Deep in debt but Bolton Wanderers have no need to panic, says football finance expert

A Leading sports finance expert has moved to calm fears Wanderers are heading for some sort of Portsmouth-style meltdown.

After a loss of £50.7million was announced at the end of last month, escalating debts to a whopping £163.8m, concern spread among the club’s supporters that the Whites may be heading for serious financial peril.

The likes of Portsmouth, Leeds United, Leicester City and Coventry City have all slid towards administration after dropping out of the Premier League – and none incurred losses of the size revealed at the Reebok on New Year’s Eve.

But while Robert Wilson, a lecturer on sport finance at Sheffield Hallam University, points out that Wanderers dropped out of the Premier League at the worst possible time, he is confident as an outsider looking in on the club’s accounts they are in no immediate risk, so long as owner Eddie Davies continues to foot the vast majority of the bill through his business interest Moonshift Investments Ltd.

“They are in the eye of a perfect storm at the moment,” he told The Bolton News. “It was absolutely the wrong time to get relegated from the Premier League and for the FFP regulations to hit.

“I would be happy to say that under the current ownership structure, with the owner (Eddie Davies) happy to continue putting money into the club for whatever benefit or reason, the debt does not concern me.

“It appears the club are now financially coming into line with where they need to be and so the next five years are crucial. I’d expect over that period to see them start to break even and begin paying a small amount of that debt off.

“I’d compare their situation more to Southampton when Markus Liebherr took over They have a stable ownership and have not had the upheaval of a Leicester City, Leeds or Portsmouth.

“If Bolton’s owner woke up tomorrow and decided to sell everything the club owned, then I would imagine a large portion of the money he has invested would be recouped – and that is another reason it doesn’t worry me. It is a soft debt.

“If Bolton were in the same situation as Leeds, for example, and did not hold as many assets, it would be a different story.”

The lack of any public communication from Davies or his chairman Phil Gartside in the light of the accounts has not helped to quell the feeling of unease among supporters.

The club have outlined plans to pursue “alternative revenue streams” key to which seems to be their £100m office and school development alongside the Reebok, which they hope will get the go-ahead from planners early this year.

Wilson reckons only promotion to the Premier League – and a share of broadcasting revenue which is now nearly three times the size of the one they previously enjoyed – will start to see the debts reduced.

“In terms of a business objective then getting back to the Premier League is absolutely vital but the worrying thing for Bolton is that it is becoming increasingly harder,” he said.

“Three teams who come down every year do so with a parachute payment that enables them to keep hold of better players, given the right relegation clauses, and retain stronger squads. This is one of the main problems of FFP and it creates an environment where other clubs could be frozen out.”

Source

Apart from the generally more optimistic tone about our finances than we are accustomed to hearing one sentence did stand out for me:

“It was absolutely the wrong time to get relegated from the Premier League and for the FFP regulations to hit."

Just more evidence for Coyle being the worst manager we have ever had (although Lee runs him a close second). How the fuck did he manage to get us relegated? It would have been easier to stay up.

xmiles wrote:Apart from the generally more optimistic tone about our finances than we are accustomed to hearing one sentence did stand out for me:

“It was absolutely the wrong time to get relegated from the Premier League and for the FFP regulations to hit."

Just more evidence for Coyle being the worst manager we have ever had (although Lee runs him a close second). How the fuck did he manage to get us relegated? It would have been easier to stay up.

Easy... f**king up a two goal lead with 15 minutes to play at Sunderland, and not playing to win the final game of the year versus Stoke. Equally appalling was the draw at home the week before vs WBA. Winning any of those draws would have kept us up.  3 chances in 4 weeks! Coyle was clueless.  It took a special coach to get us relegated... a nice coach... a clueless coach who bought the wrong players, did not inspire the team, and did not understand what it took to stay up.  I feel for Dougie as he tries to rid us of the overweight salaries of underweight players.  Who in their right minds would have re-upped Knightmare at such numbers?  Lastly who is the overseer who agreed to pay such egregious numbers to lightweight footballers?

We were eventually relegated by a single goal - one that shouldn't have stood IMO, but that's all water under the bridge now.
I tend to agree with the author as the club has purchased a large portfolio of assets and would have 10 years to dispose of them if required, however it is still a serious situation and one that will really limit our growth potential over the next few years.

I know the bloke is an expert BUT he can only days what he see's in the published accounts. We on the other hand can see a bigger picture and are not going to lose our reputations by speaking out about what is not in the accounts.

For example the accounts show a line of credit from Moonshift to the club - but does the expert check to see how Moonshift gets the finance in the first place to fund the credit line and why?

The accounts show nothing wrong in the current funding on paper but we are led to believe fron Gartside that the money is from Davies, whilst clearly Davies dosen't have that sort of money to invest. So going by the accounts like he has is one thing, yet being able to see a broader view of things gives quite a different picture.

Another example of what the accounts 'says' and what common sense tells you differently is that bit about where Davies can get his money back by selling off his assets. Maybe so IF someone wanted to by a football club that needs massive investment in the team (which Fair Play regs now prevent) and which is in the shadow of several nearby 'bigger' clubs such as United and City who siphon off a great deal of non committed Bolton fans to their support.

Same to about the hotel and academy - great if someone wants an hotel in the middle of Horwich, or a football academy to produce players for who exactly (if it is sold seperate to the club)?

What I'm trying to say is clever people spend a great deal of time 'creating' accounts but sometimes what they show in 'black and white' - to satisfy the legal requirements - is nothing like the real picture that we can see if we don't limit our view to the 'books' only.

Common sense alone tells you that watching a business plunge to £170 million in the red over the last five years, is a business that is in real trouble even if the books are trying to say differently.

I will never pretend to understand finances thats for sure, but I don't understand how any level of debt can be seen as a good thing, no matter who you're owing it too.

Always interesting reading your points on the finances sluffy!

Hipster_Nebula wrote:
Always interesting reading your points on the finances sluffy!

Someone wants to be a mod.

Natasha Whittam wrote:

Hipster_Nebula wrote:
Always interesting reading your points on the finances sluffy!

Someone wants to be a mod.

Nah, genuinely mean it.

Aww how sweet.