be said to have played a pivotal role in the club’s promotion.

The rest of the squad is made up of astute signings brought in for modest fees or on free transfers, many of whom have come up the divisions with the club. The club’s regular back four – Simon Francis, Tommy Elphick, Steve Cook and Charlie Daniels – individually and collectively the subject of so much praise over the course of last season, were signed for combined transfer fees of £433,000.

Harry Arter, comfortably the best central midfielder in the Championship this season in most people’s eyes, was signed for £4,000 from Woking, having been previously cast off by Charlton. Matt Ritchie, whose 15 goals and 17 assists from right midfield have been essential to Bournemouth’s promotion, cost £400,000 from Swindon. He’d previously been linked with seven-figure moves so chalk that one down as a cast-iron bargain too.

Yann Kermorgant’s fee was also in the region of £400,000. He added some guile and sparkle behind Wilson, not to mention converting plenty of those aforementioned penalties. Charlton fans are still mourning his departure and he was giving a rousing ovation from all four sides of the stadium when substituted at The Valley on the final day.

Bournemouth’s transfer kitty last summer was largely spent on Wilson, though Andrew Surman (circa £500,000) was another shrewd signing from Howe, who also brought in Dan Gosling and Junior Stanislas on free transfers. Overall, Bournemouth were 10th in the spending table. Fulham, with their £11m signing of Ross McCormack, spent the most. Yet none of the four biggest spenders (Fulham, Cardiff, Nottingham Forest, Wigan) troubled the eventual top six during the latter months of the season.

It should also be noted that the Wilson money was roughly the same as the club received from Norwich for Lewis Grabban, whom Wilson replaced. And, thanks to some brilliant thinking in the Cherries’ youth academy many years ago, Bournemouth also got a 25% cut of the Adam Lallana transfer fee when he moved from Southampton to Liverpool for £23m. Recouping up to £5.75m for a player that left when he was 12 is not bad going. It may also explain why Artur Boruc spent much of the season on loan at Bournemouth from Saints – perhaps his wages were offset against what Bournemouth were due for Lallana? Seems pretty plausible.

While Bournemouth’s accounts aren’t yet in the public domain for the season just finished, the previous campaign saw them make a net loss of £10.3m but also double their turnover to £10.1m compared to their final season in League One. Wages had also increased 42.8% from League One, as you might expect. Accounts showed that the £25m Demin has put into the club was in the form of loans, charged at 3% and repayable by October 2017, with £7.8m of the total owed to the Demin-owned Wintel Petrochemicals. Presumably Bournemouth could now pay off these loans early if Demin so desired. That would seem very unlikely though – it wouldn’t be worth jeopardising the club’s performance on the pitch and damaging his investment.

“But what about the silly wages they’re paying?”

The wages line is an oft-heard comment and one aired about fifty times as frequently after word got out that Bournemouth were covering Kenwyne Jones’ entire pay packet during his loan in the closing weeks of the season. But by that point Bournemouth were tantalisingly close to sealing promotion. It was a tactical gamble worth taking, to bring in an experienced player who could make a difference from the bench and help to close out narrow victories.

It’s true that Bournemouth’s wages-to-turnover ratio is high, but actual spend on wages is by most accounts somewhere in the middle for the division. And when you are confident you have the best manager in the division by a distance, and if the club’s backer is prepared to swallow the cost if you fail, it wouldn’t seem overly reckless to try and build a team capable of getting promoted to a league in which TV revenue would quickly rectify any issues with unsustainable spending. Of course, clubs have tried this in the past, but they often had mediocre managers and no coherent plan. Eddie Howe has been planning for the Premier League since the day he rejoined, when the club was languishing in League One.

Bournemouth successfully met Financial Fair Play requirements for 2013-14 and, presumably, given the good fortune from the Lallana deal, have done so again for 2014-15. In their financial accounts for 2013-14, the club acknowledged that they were “aware of the risk associated with reliance upon finance from its parent company to fund operations” but stated that directors were confident “this risk is minimal based on the ongoing commitment from investors and recent positive developments within the business”. Not sure I’d go as far as “minimal”, but with Howe at the helm this was certainly a value bet from Demin. And now it’s paid off.

So if Bournemouth hadn’t been promoted this season, would the wheels have come off? Certainly they’d have struggled to hold on to a host of players – Wilson, Ritchie, Arter, Cook, Surman and Francis being the most probable to have attracted interest. But it seems likely that they’d have sold a couple, perhaps three, sourced cheaper replacements and had another tilt at getting promoted. Which, given the manner in which a few Championship clubs seem likely to throw money at the transfer market this summer, with one eye on the new Premier League TV deal, would have been a tough ask.

