|Time Tells: Taking Stock Ten Years After the Marcus Evans Takeover|
Written by SanityBlue on Thursday, 21st Dec 2017 14:31
It is virtually 10 years to the day since Marcus Evans gained control of Ipswich Town Football Club. The new era started on December 22nd 2007 in a home match against Burnley which ended 0-0 before a crowd of 20,077.
My worst fears following the takeover have not been realised. Marcus Evans is not the fraudster or narcissist so many other clubs have had to endure. ITFC has not been run chaotically and there have been no major scandals. And yet we’ve lost a great deal. Our culture has been destroyed and we are not the widely respected club we were a decade ago.
Before outlining what in my view has gone wrong, it would be worthwhile retelling briefly the events that led to the takeover. In its first season back in the Premier League in 2000/01, ITFC surprised fans and pundits alike by finishing fifth.
The following season, high on managerial success, George Burley went for something even better when he should have been aiming for consolidation. Big-money acquisitions were made by the club’s standards – most notably Finidi George, Matteo Sereni and Ulrich Le Pen, which led to disharmony within the squad. A team which had overperformed one season, underperformed the next and was relegated.
It proved to be the worst possible time to go down. Inflexible player contracts and high borrowings for major stadium improvements coincided with a collapse in the transfer market and the demise of ITV Digital.
ITFC went into administration in February 2003. Crucially, the two main sources of financial drag were not addressed: the Norwich Union stadium debt which stood at £24.5m at the time and the hefty wages being paid to players who could not be offloaded. The Administration relieved ITFC of a meagre £5m in debts with 5p in the pound paid to suppliers and 50p in the pound to HM Government.
The financial accounts show that in the five years following relegation (1 July 2002 – 30 June 2007) the club recorded aggregate statutory losses of £13.9m or £13.6m if non-cash items are excluded.
The losses would have been greater if the club had not received a net £12.6m in transfer fees. The bulk came at the end of the 2001/02 relegation season when Titus Bramble was sold to Newcastle United(£6.0m), James Scowcroft to Leicester City (£3.0m) and Marcus Stewart to Sunderland (£650,000). The collapse in the transfer market really set in the following season so by the time Matt Holland was sold to Charlton Athletic at the end of 2002/03, only £750,000 was realised.
For the year ended 30 June 2007 (the last full year before Marcus Evans gained control) the accounts show the club made a statutory profit of £0.2m. However, this was boosted by an agreement with Norwich Union for an interest moratorium which saved approximately £1.8m.
The board sought to improve the financial position of the club by making a public offer to supporters to take up shares. The recapitalisation which was completed in February 2004 was not a success as only £1.7m (£1.1m net of issue costs) was raised from the 2,777 fans who subscribed.
From that point, ITFC was up for sale as the board led by David Sheepshanks formed the view the club could not simultaneously meet its financial obligations and build a squad strong enough to challenge for promotion to the Premier League. There was much speculation about interested parties but the search dragged on until Marcus Evans emerged.
More than 99% of shareholders voted in favour of Marcus Evans Investments Limited acquiring 87.5% of the shares in Ipswich Town Football Club Company Limited and therefore ultimate control.
I was one of the less than 1% to vote against the takeover. As I tried to argue in various blogs, although our financial situation was serious, we were not confronted with financial armageddon. We had managed to get what we could from player sales and the worst of it was over.
The accounts clearly show that even if you excluded the profits from player sales but also excluded the interest on the Norwich Union debt, ITFC was close to break-even. And this raises the obvious question: if Marcus Evans could negotiate a major haircut on the debt, why couldn’t the board have done the same? Why destroy a unique club culture by delivering a widely respected club with a 129-year history to one man and his whims at the first sign of trouble?
All kinds of apocalyptic statements were made about how the club would inexorably hurtle down the divisions without a private owner. But this was at odds with what was happening on the pitch. In 2004/05 a team operating on a shoestring budget with Joe Royle as manager fell one place and two points short of automatic promotion. Why was it far-fetched then to think a team operating on a modest budget could not merely survive in the Championship?
But let’s say for argument’s sake that Marcus Evans had not come along or any other investor for that matter. Let’s also assume ITFC had dropped into League One and gone into administration a second time in order to restructure the Norwich Union debt and possibly other liabilities. Does it necessarily follow the club would have been consigned to permanent minnow status?
League status for all but the biggest clubs is a fluid thing. To illustrate the point, while we’ve been moribund in the Championship, the following clubs have gone from League One, and in a few cases League Two, to the Premier League: AFC Bournemouth, Blackpool, Brighton and Hove Albion, Cardiff City, Huddersfield Town, Hull City, Leicester City, Norwich City, Queens Park Rangers, Reading, Southampton, Stoke City, Swansea City, Wigan Athletic.
None of these clubs has won as much silverware as our club and most of them do not have our traditions or support. They’ve had their ups and downs with seven of them currently in the Premier League while five are in the Championship and the other two in League One.
So why has ITFC been stagnant while lesser clubs have streaked ahead of us? I believe it is because a culture that allowed ITFC to punch above its weight was all too quickly ditched for the commercial crassness and short-termism that afflicts the modern game.
The managerial methods Marcus Evans employed in his corporate group have been ill-suited to the hurly-burly, emotion-charged world of football. Simon Clegg might have been a decent enough administrator in the staid world of the British Olympic Association but he was a poor choice to lead a professional football club with its day-to-day demands and large, expectant fan base. We now have Ian Milne, another tired MD, whose only qualification for the role was his loyal company man status in the Marcus Evans Group.
The managerial appointments of Paul Jewell, Roy Keane and Mick McCarthy were for the most part welcomed by fans because they had a record of taking their clubs to the Premier League. But there was something formulaic in those appointments.
