Turmoil Week: Coventry City
Stage 3 of our examination of the financial architecture of the Football League’s clubs sees us head to Coventry. Ian Palmer is a friend and associate of Neil Allison, custodian of the Sky Blues Blog and here provides his thoughts on the slough of despond facing the Sky Blues, a situation that has been allowed to develop both on and off the pitch. You can follow Ian on Twitter at @iancpalmer.
Coventry City, like an awful lot of football clubs these days, are broke.
Being a fan, I know that if any kind of offer comes in for one of our players, then I am unlikely to see that player again, until he plays (and probably scores) against us.
Of course, we’ve always been a selling club. But the kind of selling club that sells players like Robbie Keane to Inter Milan for £13 million, making a tidy £7 million profit in the process. Keane may not be a typical example, but the point is that although we have always been a club whose best players have outgrown and moved on, we’ve always managed to negotiate fairly good prices for them.
These days, offer us a bag of balls and a goal net and you could get a pretty hard-working midfielder who can pass a bit. All in all, we’re desperate for money.
I’ve no doubt that in the last decade or so of Coventry City’s Championship existence, we have had at least eleven players capable of achieving promotion. The trouble is that because of our finances, we haven’t been able to keep all those players here at the same time so that they can all play together.
This isn’t just because our best players have been sold; many of them have left for free at the end of their contracts. We don’t seem to offer improved contracts until they’re about to run out, and by that time the player has already decided to leave.
The club’s current owners, Sisu Capital Limited, appear to be in the throes of an austerity drive, which although this has greatly reduced the club’s losses, has created a team of modestly earning individuals (as far as footballers go) that are rock bottom of the Championship.
Sisu took over in 2007, ostensibly saving the club from extinction. Led by Ray Ranson, they were seen at the time as glorious white knights striding forth from the darkness to save our club and end our woes. We toasted them and dreamed of where their promises of investment could take us.
Fast forward four-and-a-bit years, and the situation couldn’t be more of a contrast. Two weeks ago, a group of loyal, battle-weary fans (calling themselves ‘Save Our City’ or the alternative natty acronym, SOC) staged a protest outside our ground before a game against the owners. Local radio phone-ins and online message boards are laden with anti-Sisu sentiment, which range from the thought out and constructive, to the derisory and obscene. ‘Sisu Out’ banners sometimes appear briefly in the stands but tend to be snaffled up by obedient stewards as quickly as they are unfurled.
Sisu cleared the club’s substantial debts when they took over — reported to be around £60 million — and promised to invest another £20 million in the team and the stadium (the club does not own the Ricoh arena, we rent it from the council and the Higgs Charity). This promise came at the cusp of the credit crunch, and Sisu’s money has come and gone.
In fact, Sisu have built up a debt of their own. No one is really sure what this is, but £30 million seems a popular guess. We know that at its most profligate, the club was losing £500,000 per month. This has now been reduced to around £300,000 per month, largely thanks to player exits greatly reducing the wage bill. But the club is still losing money at quite an alarming rate. Last year the training ground was mortgaged to raise funds, and next season’s season ticket revenues have already been spent in an effort to keep the club afloat.
Sisu’s austerity measures appear to mirror those of the coalition government: cut hard and cut fast. Just recently they sold this season’s leading goalscorer, Lukas Jutkiewicz, to Championship rivals Middlesbrough, for a fee which we’re told could rise to £2.3 million.
For a lot of fans, this gesture was akin to waving a white flag as far as relegation is concerned. Sisu will not spend their way out of Coventry City’s difficulties, but they maintain that the debt lies with them, and not the club. This does nothing to placate the fans. Sisu have been too dubious thus far in their running of the football club to engender the fans’ trust.
A defining moment was Ray Ranson’s resignation as chairman in March last year. Ranson was a football man, quietly passionate about the club, and clearly frustrated at working within the ever-decreasing boundaries Sisu drew. After his exit, a disgruntled Ranson had a parting shot at Sisu by revealing a list of players City could have got for next to nothing had Sisu chosen to invest (Andy Carroll and Jordan Henderson to name but two).
His replacement, Ken Dulieu, began his short tenure with a press conference in which he stated that he had scheduled a meeting with the council to discuss buying a stake in the stadium. The council were quick to point out that they knew nothing of this meeting, and this discrepancy really set the tone for all of the boardroom goings-on ever since.
Dulieu recently resigned when, having appointed himself as ‘Director of Football Operations’, he appeared in the dugout at the next match alongside our poor perplexed manager, Andy Thorn.
Ownership of the Ricoh Arena is a key part of making this football club profitable. The council shed some light on the Sisu’s business practices by declaring that as long as Sisu were in charge they have no intention of selling their half of the stadium rights. But to view this as a clear case of goodies versus baddies is probably over-simplifying the situation. The council don’t have a squeaky clean reputation for their handling of the situation either.
As hard as they try to appear credible, Sisu just keep shooting themselves in the foot. The Coventry City boardroom has been a merry-go-round of comings and goings this past year. One man who has remained steadfast, however, is Sisu’s frontman, Onye Igwe. But Igwe is not one for self-publicity. Indeed he has remained very much a background figure. His communication with the fans has thus far amounted to a single interview with the local press and a handful of platitudes in the odd matchday programme. The thing that riles City fans the most is the reticence of Sisu, and the lack of reassurance that they have a plan for the club, that they’re in it for the long term, and aren’t bent on merely recouping what losses they can by selling off our best players.
But Coventry City’s fans cannot remain blameless for their club’s financial demise. Our average attendance when Sisu took over was 19,000. It’s now down to 15,000. That 4,000 drop in attendance equates to around £150,000 in lost revenue per month, or £1.8 million per year. In comparison, both Norwich and Southampton managed to maintain attendances of over 20,000 even when they dropped to down to League One. City fans can moan all they like about the owners, but if we were getting that kind of attendance every week then things might be very different.
Sisu had a chance to put an end to their loss-making endeavour when a consortium led by former director Gary Hoffman tried to buy the football club for just £1 last summer. But Sisu rejected the bid, and Hoffman’s investors were scared off their pursuit when the identity of one of them was curiously leaked to the press. Hoffman, a genuine fan of the club, can still be seen hob-nobbing amongst the supporters at matches home and away, and he is apparently still in talks to buy the club. A lot of fans see him as another knight in shining armour, but the truth is that we have no evidence to suggest that his ‘backers’ are any different to Sisu.
Of course, our perception of the owners as a clueless bunch when it comes to football might be very wrong. Perhaps Sisu are smartly ahead of the game. With FIFA’s new Financial Fair Play rules on the horizon, clubs are going to have to learn to live within their means. Fans’ perceptions of the state of football finances are warped by the likes of Manchester City and Chelsea, who are funded by individuals willing to throw extortionate amounts of money at their clubs knowing that they’re not going to see a return. In trying to compete at the same game an awful lot of clubs are spending beyond their means, and it can’t last forever.
Perhaps Sisu are saving Coventry from a ticking time bomb which looks set drive a whole raft of clubs into financial oblivion. Or perhaps they’re dispassionately squeezing us for every penny they can get. The trouble is, no one knows for sure.