Southampton Preview

I was supposed to be flying to London tonight, with a view to possibly making the pointless drive to Southampton.

However a family issue takes precedent and thus I find myself still in New York, desperately trying to think of something interesting to say about such a depressing fixture.

Southampton's fate has been the key Championship news story this week, but it has required a background in company law to fully understand the implications.

Either way, their story is a sad one on a number of levels, but also one that I found hard to fully comprehend until I dug a little deeper.

Despite the limitations of a highly restrictive stadium, they spent the entire period 1978-2005 in the top flight of English football, a remarkable achievement. A runners-up spot in 1983/84 was their high point, and they flirted with relegation on a number of occasions.

Their final season at The Dell as 2000/01, and thus they enjoyed four full seasons at St Mary's Stadium before finishing bottom of the Premiership in 2004/5. Thus despite the obvious cost of building the (unnecessarily) large new stadium, it's not as if relegation was an immediate event.

More interestingly, since relegation they have offloaded a number of players for not inconsiderable fees: Beattie (£6m), Crouch (£7m), Walcott (£5m), Bale (£5m), Baird (£3m), Jones (£6m). How Charlton would have enjoyed this type of windfall, which they only partially matched via Darren Bent.

Their average attendances at St Mary's steadily fell as expected, regularly approaching the 32,000 capacity in the Premiership, but settling around 23,000 post-relegation.

However in 2008/9, their attendances have nosedived to just 16,808 implying a barely half-full stadium.

Anyhow, nothing in the above account of their recent history implies that they would be top of anyone's list of the most 'at-risk' football clubs. Even whilst in the Premiership, they never appeared to be a club that noticeably lived beyond its means.

However, they certainly had their fair share of managers with all of the related and grotesque signing-on fees and payoffs (since 2000 alone: Jones, Hoddle, Gray, Strachan, Sturrock, Wigley, Redknapp, Burley, Pearson, Poortvliet). Where have we heard that one before?

A brief review of the accounts of the listed Southampton Leisure Holdings Plc to 30 June 2008, was however startling. In the very first paragraph of the Chairman's Statement, it reveals astonishingly the following:

"The operational performance during the period....was entirely down to the previous Board. I do not propose to go into the detail....but to lose £4.9million after a £12.7million profit on player disposals, and to run a player/coach wage bill of 81% of turnover speaks for itself. The only justification for this would have been promotion, but in the event we narrowly avoided relegation!"

It seems that George Burley was given licence to strengthen the squad (via both transfer fees and higher wages), having reached the play-offs in 2006/7. Unbelievably therefore, the wages of playing staff alone rose from a manageable 45% of turnover, to 81%! No wonder they're close to collapse.

Despite Burley's vision, they ended up finishing 20th, and this outcome coincided with the loss of their parachute payments, revenues thus ratcheted lower whilst the cost base was now higher.

Matchday revenues fell sharply too as the momentum of the prior season died away, from £10.5m to £7.9m, not as a result of lower attendances (as noted above), but lower ticket prices. In the current season, their season ticket sales fell to just 10,000.

As a result, and as noted in the above accounts, the club remained reliant upon the continued support of its key creditors, namely Barclays Bank (£5.7m overdraft) and more importantly £22m in loan notes.

It is these loan notes that have clearly caused the club's collapse into disarray. The club borrowed £25m at a fixed interest rate of 8.35% (!), repayable in annual instalments out of a securitisation structure backed by season ticket and matchday ticket sales!

The interest portion of the remaining loan balance (£22m) is thus nearly £2m alone, before even accounting for principal repayment.

When the club's short-term operations are being funded meanwhile by the above Barclays overdraft (not surprising given that net cash outflow from operating activities is £15m), then eventually the impressive conveyor belt of impressive saleable youngsters cannot keep up. That is where the club finds itself today.

The irony of the above should not be lost on Charlton fans. After all, Southampton are precisely one year further down the post-Premiership line as we are. Their parachute payments have already run out; ours are about to.

Given our respective League positions moreover, its unsurprising therefore why this fixture is so damned depressing. At least they still have a fighting chance of staying up, a points deduction notwithstanding.

I've almost lost total interest in the footballing aspects at Charlton, strangely energised only by seeking to analyse its season ticket pricing, or reviewing its next opponents' annual accounts.

I feel no rapport with the players, and certainly not with their manager. I'm hoping the summer clearout reignites my passion, but right now its stone cold.

When I try to predict the line-up, I can barely remember who's in the squad anymore: is Soares still there? Who knows? Who cares?

Anyhow, I think Parky will line up his dead men walking as follows: Elliot, Butterfield, Youga, Hudson, Ward, Bailey, Racon, Spring, Sam, Zheng, Kandol. Subs: Randolph, Holland, Shelvey, Dickson, Burton.

NY Addick predicts: Southampton 0, Charlton 0. Att: 23, 289.