Sometime last week rumours began to emerge of there being some good news for City fans to be announced next month, while, at the same time, stories started to circulate that club owner Vincent Tan would take in his second game of the season at Charlton tomorrow. Then, on Tuesday, it was learned that Mr Tan would be meeting up with a group of supporters and commercial partners before the weekend’s trip to the Valley.
That meeting took place yesterday lunchtime and, on the face of it, it would appear that the good news announcement was brought forward by a month! There had been speculation that there would be some movement on the long standing debt to equity commitment first mooted back in the spring of 2012 amid all of the fallout from the rebranding of the club kit from blue to red, but I’m not sure that anyone really thought it would be on the scale announced by the man himself yesterday.
This article sums up the main points to emerge from the meeting, with the news that the club’s debt levels will, effectively, be more than halved by Mr Tan’s decision to convert over £60 million of that debt into equity. With earlier conversions also confirmed, the club’s owner said that the outstanding £40 million debt would be converted into equity at the rate of £8 million a year, so that the plan is to have a debt free club by 2021.
So, will yesterday’s announcement have an effect on what I think it’s fair to say was a mostly negative perception of Mr Tan beforehand? My take on that is that I have always maintained that how you reacted to the rebrand when it was first announced was very much a personal decision – we are all different and so it’s obvious that there was never going to be a uniform reaction to the change of kit.
I feel yesterday’s news falls into a similar, but not identical, category. Some people will feel vindicated, some will be shocked, some will be cynical and there will be others for whom it will make little difference at all – none of these viewpoints should be dismissed or rubbished just because they don’t coincide with your own, it’s just that others are seeing something different to you in the Cardiff City kaleidoscope when they look into it.
To fully explain how I feel this morning, I need to go back nearly four years to the time of the rebrand. My initial reaction to it was that it was something I could live with if it led to the eradication of the club’s debt and so, if supporters had to be simplistically defined as being either for or against the changes, I suppose I would have fallen into the former camp during the skirmishing which did so much damage to the club and supporters’ morale in the months which followed.
During that time, I gradually came to the conclusion that my initial reaction was a mistaken one – the increasingly obvious lack of a commercial justification for the rebrand was a slight factor in this, but, by far the biggest were, first, the realisation that us playing in blue meant more to me than I had thought it did and, second, the non delivery by the club on the debt to equity front.
Those two things were the pillars that propped up my critical attitude towards Vincent Tan in recent years when it has been blindingly obvious to any regular reader of this blog what I thought of his ownership of the club.
Vincent Tan’s meeting with some supporters and sponsors yesterday was only supposed to go on for thirty minutes, but ended up lasting three times longer than that – maybe subsequent events will make me look foolish, but I have a feeling that 11 February 2016 will turn out to be one of the most significant dates in Cardiff City’s recent history.*
When the first of those pillars tumbled down early last year as our owner decided we should revert to blue, I complimented him on his willingness to act when the realisation that this was a fight he would never truly win dawned on him. However, in truth, I was still as critical of him as I had been before because the second, and probably stronger in terms of my attitude towards his ownership, pillar remained in place. There had been some debt to equity conversion, but, in terms of the overall figures involved, they were insignificant and we were absolutely nowhere near being the debt free club talked about back in 2012.
Now, that second pillar may not have been destroyed completely by yesterday’s announcement, but it’s taken a blow which, seemingly, leaves it barely standing, so how do I feel now about our owner?
Well, in some ways nothing’s changed. For example, I’m not going to stop calling the Ninian Stand extension “Tan’s Folly” because nothing that was said yesterday will, in the short to medium term at least, alter the fact that it is a structure that cost a lot of money which serves no practical purpose as far as Cardiff City is concerned – it’s a decoration, a distraction, a Folly.
Secondly, although Mr Tan, apparently, sees the blame for the damage to the club, both on and off the pitch, which was caused by the huge outlay on signings made during the period July 2013 to September 2014 as falling entirely on the on field management of the club at the time, the lack of knowledge and experience on behalf of the off field hierarchy, which meant that signings made by Malky Mackay in particular were, more or less, just rubber stamped, has to reflect poorly on him and his hand picked CEO at that time.
There has to be an element of collective responsibility for what happened – yes, Messrs Mackay and Solskjaer were guilty of expensive, in both senses of the word, blunders in the transfer market, but the club paid a very heavy price for the fact that Mr Tan had steered it away from having “football men” in important administrative and financial management positions.
Thirdly, although, to my admittedly non expert eyes, the facilities available to the club at the Vale training base are perfectly adequate. Therefore, this is not a matter that has ever bothered me much, the “state of the art” new training ground on offer as part of the “deal” offered as a sweetener to the rebrand has not materialised yet.
So, I’m not going to say that I won’t still be having the occasional pop at Mr Tan on here, but, honestly, he did far more yesterday to change for the better how I perceive his time with the club than I ever thought he would.