ITFC’s most successful managers – Alf Ramsey, Bobby Robson and, before he overreached, George Burley, were all bold choices. It’s also not a coincidence most of the clubs cited earlier who have leapfrogged us, achieved success with managers who were virtually unknown before their appointment.
We have also lost daring when it comes to the recruitment of players. We used to invest wisely in scouting and patiently developing young talent. Such was our reputation for discovering young players and giving them first team opportunities that it was common for up and comers to choose ITFC over bigger clubs.
The fans of other clubs also had a wide respect for ITFC. In the 70s, 80s and even 90s we picked up a strong base of support from people who lived well away from the Ipswich catchment area. We had a reputation for being everybody’s second-favourite team. Such admiration and respect came because we did extraordinary things with limited resources and with integrity and a sense of style.
A torpor has now taken hold at the club – a remote owner; insipid MDs and ‘been there, done that’ managers. At all levels there is a dearth of passion, boldness and vision. A proud football club has become a Marcus Evans brand. Exploitative prices are everywhere. Ticket prices were reduced for the 2017/18 season but they are still at the very high end for the Championship. Concession prices for those over 60 were stripped.
It is no surprise fans are voting with their feet. But it goes deeper than the mediocre football and rip-off prices. It is the lack of engagement with the fans and even the disrespect. Roy Keane routinely made contemptuous comments about the supporters’ lack of knowledge. Mick McCarthy regularly insults fans and even jokes about how he enjoys riling them.
Would they have dared to be so disrespectful if their masters had been the Cobbold or the Sheepshanks-run boards? Of course not! It’s plain for everyone to see the fans no longer matter.
The old ITFC was quaint enough to actually reply to fans’ letters if they had a complaint. The patrician Cobbolds and the assortment of local business people during the Sheepshanks era might not have been perfect, but they would not have tolerated such insults. They knew that a small-town club could not afford to alienate a single fan.
In the 2006/07 season, despite finishing a disappointing 14th place, ITFC had a healthy average gate of 22,445. The average gate in 2016/17 was 16,980 and this season it is tracking lower still at 16,337. This is a 27% decline! Any business or non-profit organisation for that matter that had such a severe decline in customers, members, subscribers etc. would be alarmed. I am unaware of any other club in English football which has lost 27% of its fans in a decade even though it is still playing in the same division.
The financial affairs of the club are also of interest to fans. After all, the rationale for the takeover was that sufficient resources would be invested to enable the team to be a serious challenger for promotion to the Premier League.
Marcus Evans paid £3.9m to acquire his shareholding and invested a further £8.1m in preference shares. This was said to give us a £12m ‘war chest’ to build a promotion winning team. It is history now these funds were for the most part poorly spent.
A plethora of players arrived at Portman Road in the early years. The most expensive was Grant Leadbitter who joined from Sunderland in 2009 for £2.6m. The other relatively expensive acquisitions were in the £1m to £2m price bracket such as Gareth McAuley, Lee Martin, Tamas Priskin, Carlos Edwards, Jason Scotland, Michael Chopra and Jay Emmanuel-Thomas.
The facts are that in aggregate terms during the Marcus Evans era the club has been a net seller. It is difficult to state with precision the amounts received and paid because the takeover occurred midway through the 2007/08 season and this is further complicated by the fact many transfer payments are made over a number of years.
My analysis suggests our purchases have been in the order of £18m while our sales have been approximately £31m. The reason we are net sellers can largely be explained by three major transfers: Connor Wickham, Aaron Cresswell and Tyrone Mings who were reported to have been sold for £8.1m, £7.0m and £8.0m respectively.
The issue of wages is an even more important factor. In the 2007 Chairman’s Report, David Sheepshanks noted the wage bill for the football department was £6.6m. He further noted that in terms of spending, it was likely to put the club in the top half of the Championship. Following the takeover, more funds were made available and this together with an escalation in player wages across the game generally, saw a ballooning to £13.4m by 2009/10.
The club no longer provides a wages breakdown but my rough estimate is that of the total wages expense of £17.8m for 2016/17, £15m relates to the football department. In other words, there has been little investment in the squad in recent years and in terms of spending ITFC is no longer in the top half. It is unclear whether the primary driver is the inability or unwillingness of Marcus Evans to invest further or a deliberate plan to get ahead of the curve when it comes to the Financial Fair Play rules.
At the recent AGM for the PLC, it was reported the various Marcus Evans entities are owed £88.3m. However, his actual injections into the club in the form of debt would be in the order of £64m given that he was said to have paid only £8m to take over loans of £32m owed to Norwich Union(£27m) and Barclay’s Bank(£5m). In summary, the £64m is made up as follows:
- £8m to settle the outstanding loans
The size of the club’s losses is surprising. As already noted, we are attracting 6,000 fewer fans to home games than we were in 2006/07. By my calculations, even if you assume lower ticket prices to bring it in line with other Championship clubs, we are foregoing annual gate revenue of £1.9m. What is also worrying is that over the same period the club’s commercial revenues have declined from £6.6m to £4.4m.
It warrants further investigation as to whether Marcus Evans is paying an appropriate amount to the club for the commercial rights. Nevertheless, if you take 2006/07 as the base year, ITFC is generating approximately £4.1m less revenue annually being £1.9m in notional lower gate takings and £2.2m lower commercial income.
We keep hearing hyperbolic statements that Marcus Evans was our saviour. Close analysis suggests the picture is much more complicated. It is true he has invested a significant amount of money in the club. But it could be argued that much of what he has put in has simply been to replace what has been allowed to slip under his watch.
It’s worth posing one final question: if 10 years ago fans had known what they know now, would they have voted in favour of the takeover? We’ll never know for certain. What is certain is that it would be a close run thing; it would not be a near-unanimous 99% plus vote.
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