Monday, January 18, 2010

Bailey's Cream

With Norwich’s thumping revenge victory taking their incredible run to 44 points from 17 games, it is strange to feel as though Charlton are losing ground despite a ten-game unbeaten run of their own.

Indeed, one wonders just how painful that late Grant Holt equaliser at Carrow Road back in September will be at the season’s end; after all it would place the teams level on points today had it not have been conceded.

The momentum behind the Canaries is considerable, but we can only focus on winning as many of our own games as possible, a feat we achieved on Saturday with a hard-fought but rarely inspired performance.

Meanwhile perhaps just gradually, Leeds are beginning to lose focus with their FA Cup run and the Jermaine Beckford saga playing on their minds.

With its steep hills, High Wycombe could be one of the region’s most attractive towns, but instead it is blighted by non-descript local authority housing and an ugly town centre.

However it is probably my nearest League One fixture (maybe only MK Dons is closer), permitting me to leave home just before 2pm.

Adams Park was neat and tidy, but the genius who chose to locate it at the end of a dead-end street , is presumably now working as ’Salting and Gritting Co-Ordinator’ for my local council.

Once inside the ground, the surroundings were surprisingly atmospheric, with the fog slowly moving in across the wooded hills beyond the opposite terrace.

Spectator visibility was sharply reduced as the game entered its final stages, and an evening kick-off would not have survived the conditions.

Charlton fans arrived in good numbers, our usually poor away support seemingly energised by the chance to visit so many new grounds.

Either that or more likely it just proves the old adage that fans just want to see their team win on a fairly regular basis, regardless of the division they are in.

Parkinson recalled Christian Dailly, Jonjo Shelvey, David Mooney and Deon Burton, reverting to a 4-3-1-2 formation with Shelvey occupying a free role, at least for the first period.

The Chairboys produced the game’s first outstanding chance, Stuart Beavon weaving through the middle of defence in worryingly straightforward fashion, only to screw his shot wide with Rob Elliot exposed.

Nicky Bailey was vociferous in his criticism of Lloyd Sam's role in the chance, surely a case of mistaken identity. Either that or he's a motivational genius, because just minutes later the winger was involved in our goal.

However it was somewhat against the run of play when Shelvey fired Charlton ahead, a left-sided cross from Bailey made its way out to the opposite flank. Sam took his time and fed the arriving teenager, who finished with aplomb.

There are plenty of aspects of Shelvey’s game that require improvement, but finishing does not seem to be one of them, judging by goals like this one, as well as those notably versus Swindon and Orient.

The rest of the first-half was soporific at best, with Charlton seemingly happy to sit on their lead, whilst the home side sought to play some neat football but without the requisite quality to carve the Addicks open.

The second half began in much the same vein, but at just 1-0 the threat of complacency was always present, and so it proved on 64 minutes.

The home side were allowed to retain possession deep into Charlton territory, and the ball eventually fell to American-born striker Jon-Paul Pittman who spun sharply and fired a fizzing shot that appeared to go straight through Elliot’s despairing dive.

Conscious that his team needed a new spark, Parkinson made three quick substitutions, and moved to a more classic 4-4-2 with Shelvey shifted wide left.

The additional pace of Chris Dickson and Leon McKenzie, as well as the forward-looking impetus of Fraser Richardson gave Charlton a fresh dynamism that they previously lacked, and they wrestled back the impetus and the three points.

The goal summed up exactly what Bailey brings to the side. With other players standing open-mouthed as Shelvey was somehow denied at close-range by keeper Scott Shearer, the flame-haired skipper remained singularly focused.

After seeing one rebound shot denied, he was first on to the subsequent loose ball and made no mistake a second time, hammering home with a clinical left-foot finish.

The enthusiastic team celebration again suggested deep reserves of spirit,, though quite why Grant Basey saw fit to grab McKenzie by the mouth is probably a private matter for the pair of them.

An unlikely five minutes of injury time were nervy, but the result was not really in doubt even if Dickson’s inability to keep late possession was inexcusable.

A valuable win for sure, but little to strike fear into fans of Leeds and Norwich. We looked a better side after Parkinson made his changes however; the Burton/Mooney combination has been a successful one but neither is blessed with the pace to get behind teams.

The return of Richardson was welcome however; his experience on the right side is useful, and will surely benefit Sam who frustrates as often as he excites.

Likewise McKenzie’s late cameo was encouraging, and offers Parkinson additional options.

Here are my match ratings:

Elliot 6 - rarely involved, but might have got down quicker for the goal
Omozusi 6 - usually resembles a table football player who only goes from side-to-side, but a rare mazy run suggests he has more to offer going forward; generally solid
Basey 5 - lack of mobility continues to hamper his progress; the goal came from his left side
Dailly 7 - a welcome return for the Scot; sees danger a split second ahead
Llera 6 - occasionally resembles Bambi on Ice, and he will face tougher opponents than these ones
Semedo 6 - his role is to block and tackle, and he blocked and tackled
Bailey 8 - an extraordinary scoring record continues, on the back of another inspirational performance; too good for this side
Shelvey 6 - not as influential as someone with his apparent potential should be (I remain less than convinced of this incidentally)
Sam 6 - showed good poise for the opener, but seemed to get the ball stuck in his feet often when an early delivery was warranted
Burton 5 - largely anonymous; would seem better partnered with a livelier striker than Mooney, who would better appreciate his guile
Mooney 5 - chases lost causes, but seems to fall frustratingly in the cracks between classic target man and Sheringham-esque playmaker
Richardson 7 - his ‘head down’ runs forward will provide much needed drive
McKenzie 7 - unlucky with a solo effort, and played with welcome determination and spirit
Dickson 5 - a riddle wrapped up in a mystery, inside an enigma

Tuesday, January 05, 2010

Called to Account

Call me a freak, but I like nothing better than pouring myself a beer and rifling through a set of accounts.

