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Charlie Metheven interview

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Charlie Metheven interview Empty Charlie Metheven interview

Post  Kipper on 2019-07-10, 9:28 am

[size=30]ALS Exclusive: Takeover No Go[/size]

July 9, 2019
|

By Giles Mooney




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Past, Present And Future... ALS Interview Charlie Methven. Part 2
 
After an intermission, here’s part two of the ALS Charlie Methven interview, in which SAFC’s Executive Director announces to ALS that the takeover is, for now, off, gives us an update on the running of the club and puts the record straight on a few bugbears…
 
ALS: OK, so let’s talk about how that will work and who’ll be involved. Who’s who around the boardroom table going forwards?
CM: At this stage there are no changes to the board. We’ve been open that we’re looking for investment but, for now and because of the time of year, we’ve decided to get on with the job in hand and keep talking to interested people in the background.
 
ALS: And why is investment being considered now? Has it cost more than anticipated?
CM: No, it’s not that. It's a multi-faceted situation. First, we came in at very, very short notice. I organised the deal with Ellis in late March 2018 and had to find financial backing for that agreement within days. The vast majority of people who you might approach would have told me straight away that that time scale’s too short - that due diligence on a business like that can’t be done in three weeks, let alone also pulling together the cash required in that short space of time. It’s just unrealistic. Then I spoke to Stewart and he stepped forward and said he’d do it.
 
‘I'll take that on. Yeah, I think you're right, it looks terrible but I reckon we can do this if we are smart.’
 
So that was a moment in time when swift action was required. And really, it was not for the faint hearted. What would have been ideal, from a financial point of view that is, would have been if we’d had an extra two or three months, we'd have been able to put together a slightly broader based Board who between them had the financial wherewithal to not just deal with the immediate situation, but then also deal with the medium term. Three years is quite a long time in football. But Ellis had already made the decision that, one way or the other, he was ‘out’ by the end of the season.
 
Juan came in to share the load a month or two later. And really, what we're doing now is just the continuation of that process of seeking the broader based financial support the club needs.
 
There are two different types of football clubs – ones that are living hand to mouth and others who are able to act strategically and are able to do the things they should do to grow because they have the right financial support to do that.
 
A lot of that is cash flow - it’s to do with the ability to say, OK, I can put in £3m now and I might get it back later on, but I've got that cash now and it's the right thing for the club now. Compare that to it being the right thing to do right now but not having the cash to do it. Then you’re having to try and just keep things bubbling along, as best you can. That is how a huge number of football clubs outside the Premier League are run and it really constrains growth.
 
We're approaching the stage where there are things that, for the club to grow longer term, will need to be invested in, so we need a good base of available capital to ensure the club can invest appropriately.
 
ALS: On the pitch or off it?
CM: Both. It can range from the relatively small things like putting a new sound system in the stadium to improve the fan experience, investing in the stadium itself, improving the corporate hospitality areas, that type of stuff, that's an investment. But it’s an investment made in the belief that you will please your fan base and customer base, and that more people will come more often, feel more engaged with the stadium and spend more there. But you need to have the cash underpinning that in order to be able to make those investment decisions.
 
In terms of on-pitch investment, again it’s not a matter of splattering cash around everywhere and running up an unsustainable wage bill again. It’s a question of being able to sign the right player at the right time, even if he is under contract to another club. All these questions are moot unless you have the financial wherewithal to finance the answer ‘yes’ if that’s the right thing to do.
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ALS: In the papers, the rumours about potential investors saw your percentage ownership the only one not rumoured to change. Does that mean you’ll continue as you are for the foreseeable future?
CM: I don't know! Ultimately, I'm a small player in the capital structure so we'll see what other, more important people think. I would like to stay at Sunderland, because I would like to see the initial three year plan through: to balance the business; to see us becoming notably well-marketed and commercially sharp; to see community relations fully restored to the heart of the club; to see the stadium full and thriving in the Championship; to see our social media perceived as the best in the country; to really optimise the Netflix opportunity. At the moment, I think that my part of the job is still only a third done and I would like to back myself to complete that side of the job.
 
Having set off on the direction that we took last summer, I think it would be harmful for the club to have to change tack again. Some of the potential investors who have come forward wanted to just take the club over and go down a different route. We had offers that were very attractive financially but we had to turn them down because we didn't think it would be the right thing for the club. And that's not us being arrogant. It’s a question of, once you've set out on a three year plan you don’t stop and rip it up and start again after one year. It’s why we’re prepared to wait for the right people whose plan fits in with what we believe is right.
 
