It’s January and after 2 consecutive months of colds, hangovers and general malaise it was time to go to the gym yesterday. And it struck me that as my expectations of a straightforward session evaporated in coughs wheezes, and dizzy spells, that they weren’t that dissimilar to the unreasonable ones of Leeds fans’ over the transfer window.
There seems a general sense of consternation growing as we miss out on the likes of Wood, Blackstock (according to the YEP), potentially Jerome Thomas, and whomsoever the 2 missed targets were according again to Warnock.
Compare that to the announcements of 2 weeks ago, and the response to them. GFH capital made a good stick of being positive when they took over, they want to establish our club back at the “heart of the city”, to bring back a sense of positivity.
Sensibly though they want any success to be based upon sustainable business principles.
In the Yorkshire Evening Post Salem Patel spoke specifically about our “one area of weakness” being Cashflow. If you combine this with their drive to get bums back on seats with the half season ticket promotion then you can see that this is not a revolution but evolution.
Much is made of Leeds United’s relatively large turnover, certainly compared to other championship clubs. But where we fall down it appears is in terms of how much wadge we have to use. Turnover is meaningless if it’s all tied up in loans, rent and litigation bills, that’s where Leeds are now. Step forward Ken Bates..
For example let’s take the Chris Wood scenario with Leicester. Warnock (unadvisedly in my opinion) came out stating he “couldn’t compete financially with Leicester”
But this was a £1.25m transfer? Surely to god a £32m turnover business can afford that? And with some funds injected to bolster the position?
Well if your business just reported a loss, (as Leeds City Holdings did) it means a couple of things.
Firstly who’ll lend you the cash if you are overdrawn? GFH are a Bank admittedly, but they too have to justify to their shareholders how that money would be spent, and that the loan was a good one. The second effect is simply that other more important creditors, your landlord, the taxman, the local authority all need paying first, and it leaves less in the pot.
Dull dull dull I know, and it sounds like one of Bates’ programme rants. But there is an upside, hidden in the paragraph above. GFH are an investment bank, they’ve already said that they want to bring in partners to work with, and the investment model is clear. Pump in a sensible amount of money (more than the flat nil Bates seemed to each year) and the upside will be enormous. Even if the club ends up yo-yoing for a couple of years betwixt PL and Championship the parachute payments alone are worth the punt.
But what GFH are really feeling now is that acute lack of cash. The business was not as rosy as Bates often claimed. He played no small part in driving fans away, not just through providing a dire team, but in being pretty dreadful to those who still turned up, and charging them to the hilt.
Half season tickets will bring in more cash, and a positive response to these will enable GFH to convince investors that they can increase whats in the coffers. A positive cashflow also means that you dont have to sell your players to break into profit. GFH will have to address that, restructure the complex web of loans and securitisations the Bates regime tied us to via the loathsome Ticketus, to ensure our outflow of cash is improved. And at the same time meet those expectations of fans and sign good players!
As the title goes – its time for GFH to feel the burn and this rather tremendous juggling act takes place. Expectations of the fans (which are astronomical) versus the reality of turning round a business going nowhere.
Would a straight £6m of cash being injected into the transfer pot solve our problems?
Well yes it might. Signing Jerome, Tonge, Boyd, Faurlin and co would go a long way to helping us out, and it may happen yet?
But our current lack of cash due to years of investment in side projects away from football has ensnared what working capital we might have had for players, and GFH will need to use all their financial acumen to resolve it.
In the meantime perhaps it’s unfair of Leeds fans to expect a Man City style revolution. Leicester City are profligate in the extreme, and one suspects their model cannot continue much longer especially with the UFFP rules incoming in 2014. That might sound like sour grapes but we do need to keep our house in order to stave off the consequences.
I genuinely believe that for the first time in perhaps 5 years we do have some money to spend in January, within reason, and that done properly that could work well for us. But £1.25m offered over 3 years will always lose out to £1.25m right now, which is no doubt whats happened with Wood.
I think Leeds fans can expect a bright(er) future under our new ownership, but after only 2 weeks of ownership we cannot reasonably expect the likes of David Silva, Iniesta or Falcao to roll up at Elland Road. It’s why Patel has already stated the value of releasing more money into our business, be that through increasing season ticket sales, advertising, or otherwise.
As is happening now a slower process which sees fringe players finally trimmed from the squad, and youth players tied up to better deals is just as important.
Our favourite miscreant on a Leeds obsessed West Ham fan site has mocked our inability to compete with `middleweight’ Leicester City, but this seems an unfair comparison, with player like Jermaine Beckford on over £30k a week that puts Leicester’s backers firmly in the same pool as some of the lower end Premier League clubs. Should we be racking up enormous debt for new players? Of course we shouldn’t.
GFH may well have to dig that little bit deeper as is always the case, and it may not even be until the summer that we see that taking place, but for the first time in a long time we have people in charge who understand there does need to be some `risk’ in the model for any investment to take place, luckily for us unlike Leicester or even Man City we can look forward to it being done affordably.
I also think we will see at least one marquee, cash signing this January, if you want the crowds to come back a signal of intent is critical to achieving this. Bates didnt really care too much about winning popularity, perverse when youre trying to encourage 40,000 people to drop their weekend plans and come down to watch a game of 2nd division football.
GFH will want to re-engage supporters, making that signing is whats called a `quick win’…
Keep the faith – surely to god we can give these guys more than 2 weeks we gave Bates nearly 8 Years. MOT.[info]Reporter – Matthew Brown-Bolton[/info]