Financial implosion at Bolton

Ian Herbert: Bolton’s decline reveals it doesn’t take overseas proprietors to damage a club

The footballing gods were certainly having a laugh when, as part of the weekend’s FA Cup third-round feast, they laid on Bolton Wanderers v Blackpool – that sublime symbol of distant mid-20th century days when football was not such an oligarchy and when the only gambles clubs took were on fitness and form.
Saturday’s reprise of the Matthews Final of 1953 came four days after Bolton had revealed the consequences of the 21st-century type of football wager – the obscene investment in players which has become an ever-increasing habit for those left by the wayside since the Premier League was born. We all know that the Premier League spawned an era of sh*t-or-bust football economics but we didn’t know quite how much of the former Bolton had staggered into. A total of £50.7m losses in the year to last June, to be precise. A respected broadcaster suggested to me recently that the preponderance of foreign owners raised the prospect of them acquiring a collective majority vote on the Premier League board, with goodness knows what consequences. Well, the shocking decline of Bolton reveals that it doesn’t take overseas proprietors to damage a football club.
The gamble of speculating to accumulate was destined to last only for as long as Bolton had a manager capable of laying good bets. Sam Allardyce certainly was one such man and so, too, Gary Megson. I took some stick from Bolton fans after suggesting in these pages 15 months ago that Megson’s dismissal in the winter of 2009 revealed the folly of letting the fans pick the manager. His crime was not being loved by the fans, they said, as if that was of the slightest consequence compared with prowess in the transfer market. Megson’s £50m investment – bringing Gary Cahill to the Reebok when Aston Villa’s Martin O’Neill wasn’t much interested in him, as well as Lee Chung-yong, Mark Davies, Gretar Steinsson and Matt Taylor – has always been underrated. Cahill and Nicolas Anelka are the only players on whose sales the club have significantly profited.
Owen Coyle arrived in Megson’s place with far richer Bolton allegiances. The club’s chairman, Phil Gartside, and benefactor Eddie Davies, who made his fortune producing kettle thermostats, will insist that their far greater willingness to persist through adversity with Coyle rather than Megson had nothing to do with the sentiment of them both being lifelong Bolton fans. But it certainly looks that way, now that we see what wreckage Coyle has left in his wake.
It is a simple story of overrated players, being signed for excessive fees, paid excessive wages and released for next to nothing. David Ngog, signed from Liverpool for £4m, is currently earning £35,000 a week to sit on the bench and seems prepared to stay there until his contract runs out in the summer. So desperate are the club to lose him from the wage roster they are trying to pay him off to go to Bursaspor in Turkey for a nominal fee. Chris Eagles (£30,000 a week) is in the same wage bracket.
So, too, Zat Knight, whose three-year deal in the high £20,000s was negotiated after Bolton’s relegation from the Premier League in May 2012. David Wheater, in a deal concluded last summer, earns around the £20,000 mark. Jermaine Beckford took a pay cut to move from Leicester City though was on at least £40,000 there. Tyrone Mears (£25,000 a week) has not played since the 4-1 defeat to Blackburn in August. And while league position relative to wages, rather than transfer fees, is the true indicator of whether a club is over or underperforming, Bolton have dealt away money like confetti. Danny Shittu cost £2.2m and played 10 games. Johan Elmander (a Megson signing) cost £8.2m and left for nothing. Taylor, who cost £4m, went to West Ham for £1m. Marvin Sordell (£3.2m, 25 games, four goals) is now on loan at Charlton.
Such is the inheritance of manager Dougie Freedman, who must be wondering what on earth he has walked into, having surrendered the sanctity of Crystal Palace, whom he had taken towards promotion. While the non-footballing sides of the club have been cut away – the director of communications Mark Alderton left last summer – Freedman has sought to meld together his own players, hired on austerity salaries, with those on anachronistic pay. He is one of the few managers who can feel blessed that six of his players are out of contract this summer. Freedman, who helped to establish the Palace youth system that produced Wilfried Zaha, Nathaniel Clyne and Johnny Williams, has revealed his disappointment with the youth system he has inherited.
Freedman’s presence provides a source of hope and Gartside has insisted that Davies remains committed to a club which, now £163.8m in debt, would be insolvent without him. Last week’s financial results show Davies was paid £6.9m in interest on his loans – a £1.4m increase on 2012 – and a £2.8m “player success fee”. The businessman may be reimbursing himself while he can, since next year’s losses will be subject to a possible transfer embargo under the Football League’s Financial Fair Play Rules. Davies will receive no interest next year.
Saturday’s victory over Blackpool took Bolton to a fourth-round tie against Cardiff City, a club whose Premier League presence is built on shifting sands. They would claim £1.8m if the gods permitted something incredible and actually saw them to winning the old competition again. It would be one small drop in the vast ocean of debt.

