Blackpool: Season in the sun

Owen Oyston, Blackpool’s controversial owner, has put the club up for sale, http://www.bbc.co.uk/sport/football/41944602 following losing a legal case with fellow investor Valeri Belokon.

Wealthy they may be, but, after the court ruling, in which Oyston and his son, Karl, were ordered to pay Belokon £31.5 million, both Oystons’ had their assets seized. https://www.theguardian.com/football/2017/nov/06/oystons-blackpool-ordered-pay-shareholder-high-court-valeri-belokon

Establishing reliable information as to the extent of the Oyston family wealth is difficult, as between them as Owen Oyston has at least 40 directorships according to Companies House.

Never popular with fans,  the Oyston empire has many tentacles, but valuing the sum of all the individual elements is difficult.

One approach to unravelling the involvement of the football club in all this is to look at the accounts in the years since the club became members of the Premier League.

Yet the accounts to an extent paint a mixed picture as to the drivers of what initially appears to be a profitable business.

Some of the transactions do support the view, taken by disaffected fans, that the Oystons were using the riches of the one season in the Premier League and the subsequent parachute payments to subsidise other elements of the family business.

The best place to probably start is the impact of Premier League status on  the profit and loss account of the football club.

One year before promotion in 2010 the club had sneaked under the radar into the Premier League via the Championship Playoffs, beating Cardiff 3-2 at Wembley.

No one expected them to stay up in the Premier League, as Karl Oyston had initially won over the those who claim that players are overpaid by saying that there would be a wage cap.

Initially, Oyston’s stance against high player wages found favour in the media and amongst fans, and this coincided with a decent start for Blackpool in the Premier League.

Soon the problems of struggling to compete in the player market caught up with the team, who were relegated, despite still being outside of the drop zone at the end of April 2011.

A look at the club wage bill showed that with a wage bill of over £24 million, almost twice that of the previous season.

Careful review of the wage note in the accounts then showed that within the total was £11 million to the highest paid director of the club, almost certainly someone with the surname Oyston.

Underdogs Blackpool’s wages for the remainder of the staff, at £13.6 million, were just 7% of those of the club that won the Premier League, Chelsea, with £191 million, and a Premier League average of £79 million.

Net profit for Blackpool, even after paying out the large sum to Karl Oyston, was over 20 million, more than wiping out the modest losses made by the club in previous years.

The accusation made by the Oystons’ critics is that the benefits of being in the Premier League in subsequent years, in the form of parachute payments, were used to subsidise other companies owned by the Oyston family.

How much was promotion worth to Blackpool? The TV money from the one season in the Premier League, and then four years of parachute payments came to £101 million. The court concluded that nearly £27 million of this ended up in companies controlled by the Oystons.

In doing so, it would appear that Valeri Belokon, who originally bought 20% of the club in 2006 for £4.5 million, was disadvantaged by such transactions with Oyston companies. This is because diverting money to other Oyston controlled companies reduced the profits of the club, and also the value of his investment.

How much the Oystons can realistically expect to receive for the club is open to question. As someone who has been involved in the sale of distressed businesses in the past, I’m aware that potential buyers will take advantage of the seller’s need for cash, and bid as low as possible accordingly. Unless there are a large number of interested parties, the club could be sold for a pittance.

With no parachute payments to look forward to, Blackpool, who have been subject to a fan boycott in recent years as part of the NAPM (Not A Penny More) campaign led by the superbly named Tangerine Knights, to starve the Oystons of cash, are difficult to benchmark in terms of a realistic revenue figure from matchday sales.

Attendances this season are averaging just over 4,000, but have been as low as 2,600. This suggests the boycott is having an impact.

If the club is losing money week to week as a result, then the Oystons will be under greater pressure to sell the club as they may struggle to subsidise it from their other business interests, given the court ruling (which they are appealing).

This would be ironic, as the football club would appear to have been subsidising the other parts of the Oyston empire in recent years. There’s a case for saying that the club could be sold for as little as £1, with additional payments linked to future success, just to get the operational losses off the back of the present owners

Where will it all end? The lawyers and other business advisors will certainly have had a happy time from all of this, as legal costs are estimated to run into millions. Blackpool fans will just be hoping for a football club they can get behind under a new owner, and perhaps make some signings in January to give the club a chance of making the playoffs.

Valeri Belokon’s ambitions are unclear, he could conceivably buy the remainder of the club, but will the family sell to him. The intentions of the Oystons, whose credibility and integrity were questioned by the judge in the legal proceedings, are also open to question.

The whole issue calls into question the credibility of the Football League Owners and Directors tests, which are aimed at preventing abuses of stewardship by senior club officials. There’s not a happy ending to this story as yet, although the fans’ are hopeful of a return to the days when the most distressing thing about supporting their club is finding out that Mike Dean is the referee and is almost certainly going to ruin their Saturday afternoon with some attention seeking decisions.