Salford financial issues(again…)

[LeytherRob]

8 minutes ago, Martyn Sadler said:

It looks as though my proposal won't be activated.

But the worrying thought is whether any other solution will be.

And the thing is that we don't actually know how urgent it all is because we don't know the state of the takeover discussions.

For all we know, Salford could announce later today that the club is in new ownership with all its problems solved.

That's down to SRD now, they can start letting players go at any time. There are clubs are ready and waiting as has been widely reported. 

 

[Dave T]

16 minutes ago, Worzel said:

I think the structural governance issue though is "what if they can't ever agree on any plan that does it?". There should be a backstop that enables an emergency action to be taken to protect the whole, that doesn't require a majority of clubs to approve. 

Yep, you won't get me disagreeing too much on governance improvements. 

[binosh]

2 hours ago, JohnM said:

I hear that Manchester Business School will be approaching a number of TRL posters to become Sports  Business Consultants because of their in-depth knowledge and experience in the finance and operation of professional rugby league clubs.

Sure, there are genuine issues surrounding the long and short term problems of SRD but at times they seem to be obscured by posters emotions and scarcely hidden antagonism.

I’d be up for that.

Question number 1 -  

I have have £10 in the bank, I lend another £10 from a different bank and then proceed to spend £30 meaning I’m now £10 overdrawn and owe 2 different banks £10 each.

Do I……

A, Spend more money sod it.

B, Review my spending as it doesn’t match my income.

C, Play the Victim see if anyone bails me out.

D, Blame the banks.

 

Tricky one this. What would everyone do?

[Dave T]

3 minutes ago, binosh said:

I’d be up for that.

Question number 1 -  

I have have £10 in the bank, I lend another £10 from a different bank and then proceed to spend £30 meaning I’m now £10 overdrawn and owe 2 different banks £10 each.

Do I……

A, Spend more money sod it.

B, Review my spending as it doesn’t match my income.

C, Play the Victim see if anyone bails me out.

D, Blame the banks.

 

Tricky one this. What would everyone do?

Surely you could have come up with a better example with this. One that has income streams that make it far more complex than what you've laid out.

[binosh]

19 minutes ago, Dave T said:

Surely you could have come up with a better example with this. One that has income streams that make it far more complex than what you've laid out.

I only had a couple of minutes 

Edited January 15 by binosh

[Dave T]

2 minutes ago, binosh said:

I only a couple of minutes 

But the point is less about the example and more that it is complicated. 

Relatively modest things can have a huge impact on RL clubs. You can have a solid plan and a series of bad weather, poor form, injuries, tv scheduling and other factors could lead to a 1k reduction in average crowds which could cost as much as £2-300k per year. Maybe a sponsor doesn't materialise or pulls out unexpectedly. Another £100k. Maybe utilities increase in cost. £50k. Maybe your planned new stadium agreement doesn't come off, reducing income by £100k.

I do understand the frustration that Salford appear to struggle regularly, but they aren't on their own in that, but it's very easy for a club's position to go South very quickly.

[RigbyLuger]

1 hour ago, Martyn Sadler said:

The Rugby League family comes to the aid of one of its own.

Hopefully better than when Jamie Peacock et al sold stuff to "save" Bradford and may as well just have thrown them in the bin, as was obvious to everyone at the time (apart from those who tried to make others feel guilty if not helping.)

[Worzel]

1 hour ago, Martyn Sadler said:

Part of the problem is that the clubs don't know what the RFL and/or RL Commercial is doing.

For example, one owner told me that they haven't been told whether the £500,000 advance was given with any strings attached, but he says he suspects it wasn't.

Meanwhile the RFL says that the clubs are independent entities, which of course is true but shouldn't be.

I find it bizarre than an owner would not know what the strings are

RFL press statements have referenced "conditions", so there clearly were some? But this lack of internal transparency is surreal. If I ran my busines like this - including with partners not just senior employees - it wouldn't be a very successful one. 

[binosh]

42 minutes ago, Dave T said:

But the point is less about the example and more that it is complicated. 

Relatively modest things can have a huge impact on RL clubs. You can have a solid plan and a series of bad weather, poor form, injuries, tv scheduling and other factors could lead to a 1k reduction in average crowds which could cost as much as £2-300k per year. Maybe a sponsor doesn't materialise or pulls out unexpectedly. Another £100k. Maybe utilities increase in cost. £50k. Maybe your planned new stadium agreement doesn't come off, reducing income by £100k.

I do understand the frustration that Salford appear to struggle regularly, but they aren't on their own in that, but it's very easy for a club's position to go South very quickly.

I agree with all that, however they are in debt millions built up over years, not 1 season and carried on regardless. Budgets should have been cut when they defaulted on historic debt after financial difficulties in 2020.