http://www.independent.co.uk/sport/football/news-and-comment/ian-herbert-boltons-decline-revealsit-doesnt-take-overseas-proprietors-to-damage-a-club-9042669.html

Pretty scary. Doesn't surprise me though because they were loss making in the PL.
It's true what the author says as well football fans don't always know it all. I'm sure a few on this very forum lauded Owen Coyle as successor to Rafa

And who knew you could make 100s of millions from kettle thermostats

Same thing happened to Leicester when Martin O'Neill left if I recall. Peter Taylor came in and spent a f**k load of money on players like Ade Akinbiyi, got relegated and went into administration. Took them being taken over by the Thai businessmen there now to get over that mess.

Pretty scary. Doesn't surprise me though because they were loss making in the PL.
It's true what the author says as well football fans don't always know it all. I'm sure a few on this very forum lauded Owen Coyle as successor to Rafa

And who knew you could make 100s of millions from kettle thermostats

Quite right.

Indeed it's a bit of a reminder to Reds here who say 'splash the cash' and pay the 'asking price', as though it's not their money. 

Quite right.

Indeed it's a bit of a reminder to Reds here who say 'splash the cash' and pay the 'asking price', as though it's not their money. 

Maybe if they had invested more (and more wisely) they would still be in the prem and their problems wouldn't have been exacerbated by paying prem wages to Championship players. Similar to the problem Liverpool found themselves in a few years ago, paying CL wages to players that didn't qualify for the competition.

Maybe if they had invested more (and more wisely) they would still be in the prem and their problems wouldn't have been exacerbated by paying prem wages to Championship players. Similar to the problem Liverpool found themselves in a few years ago, paying CL wages to players that didn't qualify for the competition.

If, buts and monkey nuts.

If, buts and monkey nuts.

A compelling argument mate.

A compelling argument mate.

Well, S@int the opening word in your statement supports the notion I highlighted in Alfie's post: "football fans don't always know it all". It's not definitive. 3 out of 20 teams go down each year, so in many cases these teams go down with players locked into contracts they perhaps then struggle to sustain in the Championship. So, yes, you could spend more and speculate that you'll stay up but if you don't, like Bolton you're left with more monetary problems that excaberate your finacial standings thereafter. When you also throw the caveat in that money should be  "spent more wisely" I presume you don't mean that they shouldn't avoid in getting into a bidding war when you have no conclusive evidence to see what they can or cannot afford in the first place? Very risky business. Like Alfie pointed out, football fans don't always know it all - so it's all well and good demanding clubs pay the asking price or spend here or there on player X but you, I or any of us aren't privvy to a club's finances, so sometimes this kind of conjecture that is passed off as fact is just frustration and finger pointing without actually 'knowing' what is affordable and what isn't, and what poses the lesser risk and what doesn't.

but you, I or any of us aren't privvy to a club's finances

But we are mate. Maybe not current, but we are privy to the annual accounts and we can to an extent estimate from current and new profit and current and new expenditure a reasonable assessment of our current position. That is what budgeting is after all.

For example we spent £9.63million in termination payments for Kenny and his staff. Spent £109million on wages (£131million over the full 12months)

Received income of £169million for the 10 months to May 2012 etc etc.

We know the increase in TV money etc etc, we know or have an idea how much we have spent net on transfers, how much we have paid for agents fees etc etc  and if one wanted you could estimate our current or even future income and expenditure with reasonable accuracy, which is all budgeting is anyway.

The only real area we can't accurately foretell is the success or failure of the club to reach its on field targets but we can estimate the impact success or failure of those on field targets would have on finances, and the amount of money to be spent on transfers. (but we should be able to estimate it with reasonable accuracy if FSG stand by their declared intent to spend what the club makes.) 

So while there is lots of conjecture, anyone willing to put the time and effort in can to a large extent "know what is affordable and what isn't" but not whether that money will be made available or not. 