ALS: Does the lack of investment mean we’re financially at risk?
CM: It’s frustrating that this keeps cropping up. There is a small cabal of so-called supporters who seem intent on disrupting our efforts to bring the club together after years of disunity. All the published facts demonstrate that the club, for the first time in a generation, is in a strong position financially. It is a result of the deal that I negotiated with Ellis, the difficult steps we have taken to turn the club around commercially, the money that the vast majority of fans who have turned up and the money Stewart and Juan have invested. As a result of all of that, the club is: 1) debt free 2) almost breaking even 3) is close to breaking even in spite of having by far the largest playing wage budget in League 1 history.
 
Those are the facts, and they should be profoundly reassuring for supporters who were watching their club heading towards administration only a year and a bit ago.
 
We are as open as anyone to taking criticism on the chin. It’s entirely fair to ask whether a wage budget that size in League 1 could/should have done better than finish fifth. It’s entirely fair to ask us how the model we are putting in place would fare in the Championship. It’s entirely fair to ask what we can do to stop Academy youngsters moving on. It’s also fair to remind us that a club of SAFC’s stature should not be spending any more time in the third tier than necessary. But when you’re criticised for things that aren’t true, it’s not on. And it doesn’t help anyone.
 
It’s frustrating that fans who want to feel optimistic about the club’s future, and have every reason so to do, are continuously being misled by these wild accusations. The Daily Mail told us it was people claiming to be fans who encouraged them to write disparaging stories about the club.
 
ALS: But does it mean our signings will be bargain basement?
CM: It’s interesting that fans are still worried about free signings after last year’s signings were some of the stand out performers (McLaughlin, Maguire). It’s a function of how football at this level operates. There will be free signings but, as we showed last year, when money is needed to get a player that we want, we’ve done that. Last season we spent £5m on players. That’s more than the rest of the division combined.
 
We’ll be signing players who are the right players to move the team forwards and get promotion from this division. They might not necessarily be marquee signings but it’s about improving and developing the squad. Funnily enough it would probably quieten some of the so called fans we were talking about earlier if we bought someone for millions but if it wouldn’t be the right thing for the club we won’t do it.
 
ALS: If potential investors ask you the one thing they should know about Sunderland that you've learned this year, what would it be?
CM: The intensity. There's a cliché about the North East football scene that it’s like living in a goldfish bowl. And it is like that. It's unbelievable. You know, you can be at other clubs, currently much higher up the pyramid, where the pressure and intensity comes and goes. But Sunderland, the pressure doesn’t change. The pressure is absolutely relentless. And I think what you saw towards the end of last season was all of us who've been involved since the previous May/June – directors, management, players - becoming emotionally exhausted by the relentlessness of the pressure. Of course, you can't have one without the other. You can't have the unbelievably intense local football scene which produces the huge fanbase and all those players who've come into the academy without it also being highly intense and pressurised within the rest of the environment. The intensity is one of those things you can't explain adequately. However much you tell somebody about it, until they experience it themselves they won’t be able to understand.

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The points about free signings and finances unfortunately won't stop some fans moaning. It's depressing for the rest of us. The time to judge may not even be at the end of the transfer window but during the season to see how we get on. Hopefully I won't be surrounded by moaners at the ground but winning should put a stop to that cheers
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Post  Argus on 2019-07-10, 12:44 pm

Where's Part 1 of this interview?

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Post  Kipper on 2019-07-10, 3:16 pm

Argus wrote:Where's Part 1 of this interview?

[size=30]Past, Present And Future... ALS Interview Charlie Methven. Part 1[/size]

June 18, 2019
|

By Giles Mooney




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The close season is one long chain of rumours and counter rumours. Jack Ross’ departure is as certain as him staying where he is. The club is definitely/possibly/probably/maybe not being sold to someone from somewhere between the Far East and the North East of England. We’re definitely signing… you get the picture.
 
We decided it was best to get an update from someone who not only sits at the big table in the board room but has just arrived home from meetings with the EFL, an organisation who, it seems, has moved Sunderland AFC from the ‘do not resuscitate’ ward to the ‘fit for work’ list.
 
Sitting in Charlie Methven’s Oxfordshire garden, we started where all fans have to start. We debriefed Wembley.
 