 

23/07/2018 Salford ask fans for investment “to sign players”

02/11/2020 Salford docked 3 points due to defaulting on debt.

24/04/2023 Salford ask fans for investment  due to “short term” money concerns.

30/05/23 Rowley says we are not a selling club.

06/06/2023 Salford say Dupree not for sale due to fans supporting club to tune of over £350k

26/07/23 Salford sell Dupree anyway.

18/10/23 Salford sell Ackers and Croft to pay wages

24/11/2023 Salford placed into special measures due to fears over their financial sustainability. 

22/11/2024 Salford placed in special measures again whilst asking for £500k advance payment of central distribution.

 

Edited January 15 by binosh

[Jill Halfpenny fan]

2 minutes ago, binosh said:

I agree with all that, however they are in debt millions built up over years, not 1 season and carried on regardless. Budgets should have been cut when they defaulted on historic debt after financial difficulties in 2020.

 

23/07/2018 Salford ask fans for investment “to sign players”

02/11/2020 Salford docked 3 points due to defaulting on debt.

24/04/2023 Salford ask fans for investment  due to “short term” money concerns.

30/05/23 Rowley says we are not a selling club.

06/06/2023 Salford say Dupree not for sale due to fans supporting club to tune of over £350k

26/07/23 Salford sell Dupree anyway.

18/10/23 Salford sell Ackers and Dupree to pay wages

24/11/2023 Salford placed into special measures due to fears over their financial sustainability. 

22/11/2024 Salford placed in special measures again whilst asking for £500k advance payment of central distribution.

 

If they managed to sell Dupree twice they are smarter than I took them for.

[Martyn Sadler]

7 minutes ago, Worzel said:

I find it bizarre than an owner would not know what the strings are

RFL press statements have referenced "conditions", so there clearly were some? But this lack of internal transparency is surreal. If I ran my busines like this - including with partners not just senior employees - it wouldn't be a very successful one. 

The problem is that legal accountability doesn't fall in the right place.

I've just been speaking to someone at the RFL who has expressed surprise at my concern for Salford while saying effectively that Salford's plight has nothing to do with the RFL and that it isn't their responsibility.

Technically that is true.

But with a better governance system it wouldn't be.

 

[Trinity1873]

7 minutes ago, Jill Halfpenny fan said:

If they managed to sell Dupree twice they are smarter than I took them for.

Your comment doesn't alter the facts to what he has posted,i.e.the amount of times SRD have been helped,but they are still up to there eyeballs in debt

[JohnM]

But with a better governance system it wouldn't be

Quite so .  That has to be in the interests of the sport as a whole. After all, there's precident fir the RFL to help out clubs in the past, if I recall correctly, and such help has to come with some level of governance, surely.

[Jill Halfpenny fan]

46 minutes ago, Dave T said:

But the point is less about the example and more that it is complicated. 

Relatively modest things can have a huge impact on RL clubs. You can have a solid plan and a series of bad weather, poor form, injuries, tv scheduling and other factors could lead to a 1k reduction in average crowds which could cost as much as £2-300k per year. Maybe a sponsor doesn't materialise or pulls out unexpectedly. Another £100k. Maybe utilities increase in cost. £50k. Maybe your planned new stadium agreement doesn't come off, reducing income by £100k.

I do understand the frustration that Salford appear to struggle regularly, but they aren't on their own in that, but it's very easy for a club's position to go South very quickly.

With a bit of previous knowledge about their income and expenditure I reckon you could have a pretty good go at coming up with some sort of plan.  Not sure what sort of team they could put out mind if you budget to keep expenditure under income.

[Jill Halfpenny fan]

4 minutes ago, Trinity1873 said:

Your comment doesn't alter the facts to what he has posted,i.e.the amount of times SRD have been helped,but they are still up to there eyeballs in debt

It wasn't meant too.

[LeytherRob]

29 minutes ago, Dave T said:

But the point is less about the example and more that it is complicated. 

Relatively modest things can have a huge impact on RL clubs. You can have a solid plan and a series of bad weather, poor form, injuries, tv scheduling and other factors could lead to a 1k reduction in average crowds which could cost as much as £2-300k per year. Maybe a sponsor doesn't materialise or pulls out unexpectedly. Another £100k. Maybe utilities increase in cost. £50k. Maybe your planned new stadium agreement doesn't come off, reducing income by £100k.

I do understand the frustration that Salford appear to struggle regularly, but they aren't on their own in that, but it's very easy for a club's position to go South very quickly.

Whilst I agree with your point, I don't think it really applies in this situation. People have been predicting this since the share scheme back in 2022, rightly pointing out that despite assurances from Paul King that the share offering would give long term stability to the club, that the only successful community share owned clubs operated on a subscription basis and not a one-off sticking plaster. 

