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.