TTU Season Preview 2012-13: Financial Questions at Ipswich Town

Posted by on Aug 16, 2012 in Uncategorized | 12 Comments
TTU Season Preview 2012-13: Financial Questions at Ipswich Town

For our penultimate pre-season preview post, we are made up to welcome Gavin Barber, a veteran of The Seventy Two; his missives for whom can be sought out at the archive we recently set up on our home page. Gavin has been a keen chronicler of all things Ipswich Town for a few years now and here he questions the veil of mystery that surrounds the running of the Suffolk club.

Every other summer, Sky Sports has to spend an uncomfortable few weeks away from the centre of the sporting universe. World Cups and European Championships temporarily force the broadcasting Leviathan into retreat as supporters’ attention is focused on tournaments that Sky can’t show. It’s occasionally entertaining to dip back in, to discover what they’ve found to fill the schedules: “Masters” football, usually, as though the sight of balding ex-pros wheezing around a 5-a-side pitch will draw viewers away from Spain versus Germany. I once caught them eagerly hyping up a game of Polocrosse which is – you’re probably ahead of me here – a combination of Polo and Lacrosse. (Really, it’s a thing. Google it.)

The football-free summer of 2012 has been a longer one than usual and, therefore, even more of a challenge for those whose job it is to fill 5 channels with sport “in stunning high definition”. Which could explain why Sky took their cameras to Portugal for the Sir Bobby Robson golf classic: a worthy charitable enterprise in which the likes of Mick McCarthy and Alan Brazil take one for the team by playing 18 holes in the Algarve sunshine, but hardly one which merits the sort of excited, forensic coverage that the channel defaults to.

As it happens, they happened upon something of a minor exclusive this year by broadcasting the first known television images of Marcus Evans, the notoriously camera-shy owner of Ipswich Town, and a man whose full name may well be Reclusive Billionaire Marcus Evans, judging by the frequency with which that description gets used. This naturally created something of a stir amongst Town fans who had reasonably been asking why they’d never had any substantial proof of the man’s existence since he bought the club almost five years ago.

For some, the reassurance that Evans had physical form resolved most of their curiosity about him, but for other Ipswich fans, questions remain which aren’t answered by the sight of him executing a decent tee shot. These questions can be complicated but basically boil down to “what’s in it for him?”.

When Town fans are arguing about Evans’ reliability as an owner, the line “he’s a successful businessman” tends to get quoted by both sides of the debate. Those with a trusting view of Evans point out that he’s made himself very rich by building extremely profitable businesses, and that we can rely on him doing the same for ITFC. Those with a more suspicious mind tend to point out that businessmen rarely become that successful by caring too much about how they make their money.

Evans took control of a financially-crippled Ipswich in 2007 by buying the £32m debt that the club owed to Aviva and Barclays. Town had entered administration in 2003 and, though a CVA was eventually agreed, the club’s position was seen as unsustainable in the long term. Evans’ takeover was presented as a safer option: the thinking being that if the club was in debt to someone whose own interests were shared with the club itself, this was better than owing money to the big scary bank who might want it back. Evans also injected cash into the club which – theoretically at least – was supposed to make Ipswich more competitive in the promotion race (that’s gone well then) and for these reasons Evans is often referred to as the man who “saved” Ipswich Town, though the reality may be a little more ambiguous.

The terms on which Evans bought the debt have never been officially disclosed but it’s thought that the interest rate is around the 8% that Aviva were charging. It’s been reported – though not, as far as I’m aware, ever officially confirmed – that Evans bought the debt for between £6m and £8m. Over the years of Evans’s stewardship, the debt to Evans has grown to nearly £44m, of which £3.3m is interest. So whilst, theoretically at least, ITFC are now in debt to someone who can only be repaid if the club wins promotion, Evans effectively earns over £3m (and rising) for every season that we don’t. Which means – again theoretically – that approximately 25% of the money I pay for my season ticket goes straight into the column on the spreadsheet headed “interest owed to Mr Evans”, and not into producing the next Connor Wickham.