We as a club always budgeted to qualify for the CL in the past, and our finances were adjusted accordingly. Presumably now we don't budget to qualify for the CL and our finances again have been adjusted accordingly. Wages reduced (or more properly wage bill reduced) to a level more in inline with a club with CL aspirations , but not CL finances.

Anyway back to my original point, on field success or failure has a huge impact on finances and sometimes it is better to gamble on success rather than budgeting for failure.     

But we are mate. Maybe not current, but we are privy to the annual accounts and we can to an extent estimate from current and new profit and current and new expenditure a reasonable assessment of our current position. That is what budgeting is after all.

For example we spent £9.63million in termination payments for Kenny and his staff. Spent £109million on wages (£131million over the full 12months)

Received income of £169million for the 10 months to May 2012 etc etc.

We know the increase in TV money etc etc, we know or have an idea how much we have spent net on transfers, how much we have paid for agents fees etc etc  and if one wanted you could estimate our current or even future income and expenditure with reasonable accuracy, which is all budgeting is anyway.

The only real area we can't accurately foretell is the success or failure of the club to reach its on field targets but we can estimate the impact success or failure of those on field targets would have on finances, and the amount of money to be spent on transfers. (but we should be able to estimate it with reasonable accuracy if FSG stand by their declared intent to spend what the club makes.) 

So while there is lots of conjecture, anyone willing to put the time and effort in can to a large extent "know what is affordable and what isn't" but not whether that money will be made available or not. 

We as a club always budgeted to qualify for the CL in the past, and our finances were adjusted accordingly. Presumably now we don't budget to qualify for the CL and our finances again have been adjusted accordingly. Wages reduced (or more properly wage bill reduced) to a level more in inline with a club with CL aspirations , but not CL finances.

Anyway back to my original point, on field success or failure has a huge impact on finances and sometimes it is better to gamble on success rather than budgeting for failure.   

Okay, tell me how much you estimate LFC have to spend this entire year on transfers alone.

Okay, tell me how much you estimate LFC have to spend this entire year on transfers alone.

£22,250,351 left after the summer spending give or take a pound or two (really need to wait till the next release of agents fees before I can be more accurate)

Obviously it is always possible that they could decide to advance money out of next summers budget to supplement our transfer fund now, or even decide to hold some money back to supplement the Summer spending. 

£27,250,351 left after the summer spending give or take a pound or two (really need to wait till the next release of agents fees before I can be more accurate)

Obviously it is always possible that they could decide to advance money out of next summers budget to supplement our transfer fund now, or even decide to hold some money back to supplement the Summer spending.

And with that kind of money [which isn't a lot really in the world of football transfers] do you really expect them to get into bidding wars considering we're a few players short of what is needed?

Oh $hit, it's dropped from 27 to 22 now! And no doubt agents fees will come off that? We'd be lucky to buy back Carroll at his 'market' price. 

And with that kind of money [which isn't a lot really in the world of football transfers] do you really expect them to get into bidding wars considering we're a few players short of what is needed?

I can't say how they will spend it or even if they will spend it, just that it is possible to estimate how much they have to spend. Personally I would prefer them to take the gamble of spending more now to try to ensure CL football next season and that Suarez stays, rather than waiting till the summer.

A stich in time saves nine as the saying goes.

I would rather they got into a bidding war and got the player that Brendan wants rather than accepting we can't or won't compete and getting a player that "might do at a pinch"

Buy cheap and pay twice might be even more apt.   

I can't say how they will spend it or even if they will spend it, just that it is possible to estimate how much they have to spend. Personally I would prefer them to take the gamble of spending more now to try to ensure CL football next season and that Suarez stays, rather than waiting till the summer. 

For the record, and before I'm accused of being a plant I'd hope to see us spend this January to propel us into the second half of the season.

Like I said elsewhere, I WILL get a strop on if we haven't strengthened in some shape or form come the end of the window. I'm just going to wait before jumping for the pitchfork and to conclusions.

For the record, and before I'm accused of being a plant I'd hope to see us spend this January to propel us into the second half of the season.

Like I said elsewhere, I WILL get a strop on if we haven't strengthened in some shape or form come the end of the window. I'm just going to wait before jumping for the pitchfork and to conclusions.

I know mate, we all want Liverpool to strengthen.

Better to be called a plant than a vegetable