I have always used the example of Leicester City’s owner’s conversion of a £100 million plus debt into equity as a stick to beat Mr Tan with and it’s been a source of frustration to me to see how the Midland club have progressed as they have done with people from the Far East in charge, whereas Cardiff, potentially as big a club as Leicester, were seemingly stagnating.
Well, Mr Tan may not have gone quite as far as Mr Srivaddhanaprabha did at Leicester, but, if all goes to plan, he will have done in five years time – thank you Vincent Tan and please accept my apologies for thinking that you would never deliver fully on your debt to equity commitment.
Of course, there are those who will probably say that until Mr Tan helps to provide a debt free club, he hasn’t delivered on that pledge yet. However, I feel it needs to be emphasised that the club debt back in 2012 was smaller than the amount our owner has now committed to converting into shares and, anyway, I believe he’s earned the right to be believed when he says that our current debts will be wiped out by 2021.
This leads me on to a couple of other matters. Firstly, having got my fingers burnt somewhat a few weeks back when I speculated as to the reason why we had that transfer embargo imposed on us in January, can I ask those better qualified than me a question on Financial Fair Play (FFP) regulations please?
My understanding is that Vincent Tan was right when he said that clubs could only transfer debt to equity at the rate of £8 million a year under FFP regualtions, so how can he say that he will convert £60 million into shares almost immediately? Presumably, the fact that there has been a general acceptance in the media of this news means that there is not a problem here and I’m showing my lack of knowledge in this matter – again!
Secondly, I must ask will we really be debt free in 2021 even if Vincent Tan does deliver the five £8 million conversions he set out yesterday? Forget Cardiff City, who have racked up some spectacular annual losses in the last fifteen years or so, you look at virtually any club not in receipt of Premier League television money or parachute payments relating thereto (and quite a few of those who are), and you will find a loss making concern.
If we are not going to lose money over the next five seasons, then it will require some truly outstanding on and off field management to get us back into the Premier League during that time. To get an idea of what I mean, Burnley were held up as the epitome of a well run, financially sound, club who were promoted two seasons ago, despite having a small transfer and wages budget by Championship standards. Yet, they made a loss of £7.6 million in the financial year ending 31/5/14 – albeit, much of that loss was down to the payment of promotion bonuses.
So, the likelihood is that, without another promotion, we’ll be in debt come 2021 even if the emphasis remains on low transfer spending and wage bill cutting. FFP means that clubs like Middlesbrough and Derby, who have both spent money like it’s going out of fashion lately, are surely going to pay a price in the next year or so if they don’t go up this season. Therefore, in a division where so many clubs still speculate to accumulate, the sort of spending we saw before our 12/13 Championship season is probably out of the question even if the will for such a financial outlay was there.
It seems to me therefore, that supporters need to be realistic about expectation levels in the coming seasons if Vincent Tan is going to remain at Cardiff. He’s surely proved now that those who claimed he had lost interest in the club and was merely set on cutting his losses were wrong. However, by the same token, it just doesn’t seem feasible to me that we’ll see a return to the days when we just used to throw another few million at a problem position in the team.
What would help of course is if yesterday’s news led to a return from some of the thousands who were going to games in the years leading up to our promotion when we’d comfortably average 20,000 for home league matches. Forget those who only came along after we got promoted, between a third and a half of those who watched us during the first three seasons of Cardiff City Stadium’s existence no longer attend games on a regular basis.
There are all sorts of reasons for that, but I believe the major one for a significant number of the non attenders is a sense of disillusionment with Vincent Tan, which started with the rebrand, but has now become more than just that.
Will yesterday’s announcement see many of those people returning to the fold? I’m not sure it will, but I would say that, notwithstanding my earlier comments about supporters making a personal decision on subjects like the rebrand, it’s hard to know what else Mr Tan could do to get those who stopped going to games directly because of him, to change their minds. It seems to me that those who are not prepared to forgive, let alone forget, now have, sadly, burned their bridges with the club.
In those turbulent months which followed the rebrand, I used to say that I had given Vincent Tan the benefit of the doubt. I spent years thinking I had been wrong to do that, but now I find myself thinking I could have been right after all. In my view, our owner is now deserving of receiving that benefit of any doubt again and maybe it’s time for fans, including many of those who still go to games like myself, to do a bit more to try and restore that reputation for being some of the most passionate supporters in the game that we used to enjoy.
*picture courtesy of http://www.walesonline.co.uk/
Paul,
Very well said.
Totally agree, also no Tan, no club and the quicker “fans” come to accept that the better.
Paul,
A well written response to yesterday’s meeting. I agree with you he cannot blame the two previous managers wholly for the transfer spend and the number of players that came into the club. This as you said would need to be authorised by the Chairman, Chief Executive, the Board etc.