It is true that Evans has put money into the club – a loss-making operation like ITFC can’t afford to pay off Jimmy Bullard’s £18k a week contract unless someone’s signing the cheques. So we can say that Evans is putting in as well as taking out, though again there is some complexity here. As someone with a multitude of business interests, Evans can loan or give money from profit-making parts of the Marcus Evans Group to loss-making parts such as ITFCplc which would mean that the Group as a whole saved money on their tax bill. This, as far as I’m aware, is perfectly legal and part of standard business practice: however it does rather give the lie to the image that some Town fans seem to have of Evans as a kind of beaming philanthropist, cheerfully stuffing cash into Paul Jewell’s pockets, patting him on the head and telling him to go out and get himself a really nice centre-half.

So whilst he may be a saviour, he certainly isn’t Jesus – though I guess we knew that. But even the question of tax itself seems to be a strangely thorny one. Christian Aid’s 2010 report “Blowing the Whistle” investigated financial transparency (or lack of it) in football and placed Town at 14th in their “football secrecy” league, noting:

“The annual return of Ipswich Town Football Club Company Limited shows that 87.5 per cent of ordinary shares and 100 per cent of preferred shares are owned by Marcus Evans Investments Limited. Despite our best efforts, we could not prove by documentation where that company is located.”

Which basically means that no-one knows where Town are registered for tax purposes. It may be Bermuda. Earlier this summer the editor of the Ipswich local paper excitedly announced on Twitter that he was going to interview Evans and asked fans for their questions to put to him. I asked him to enquire of Evans where his company (and, therefore, ITFC) were based for tax purposes. I didn’t get a reply.

And then there is that question of the debt itself. The club’s accounts show a total debt of £66m, of which the aforementioned £44m is interest-bearing. That’s almost twice the £35.6m that was quoted at the EGM at which Evans’ takeover was agreed. Again, there are those who argue that so long as we owe the debt to Marcus Evans, we’re fine because he’ll want to resolve it by getting us promoted. There are others who wonder whether owing that amount of money to any one individual is a healthy situation to be in.

All of which returns us to the question of “what’s in it for him?”. Ipswich Town’s PR machine – usually fronted by chief executive Simon Clegg, who could only carry off a man-of-the-people act if the people in question were a collection of particularly grumpy PE teachers – would have us believe that Evans is working tirelessly, and pumping his hard-earned Bermuda(?) dollars in selflessly, to achieve a goal that he shares with the fans, i.e. promotion. And whilst it is true that Evans, having bought a £32m debt, will only see that repaid in full if Town are in the Premier League, closer inspection of the arrangements show that he’s unlikely to lose too many yachts while we’re not.

Earlier this summer I posted a few horror stories about the Cardiff City takeover onto the ITFC Twitter hashtag. The response from some was along the lines of “so glad we’re not in that situation! Thank goodness for Marcus Evans!”. But my point in bringing them to Ipswich fans’ attention was not to illustrate the differences between the two clubs’ situations, but the similarities. Cardiff happen to have been taken over by the annoyingly wacky kid from the shady millionaires’ business school, rather than the one who wanted to sit quietly in the corner and listen to Dire Straits on his walkman, but the key facts of the two clubs’ positions (i.e. one individual loading the club with debt, the facade of “investment”, the lack of any published business plan to deliver success on or off the pitch) are uncomfortably alike. Of course, we’ve no reason to think that Evans is planning to turn our shirts red and rebrand us as the East Anglian Aces for the benefit of the Asian market, but we don’t really know what he is planning to do, either.

I don’t think many Town supporters would object to Marcus Evans making money out of the club if he did so by bringing real, sustainable football success – a place in the Premier League and a thriving Academy being reasonable (if currently very distant) yardsticks for measuring that. What we’d like to be reassured about is that he has a plan to achieve it which doesn’t involve loading debt on top of debt. If Sky Sports could point a camera at him while he explains that, they’d certainly distract a few Ipswich fans away from all the other channels.