CM: I think like everyone else, I was very, very sore for a couple of days. I mean, really sore, I can't, not since I was a little kid can I remember being that upset after a game. My daughter was crying, and I wasn’t far off joining her. I think that while the whole caravan was still on the road and still capable of reaching its final destination you can keep going but all that pent up tension and ambition, desire… and you come crashing off it, it's just a shattering blow. And the other problem is that because you're in the playoffs for three weeks, you've reduced the time to do a whole load of stuff off the pitch, in terms of review of that season and preparation for the following season.
 
ALS: On the pitch we were just short but did the season pan out as expected off the pitch?
 
CM: I think so, more or less. In terms of the due diligence work we performed and our budgeting at the start, we were pretty much bang on. That is to say, we predicted correctly how the business would run. There’s no doubt that prima facie we were pretty optimistic in terms of the revenues we could raise and the costs we could cut. The EFL looked at it and said we wouldn’t be able to do it (those figures). That's why they insisted Stewart show them £50m. Also, our business plan bore no resemblance to the club's previous business plan, and that always makes people nervous. The EFL thought we were being naïve, as did other people inside and outside the club. Sometimes they said it outright, sometimes it was their body language – like, you could see senior members of staff thinking ‘who are these nutjobs who think that they can do 25% more revenue in a lower league while cuttings costs?’ So whatever else happened last season, I'm proud that we got the business plan right and executed it right. It was mostly about using our experience to work out where the club, as a business, had gone wrong and throwing ourselves headlong into sorting that out as quickly as possible.
 
ALS: Not knowing which players would stay or go must have been a difficult one to deal with.
 
CM: I think that for the most part we correctly predicted those who did go probably would go and the same for those who stayed. The big difference between where others thought we might be, and where we ended up, was on the matter of paying off some of the big earners – you know, Kone, Ndong, Rodwell, Djilibodji. The league expected us to pay them a lot to go, but instead we ended up with net payments ‘in’ from those four. And that was one of the biggest differences in terms of what we were able to achieve with SAFC’s numbers compared to what the EFL and others expected. Great credit to Stewart and his team for that.
 
ALS: A year on, how do the EFL view our prospects?
 
CM: Look, we’re still not entirely out of the woods – there are still problems to solve before the club is fully on its feet again. But I've just got back from the EFL conference and the mood music there was positive. Sunderland has gone from being the poster boy for all that's wrong with the way football clubs are run to, you know, being debt free and more or less break even, which very few clubs can claim. As you can imagine, there was a lot of chat about the financial difficulties of the clubs who are going to be facing points deductions and forcible relegations and not able to pay their staff. And not just the obvious ones. There are others bubbling around below the surface. And that's causing the EFL a lot of angst. 13 months ago, SAFC was very much a part of those panicky discussions and now we are not.
 
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ALS: And what about the legal cases that were hanging over the club?
 
CM: Yeah - all either finished or almost finished. The last couple are coming towards the end game. We knew it was going to be really difficult. In the first six months, from May until November, I would guess that at least half of Stewart's time was spent on dealing with those issues. You know, it's really, really difficult, nasty work that the fans don’t see and mostly don’t appreciate. But it really mattered: the deals with Djilobodji and Ndong, the other lawsuits, these were the biggest cashflow swings that the club had on its books. And then the rest of it was just the hard work of cutting costs and boosting revenues. I think that a lot of people knew that the costbase had spiralled out of control, but not many people realise that the revenue base had just absolutely crumbled. Psychologically, as a business, the club had sloppily got used to the Premier League TV revenues. As a result of that, every other revenue line felt relatively insignificant, so gradually all the revenue lines had been shrinking. Corporate hospitality had gone from £3m to £1m, retail had halved, concerts had been abandoned. Even worse, there wasn't a single sponsorship sales person in the whole business. Not a single person.
 
So we took over a business with a costbase of £50 million, hoping to do £15.5m in revenue. I said to Stewart that I thought we could do £20m, but that was more wishful thinking than anything else. In the end, we settled on £18.5m as a tough but realistic target, but in fact – with the help of the fans, of course, and getting to Wembley twice – we did end up doing over £20m. Those revenues didn’t come from one big thing – it was just hundreds and hundreds of small wins, in commercial and marketing. That has been Tony Davison, my and our team’s year: hammering away at the small wins, within the overall philosophy we set out at the start of the year: ‘One Club; Your Club.’ That was a philosophy deliberately aimed at making the club more fan-focussed, and I’m really grateful that the fanbase were so supportive.
 