Not sure on this one. Will the transfer embargo now be lifted, once the Annual Accounts are submitted with part of the debt being converted to equity? Perhaps Keith on one of the other message boards can advise?
Regards
Geoff
Thanks for your replies Howard and AMO. Geoff, I raised the subject of when the embargo could be lifted on the messageboard and Keith replied – my understanding is that the Football League will accept accounts covering the period 1/6/15 to 31/3/16, rather than for the full year. Therefore, as long as they are in order, the embargo could be lifted before the transfer window opens again for the summer.
Paul,
Thanks for coming back to me. Good news all round for our Club then.
Regards
Geoff
I feel the two previous managers had good experience of the market place much more knowledge of the situation than Tan. He simply naively trusted them. As for the debt thanks.
As for Slade well done.
Whilst not wishing to diminish the impact of the horrible mistaken rebrand and the partially justified vilification of Vincent Tan as its architect I cannot help but think that the disillusionment and subsequent disappearance of fans has so much more to do with the miserable way we have declined on the pitch and served up incessantly disappointing spectacles for the paying customers to suffer. After the inevitable bursting of the Premier League bubble the past two years on the field have driven away the supporters many of whom were only introduced to the club in the Dave Jones years and so we are left with those of us who are so dyed in the bluebird wool as to have no choice other than to continue turning up on a Saturday in the vain hope of being entertained. Conversely if we start seeing the promised 40 shots converted regularly into goals and wins the lost will return and with them a new generation of bluebirds. ‘Twas ever thus!
Hi Paul. Thank you for an extremely well written, objective and informative piece. My reply to you will come from a purely personal perspective.
Ever since I was able to lob a stuffed toy at my brother I have loved football. It was my all consuming passion. My father, a Blackpool fan, instilled this love of the game into myself and my brother. But, for the last few years I have found my love for the game diminishing to the point where I rarely watch it on tv now.
At this point I want to state that I am no bandwagon fan. My first match was at Ninian in Feb93 against Doncaster on a freezing cold, wet Tuesday evening. Along with about 3000 others, we roared the boy’s to a 1-1 draw. I loved it and the club. So. What has changed? Well it’s not Mr Tan or Russell Slades management. It is the malaise that has spread through football in general. I am talking about the billions of pounds that are needed to compete or just survive in the game. I now feel alienated by ridiculous wages, high ticket prices etc. I am in no way jealous. I just don’t recognise the game I used to love any more.
Unfortunately I don’t have any cure or answer for this. But I truly fear for the future, especially the time when billionaires become bored with football and look for something new to play with. So. It is with sadness and find memories that I look back to the game that I loved so much and close my eyes in fear of what may come to pass.
Jez.
Great write up, sums up my feelings on the situation. I still can’t stand Tan and his arrogance, but if he delivers this promise then i’ll happily give him the credit he’s due. It’s a big commitment, and as you say there are still some practical questions to be answered but i feel a lot more optimistic about the club now than i did this time last week!
I think there are a lot of fans who will never return to the club, but a large number who, given a decent promotion push and one or two more faces (and a manager!) they can get behind that would be willing to give things another go.
Onwards and upwards!
Paul, congratulations on a brilliant summary of the current Tan situation.
I speak as someone who has been embarrassed and , at times, ashamed of the xenophobic attitude of many of our fans towards a person who, admittedly, not for philanthropic reasons,has firstly rescued us from administration and then gone on to invest millions in a failed attempt to establish us as a Premier League team.
I do not claim to be an expert on FFP but my understanding is that although the maximum amount of losses that can be covered by a debt to equity conversion in any one year is currently £8million this does not prevent a much larger sum being converted.
In other words if Mr Tan converts £68 million in the next few weeks the first £8million will help us to comply with FFP and the remainder will be part of his promise to make us debt free.
You are right of course in saying that to be debt free in five years time we also need to at least break even in our trading during the annual £8million debt to equity conversions.
Plenty of scope for arguments on how to achieve this!
Thanks, especially to those who have made their first contribution on here, for a set of replies overnight which cover a good range of emotions that capture well the differing views on our team currently. Russell, it may well be unfair, but I think a change of manager would stand a better chance of bringing more of the missing thousands back than debt to equity conversions. My own view is that I’d take the latter over the former because, although, I’m not convinced by Rusell Slade, I can see that he’s not done a bad job overall in testing circumstances. However, I just don’t see it working out for him at Cardiff because significant numbers didn’t accept him from day one – I’m not sure there’s much he can do to change such feelings.