Gavin Barber

12 Comments

  1. PG
    August 16, 2012

    Good piece, Gavin (again). The whole thing’s rotten. Fucking rotten.

    Reply
  2. Keith
    August 16, 2012

    Interesting piece but as supporters what do we care? It was obvious that ME was doing a business deal when he purchased the companys debts at a deep discount. He only gets a payback if Town are promoted so his interests exactly match those of every supporter. With so many clubs threatened with closure and bankruptcy we should be grateful that our club has a financial backer to fund the whole thing and keep the show on the road. I for one hope he makes a decent return on his investment, not many football investors do. I just want to see attractive attacking football every week and Town having some reasonable success and something to play for at the end of every season be that promotion or relegation. I no longer expect under current football arrangements to see my home town club challenging in Europe or to win the Premier League.

    Reply
    • Lloyd
      August 16, 2012

      “He only gets a payback if Town are promoted”; ” I for one hope he makes a decent return on his investment”.

      Keith: with all due respect, did you read the article? Essentially, it seems that Evans is already doing very nicely from this arrangement…

      Reply
    • Gavin Barber
      August 16, 2012

      Hi Keith, thanks for comments. My ambitions for ITFC are similar to yours, I’m not expecting to see us back in Europe any time soon. The only thing I’d add would be that I’d like to see more home-grown players coming through from the Academy (but that’s probably a separate debate).

      As regards the question of “what do we care?”, it’s a question about the sustainability of the current situation. The levels of debt – which I should have emphasised more strongly in the article – are a massive concern to me and to several other Town fans that I’ve spoken to. Being so indebted to one individual must be a risk, no matter who that person is. Other clubs have suffered when they’ve found themselves in that situation. I am not comparing Evans to those who’ve ruined Portsmouth and Rangers, but even with the best will in the world, it must be something that we address in the long term. If the fortunes of Marcus Evans are inextricably linked to Ipswich Town then yes, OK, he has a motivation to bring us success on the field, but equally, it means that the financial fortunes of Ipswich Town are inextricably linked to those of Marcus Evans/MEG, and however secure that may be as an institution, no concern that large is ever immune to sudden downturns in fortune.

      Like you I very much hope that Evans makes a decent return on his investment, because that will mean he’s brought success to the Club. I am, however, increasingly doubtful as to how long we can go on piling debt on top of debt.

      I would be very, very happy for my concerns to prove unfounded, but nothing that I’ve heard or read has offered me any assurance thus far.

      Cheers
      Gav

      Reply
  3. Lloyd
    August 16, 2012

    Great piece, Gav. You’ve combed through a very knotty subject with seeming ease here.

    £66m in debt!? That seems an awful lot (I wonder how it compares to other longstanding Championship clubs?), particularly given ITFC’s decreasing crowds and what’s still likely to be a hefty wage bill. How on earth the club will begin to reduce it besides promotion to the Prem – which looks pie in the sky now – is beyond me.

    I’m interested to hear more about the tax loop that allows Evans to save on his returns by loaning or giving money from profit-making parts of the Group to loss-making parts (which theoretically means that Jason Scotland is stealing from lollipop ladies). I came across this in relation to Andy Pilley in researching the Fleetwood piece that went up yesterday, so it seems as though this is now standard practice in professional football in England. It stinks.