We started a business club, which had been something Tony and I had done at Oxford. It builds a forum where we get to know people and understand their businesses better.  Only speaking to shirt sponsors, short sponsors, back of shirt sponsors is a dangerous game. What happens when one or two of those drop away, suddenly it’s: where do we go from here?
 
A good example of the business club working is the Checkatrade semi final. We were told by the EFL that we’re allowed to put a shirt sponsor on the sleeve, but it's quite short notice. The game is going to be shown on TV, back to the North East and an awful lot of people will be watching that in the evening so we thought about which of our business club people would most benefit from having that exposure in the evening. The Dominos guys were exactly right for that. Not massive money but – as I say - a football club’s revenue base is built is off the back of small wins. Now when you get to the Premier League, it can feel different, but it mustn’t change. If you can keep that small win mentality going then when the tide turns in your favour on the pitch, then you really do max out. That mentality has to be led by the senior people, and Sunderland had it under John Fickling in the late 90s. But it was lost subsequently, which meant that when the club finally was relegated it was a shell of a business.
 
These are lessons that Tony and I have learned when we did work at Arsenal and at Spurs. For Daniel Levy, for Danny Fiszman and David Dein, no detail was too small. Everything has to be operating to its maximum efficiency if you're going to be competitive. By definition, if everyone has the same TV revenue, the way you out-compete is in non TV revenue. So doing things like casting aside the concerts and not bothering to sell sponsorships, and letting corporate hospitality crumble, is just suicidal.
 
ALS: And has the corner been turned?
 
CM: We’re about halfway there, I’d say. Halfway to being a truly sustainable, competitive club in a position to punch above its weight, rather than below it. I regard the operating model as being separate from parachute payments. The parachute payments are meant to help fill the black holes which inevitably come when you leave the Premier League. I've been frustrated by people thinking that the Club had some sort of right to spend parachute payments on new players. They are there to pay off debts or legal cases or to pay off players who are too expensive. That's what the point of the parachute payments are, not as a way of getting yourself into even more trouble,
 
I digress! So: we inherited a model, which was cost base of £50m and a forecast revenue base of £15.5m so an operating loss of £35m on an ongoing basis. We're now at revenues of £20m and a cost base of just under £30m. Right now, our final parachute payment means that we bridge that gap this season, which is great but, because I'm having to look forward to July 2020, when the parachute payments stop, we are still working, working, working to get those costs down further and the revenues up to match.
 
I think that, realistically, by next June the cost base needs to come down to around £22 or £23 million. I don’t think I’m breaking any state secrets to say that we’ve still got some very highly paid players on the books whose contracts are gradually running down. Reduce those salaries and the current overpayment on business rates (which will stop in 18 months’ time) and the model will start to look healthy – coming close to break-even with the top playing budget in League 1 or a top 10 playing budget in the Championship. As commercial and marketing guys, that is my and Tony’s job: to provide the club with the business base off the pitch that allows it to achieve its potential on the pitch.
 
ALS: Is there a worry that fans were loyal for a year but might not be as loyal in year two? Could that effect your revenue line?
 
CM: Oh, sure – I’d be naïve to think that the current level of support we enjoy will persist indefinitely in League 1. I think we will be OK this year, provided we start Ok on the pitch. We've sold nearly 22,000 season tickets already, which is more than we'd sold at this stage last pre-season. So if one might imagine some good players being signed, and some reasonable results in preseason, I'd hope that season tickets will be up towards 23,000 by the start of the season, which would be better than last year. Corporate hospitality sales just started, and they've started really strongly, retail sales are well ahead of where they were last year. So the sense I get is that the vast majority of fans are giving us a fair chance. And, I hope, reacting to the various improvements we have made in these areas. But, don’t worry, we are under no illusions: this is the season it has to come together on the pitch. It’s really important for Sunderland that we get promoted this season.
 
ALS: OK, so let’s talk about how that will work and who’ll be involved. Who’s who around the boardroom table going forwards?
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Post  Argus on 2019-07-10, 4:00 pm

Thanks.

This makes very interesting reading and certainly clears up some of the misconceptions being bandied about on social media etc...

Sounds like the current board have their finger on the button as far as finances go - which is excellent news - whilst being cautious about the future.

Let's hope the team can match them in terms of improvement on last season?

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Post  Hieronymus on 2019-07-10, 4:09 pm

Nice to see a nod to John Fickling - think he was greatly underestimated as a Chief Exec and without him we would probably not have the Stadium and the Academy as it is today.
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