Lisztomania, I believe you have mentioned the single biggest reason for our decline in attendances. They hardly amount to scientific proof, but Wales Online have had a couple of polls early on and in the middle of this season asking what was the reason for people deciding to stop going to games – on both occasions “boring football” was a comfortable winner. Just before Christmas 2014, I made a decision to not renew my season ticket if we were still wearing red in 15/16. That decision was made a lot easier by the awful route one stuff our team, which cost an absolutely fortune in transfer fees and wages, was playing every week (they weren’t very good at it either!) – I wouldn’t blame anyone who said they’d had enough at that time because we were absolutely woeful for about two months either side of Christmas last season. The sad thing is, although I find this squad maddening at times, the football is generally a lot more watchable this season, but I suppose we need the results to go with the entertainment to tempt those who had got bored back.
Jeremy, I can sympathise with and, to a degree, understand your feelings. It would have been unthinkable five years ago, but I often don’t bother with televised football now (particularly in the evenings). I don’t get BT Sports any more so I can no longer watch Champions League Football – I don’t miss it in the slightest because the last thing it is is a tournament for Champions (I only get vaguely interested in it is in it’s latter stages when it becomes more like the much better competition it replaced). Conversely, what I miss about BT Sports is flicking though the channels and finding a non league game to watch – I think that I have a milder version of your condition in that I find such games to be a return to my roots so to speak, far away from what modern football at the top levels has become.
Tom, i agree with you about there being significant numbers of fans (many in the “diehard”, long established category) who we’ll very rarely, if ever, see back watching the City – I suppose what I’d like to see now is evidence of the club’s hierarchy learning from the mistakes they’ve made in the past (to be fair, I do believe they are trying hard to be more in tune with the fans these days) and a recognition of such behaviour from those supporters whose attitude towards the club now could be described as intransigent.
Mike, you are right about the FFP regulations. I always post my pieces on a City website I use and I had a reply from Keith Morgan who, for me, is THE man to talk to about football finances – here’s what he had to say;-
“On your FFP point , the explanation is as follows.
In the current 2015/16 season Championship clubs are allowed to make a loss of £5m and still comply with FFP rules. This figure goes up to £13m if the £8m difference is matched by an equity injection by the owner. There is no bar on or penalty for injecting more than that figure , just no benefit for FFP purposes.
What the extra £60m debt to equity conversion will do of course is hugely improve the club`s balance sheet position. The additional £10m write off of debt and other factors such as the profit on Joe Mason`s sale should enable the 2015/16 accounts to show a profit on top of that which is due to be published next week re the 2014/15 season. As a consequence , I would expect the balance sheet as at 31 May 2016 to show that the club has more assets than liabilities for the first time for ages.
From season 2016/17 onwards , the FFP rules change again such that the financial performance of clubs is monitored as an average over a 3 year period rather than just season by season , with a cap on allowable average annual losses of £13m.
Paul,
I feel totally vindicated in my longstanding belief in Sir Vincent.
The plain facts of the matter are that he is far more the “English gentleman” than any amount of Lord Lucans or Lord Archers could ever be.
Of all the things he said – and methinks he’d been drinkly deeply at the well of the great “Sir” Charles Hughes with his de facto praise for POMO football – the comments regarding that dreadful bounder Sam Hammam most struck a chord with me.
I urge South Wales Police to leave no stone unturned in seeing if we have a case against him.
If you want to know a man who brought ridicule on the club, look no further than a chap who almost invades the back of the net while the game is on, has a totally unsavoury character as a personal minder, and insults other Welsh clubs by telling anyone who will listen, that Cardiff City is basically the totality of Welsh football…that club and nation are synonymous.
Jeez…some of us have fled to Grimsby to avoid the worst excesses of nationalism. We needed this malevolent character like we needed hemlock in our mother’s milk.
As Sir Vincent says: he’d rather not think of that dreadful man…it spoils his day.
A final word on the magnificent Mr Tan…the plain truth is that he is far too good a man for far too many so-called Cardiff City fans. Can these louts who have held up these dreadful “Tan Out” banners – and waved these flags of surrender while the team were struggling to avoid the drop from the EPL in a season I had been waiting half a century for – now go off and form their own club, FC Manchester or AFC Wimbledon style?
I can give them a club name.
Try “XENOPHOBES UNITED” on for size.
DW.
Paul
Another well considered article. Thank you and keep them coming. I think most Cardiff City fans forget too easily the mess the club was in before Vincent Tan arrived. I don’t recall that there were many options and the talent was being quickly sold on. I suspect to avoid administration, Mr Tan was the only show in town. It feels to me he was actually a little naive maybe badly advised, but the premiership rollercoaster was an expensive experience. Whist i do much appreciate the writing off of debt, he has kept his word, but it has come late after the rebrand. Hence the fans obvious disappointment. I dont think his communication has always been good around his vision or expectations. Again this has not helped build confidence with fans.
As for Russell Slade , it feels to me he has done a good job in trying circumstances. But i agree he will likely move on. Will his successor be given more of a chance or do any better with whatever restrictions apply to him