Some slightly trickier problems might have come a further year down the line, but we won’t realistically find out how Demin handles the challenge of meeting FFP again until such a time as Bournemouth come back down and have to readjust to life in the Football League as parachute payments shrink.

Bournemouth’s long-term future feels like it might depend quite heavily on whether Eddie Howe can perform another minor miracle and keep them up for more than a solitary season. Given the fiendish run-in the fixtures have handed them, they’ll want to have daylight between themselves at the bottom three come late March. But if they can be part of the top flight when the new broadcasting deal kicks in, then even if they go back down in their second season, the additional cash injection could set the club up to be in the top two divisions for a generation. And for a club that has only spent five years in its history higher than the third tier, such a scenario would be really something.

Neutrals and rival fans often enjoy the schadenfreude when a club, having come into newfound wealth to the point that its fans say they are going to “enjoy the ride”, then sprays it up the wall and subsequently has to clean up the mess.

Ecstatic Bournemouth fans are approaching the apex of the rollercoaster this summer, but will there be a stomach-turning plunge around the corner? Given how close they came to losing their club completely just a few short years ago, fans would doubtless counter that it could never get that bad again. But even so, nobody wants to sink like Wigan or Blackpool have done after their chairs at the big table got kicked away. There’s something to be said for a dignified readjustment, perhaps more akin to the way Reading have coped since their relegation.

After the most remarkable season in their history, one of English football’s most long-suffering sets of fans will enjoy a completely unexpected season in the sun even if they finish rock bottom. If it should turn out to be more than a cameo for Bournemouth, that would be halcyon days indeed.

The Two Unfortunates
The non-partisan website with an eye on the Football League

8 Comments

  1. Paul Smart
    June 19, 2015

    Excellent and well researched article. Nails some of the popular myths peddled by bigger fans of rivals.

    Reply
  2. David Atkins
    June 19, 2015

    Very interested to see how Bournemouth fair. Personally I think they are blazing the way forward. The net income will be massive from TV and given that they wont make much money from crowds alone (max 12,000 capacity I think), they should use the small, tight crowds to their advantage. The big boys dont enjoy playing in bear pits, especially the “only here for the money” mercenaries. Having watched Pompey being systematically robbed by crook after crook, it does appear that Bournemouth have learnt a lesson. Good luck to them anyway, they could be the model for the future.

    Reply
  3. Lanterne Rouge
    June 19, 2015

    Fabulous post Chris. Interesting that in this fascinating interview with Reading striker Pavel Pogrebnyak over at The Tilehurst End, the big striker speaks very highly of Demin – maybe we can palm him off on you?!

    Reply
  4. frankrispin
    June 19, 2015

    Thanks. Best article on AFCB i have seen by a mile.
    AFCB will stay up and do a Swansea, they play like Swansea.

    Reply
  5. Mark Anstee
    June 23, 2015

    Interesting article. The other factors to mention in so successful a campaign are luck, clarity of purpose and consistency of selection. Bournemouth had no significant injury problems last year; not only did Howe know what his starting XI was (and exactly how he wanted his selection to play), he was able to put it out for the vast bulk of the league matches. Competition for starting spots was fierce because there was no squad rotation for league matches. And Boruc proved a truly excellent loan signing!

    Reply
    • Lanterne Rouge
      June 23, 2015

      Great to hear from you Mark and particularly because it allows me to extend hearty congratulations. Hope all is well. Rob

      Reply
      • Mark Anstee
        June 25, 2015

        Cheers Rob! It’s all been a bit surreal. The performance at Fulham back in Feb was probably the best I’ve ever seen from B’mth, and there’s so much to admire about what the club has achieved. Feet firmly on the ground, it’s time to continue treating the twin imposters as ever. Hope to see you sometime soon, M

        Reply
  6. Jertzee
    June 29, 2015

    One slight inconsistency that could seriously bit the club in the bum..

    “and if the club’s backer is prepared to swallow the cost if you fail,”

    doesn’t quite fit in with the previous statement of :
    “Accounts showed that the £25m Demin has put into the club was in the form of loans, charged at 3% and repayable by October 2017, with £7.8m of the total owed to the Demin-owned Wintel Petrochemicals.”

    It clearly shows the owner is bearing no risk as they are loans, and not interest free ones either.
    The risk once again lies with the club.

    Reply

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