When those accounts are those of Charlton Athletic, they hold particular resonance because when one steps away from the passionate and opinionated debate about matters relevant to the club, they represent the only objective and universally available insight.

I urge you to read them here too. Meanwhile my review of the previous year’s accounts can be found here.

On the opening pages, Richard Murray’s statement is refreshingly honest and critical. Mistakes are admitted, particularly those pertaining to manager selection, transfer dealings and loan signings.

The scariest data point in the entire document is contained right there on page 1, notably ”£12.6million of the total £13.6million of the television and broadcast income recorded comes from the parachute payment.”

Given that total revenues for the fiscal year were only £23.5million, more than half of the club’s revenues have since disappeared at a stroke, a truly devastating statistic.

Reflecting this sudden drop in revenues, the most important aspect of the cost base (staff costs) was reduced by 30% but this must surely fall much further.

After all, if promotion is not achieved this season, one must additionally assume further falls too in matchday and commercial revenues.

The operating loss was over £8million (down from £12million) even with the final parachute payment, and this is unsustainable although as discussed below in the short-term cashflow is more relevant than profitability.

The club still employs 160 staff, a figure which intrinsically feels too high to me. If revenues fall to say £12million in the current fiscal year, this implies turnover of only £75,000 per employee.

This compares for example with a retailer like Tesco which produces revenues of £125,000 per employee, and any supermarket shopper knows how useless many of them are.

The accounts remind us of the substantial turnover on the Board in September 2009, with a number of longstanding directors such as Martin Simons and Michael Grade resigning.

Simons earned a £25,000 salary during the year, but it is not specified why he was a special case.

The ability to provide financing (or notably in the case of Peter Varney, the ability to attract financing) has seemingly become the key factor in determining Board representation.

The club’s main assets are its freehold land and buildings, and the ‘intangible’ value of player registrations.

Not surprisingly the value of the latter has fallen substantially as players are offloaded, and as a result the club’s ‘net assets’ are barely positive at £1.4million.

However the asset side of the balance sheet is not particularly useful as a metric (Jonjo Shelvey is not a playing 'asset', yet represents the club's most saleable player).

It is difficult not to be astonished by the negative (£44.6million) figure for the ‘profit and loss account’, equivalent to the total cumulative losses for the club since inception (net of any distributions to shareholders).

Indeed it contrasts with a comment Murray makes in his statement, namely ”….it is important we continue to work hard to secure new investment into the club.”

The dictionary definition of ‘investment’ is ….laying out money or capital in an enterprise with the expectation of a profit.

The club may or may not be successful in attracting capital, but the concept that it would constitute an ‘investment’ in the strictest sense of the word is fanciful.

From Portsmouth to Cardiff, and from Notts County to Stockport, the finances of football clubs are being laid bare.

Indeed as any followers of non-League football will know, the madness does not stop at the gates of the 92 League clubs.

I sense that the collapse (by which I mean the complete disappearance) of a relatively major club would be the best thing that could happen to football, but one just hopes it doesn’t happen to be ours.

It would render credible to every club in the land the threat of liquidation, and force a dose of reality into the Ponzi scheme that masquerades as domestic football.

The club’s debts were largely unchanged during the fiscal year, but a note to the accounts confirms that certain directors agreed to provide additional short-term funding (to the tune so far of £3.1million).

There was however a small £0.5million Football League loan, on an interest-free basis. Nice terms if you can get them.

The directors who participated in the £14million convertible bond issue (Messrs. Murray, Chappell and Hatter accounted for 70% of it) from the prior fiscal year, generously waived their right to the interest payment on their securities. However it again emphasises the perilous state of the club’s cashflows.

The notes to the accounts reminded us that this convertible bond issue is both redeemable by the club at any time, and convertible by the bondholder into equity following a change of control.

Once again both of these aspects suggest that this was only intended as a short-term ‘bridge’ financing until new owners can be found. The fact that the global financial crisis blew up since is a vital and worrying observation, because it materially reduces the prospect of this occurring.

The main non-director provided debt remains bank loans, of which £4.8million was outstanding at fiscal year-end. Approximately a third of these are repayable with the next two years,

Speaking of which, thanks to a net inflow of £3.7million on cash transfer fees (notably including Marcus Bent and Madjid Bougherra), the club actually posted a net cash inflow for the year of nearly £1million.

Of course, with over £30million received in cash for transfers during the prior two years, the saleable playing squad assets are now somewhat limited going forward, hence the need in my view for the aforementioned additional short-term director funding to meet cashflow requirements.

As if we didn’t already know it, the accounts emphasise just how vital it is that the club wins promotion back to the Championship at the first attempt.

It is ironic perhaps that I am writing this blog just as the team has fallen out of the automatic promotion places for the first time this season.

Following promotion, attendances may inch back towards 20,000 and whilst we will be a long way from a profitable entity, some suitably stupid or hopelessly optimistic ‘investor’ may be tempted to get involved.

Without it, administration must be a very realistic prospect which will surely put any subsequent promotion back by at least one season (as Southampton have discovered).

However in the meantime, at least the Board hasn’t completely lost its sense of humour, even if they appeared rather miserable when I rubbed shoulders with them at Brentford.

As page 5. drily notes, ”The directors do not recommend the payment of a dividend.”