    Reply
  4. Ben
    August 16, 2012

    Brilliant post, Gavin. At Newcastle our feelings were somewhat different – after a larger-than-life and all-too-visible/vocal chairman in Fat Freddie Shepherd, someone like Mike Ashley who (by and large) prefers to stay out of the media spotlight was a welcome change, even if many of the decisions he made (at least initially) were unpopular. As for the financial situation, surely it’s not much to ask for greater transparency? I hadn’t realised things were so shady at Ipswich – it sounds nearly as bad as Leeds…

    Reply
  5. Keith
    August 16, 2012

    Lloyd, yes I did read the article. I would disagree that ME is doing nicely from the arrangement. At the moment he has probably paid out cash of about £18m and received no cash back. Without looking at the accounts in detail I’m assuming inteerst at 5 years at 8% on the notional £33m (say £15m) plus the £33m less the £66m now due, plus the £8m initial outlay). The only cash benefit he will have received is a tax reduction for the losses incurred by ITFC, probably about 20% of the running losses. Not a great investment so far and it will only come good if Town are promoted and sufficient cash comes in to allow the debt to be repaid or somebody buys it all off him.

    Reply
  6. Colin
    August 16, 2012

    Good article. For me the debt only becomes a problem if ME wants to leave or, as happened at Nottm Forest, if he should die. Nottm Forest found a buyer willing to buyout the Doughty family so presumably will Ipswich.

    But the real problem in English football is the massive financial gap between the Premier League and the Football League. Whilst some clubs move from League 2 to League 1 relatively painlessly moving up a division higher up the pyramid becomes a big financial headache. West Brom made a number of attempts to get into the Premier League only to come back down after a season or 2. The parachute payments helped WBA win promotion again but staying there more than 2 Seasons is a real battle for many of the promoted Clubs.

    Reply
  7. Nicola
    August 16, 2012

    I took a look on the Duedil.com website and their representation of the Marcus Evans Group Structure shows Marcus Evans Investment Limited as being based in Bermuda. There chart shows Marcus Evans Investments Limited as the controlling company for all MArcus Evans companies, though it would be more logical for Marcus Evans Holdings Limited to be the top of the group tree. That is also based in Bermuda.

    Findownersearch.com –
    http://www.findownersearch.com/owner-marcus-evans-investments-ltd-2355606-company-brands.html

    gives the address for Marcus Evans Investment Limited as

    2 Church Street
    Hamilton HM 11
    Bermuda

    Reply
  8. Nick Richards
    August 17, 2012

    Interesting post Gavin – remember me from the Green Un days? Hope you and your (then) baby are well!

    Reply
  9. Ivesy
    August 17, 2012

    Gav, long time no speak mate. Excellent article, you’ve known for a while my thoughts on the current regime at Portman Road…the club lost its soul a long time ago and is nothing like the club I grew up supporting. We’ve been cursed ever since Evans rode into Town, the treatment of Magilton was abysmal whilst the appointments of Keane and Jewell have been shocking. Another season of mediocrity beckons…

    Reply
  10. Ian Byrne
    March 3, 2013

    Thanks for that article. I’d been looking for a synopsis of our finances. Having seen clubs of all sizes and reputations go to the wire and even fold, It’s important that people like yourself hold a light up to the dealings of clubs. Even if the best case scenario plays out and we get promoted, serving the interests of ME and us supporters, everyone should be able to see what is going on. That doesn’t look to be something that will happen quickly. My gut feeling is that while ME holds the debt and stays at the club, we’re in the best posistion we can be given our debt. I’d be more concerned if ME was looking to sell the club to some crack-pot chicken farmers or Kuwait based mega-bucks mentalists. I base this opinion on what appears to be a concerted effort to reduce the wage bill. The next challenge will be to get the gate numbers up and I think that will only happen as we (hopefully) become more competetive.
    To our owners credit, I think we give our managers a fair(ish) crack at the whip. In hindsight Magilton’s sacking was hasty although Keane’s appointment after getting Sunderland promoted seemed logical. After Keane, appointing Jewell made sense as the morale of the club had been decimated. Looking back it’s easy see that neither Keane or Jewell were good appointments but at the time there was sound reasoning behind them.
    In McCarthy we now have a manager who likes to stay at a club and build and it looks like it’ll be 3rd time lucky for ME appointing the right man.
    In the meantime, keep up the good work trying to get our club to open up and keep the rest of us informed.

    Reply

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