For a long time SRD have been relying on income that wouldn't be normally considered 'regular' for a normal RL club, be it transfers, loans, grants or the share scheme. I summarised it earlier in the thread:

On 22/11/2024 at 13:41, LeytherRob said:

So as reported, Salford have received the following in the past 2 seasons

£364,270 from the share scheme

£215,440 in Loans since Dec 2022 from council

£315,000 grant from the council March this year

£300,000 from sale of Croft and Ackers (The transfer fee Leeds Rhinos have paid Salford Red Devils for Andy Ackers and Brodie Croft - Leeds Live)

6 figure fee for Dupree, £100,000 to be conservative.

That's an additional £1,194,710 on top of their distribution, averaging at £597,355 per season of one off income that still sees them unable to pay bills. Where is the money going to come from to not only bridge that gap but also go further so that they can not only break even but earn enough to service the debts they do have? Especially when they are planning on spending over a third of their yearly distributions before the season even starts?

You just can't continue to rely on over £0.5M a year in 'bonus' money to plug the gap in your everyday operating costs, and you certainly shouldn't be signing the players they have been doing or taking on an elite academy and the £200k it costs annually to run. SRD should realistically be running a squad not too dissimilar to the Cas squad that started 2024, or the Hull one that finished 2024, not outbidding Huddersfield to add Esan Marsters to a 3/4 line that already boasts 2 of the comps best centres in Tim Lafai and Nene Macdonald - it's just plainly irresponsible and you don't have to be a financial expert to see why there is a such a colossal black hole in their budgets.

[Worzel]

18 minutes ago, Martyn Sadler said:

The problem is that legal accountability doesn't fall in the right place.

I've just been speaking to someone at the RFL who has expressed surprise at my concern for Salford while saying effectively that Salford's plight has nothing to do with the RFL and that it isn't their responsibility.

Technically that is true.

But with a better governance system it wouldn't be.

 

Yes, that's a ridiculous mindset even if we accept that technically the financial performance of a single club is the fiduciary responsibilty of the directors of that business. The integrity of the competition is the RFL's concern, in fact it should be their primary concern outside of player welfare. Running a comp with 11 teams instead of 12 damages the integrity of the competition. Not providing the sport's number one customer by revenues (Sky Sports) with the product we're contractually obliged to damages the finances of the RFL and its constituents.

How anyone at the RFL could think that meant is wasn't their responsibility, even under the current governance structure, is genuinely mind blowing. That dereliction is almost worse than the Salford problem itself. 

 

[Trinity1873]

5 minutes ago, Jill Halfpenny fan said:

It wasn't meant too.

I'm glad that's so,but there are a lot of posters on here seem to think SRD can go on and on getting bailouts.

[Martyn Sadler]

10 minutes ago, Worzel said:

Yes, that's a ridiculous mindset even if we accept that technically the financial performance of a single club is the fiduciary responsibilty of the directors of that business. The integrity of the competition is the RFL's concern, in fact it should be their primary concern outside of player welfare. Running a comp with 11 teams instead of 12 damages the integrity of the competition. Not providing the sport's number one customer by revenues (Sky Sports) with the product we're contractually obliged to damages the finances of the RFL and its constituents.

How anyone at the RFL could think that meant is wasn't their responsibility, even under the current governance structure, is genuinely mind blowing. That dereliction is almost worse than the Salford problem itself. 

 

It seems to me that there is no one with the specific responsibility of developing the Super League competition as a valuable entity with the requisite powers and responsibilities.

We don't have the equivalent of the NFL Commissioner, who is judged by his ability to do that.

[Dave T]

21 minutes ago, Jill Halfpenny fan said:

With a bit of previous knowledge about their income and expenditure I reckon you could have a pretty good go at coming up with some sort of plan.  Not sure what sort of team they could put out mind if you budget to keep expenditure under income.

It's clear they haven't been very impressive, and as I say, maybe their level is far lower than what they've been playing at, but I can absolutely see how clubs get into a cycle of working to optimistic plans based more on hope than smart decisions.

And I'd say every club in the league have done it on more than one occasion.

[RigbyLuger]

3 minutes ago, Martyn Sadler said:

We don't have the equivalent of the NFL Commissioner, who is judged by his ability to do that.

Whenever we put someone is a role, like with Robert Elstone, "we" immediately moan we're wasting money. 

[LeeF]

So if the Salford position is as bad as most think is the only solution left being to give them the rest of their central advance for the season now and thereby buy them some time for a new “investor” to actually produce the goods?

This assumes that there is actually a genuine interested party or parties and tangible evidence of this would have to be provided to the RFL. Extra time would also allow less of an immediate fire sale of the existing squad as it would negate sales being required in the next 2 weeks before this month’s salary run which is probably the next key deadline

[Martyn Sadler]

1 minute ago, RigbyLuger said:

Whenever we put someone is a role, like with Robert Elstone, "we" immediately moan we're wasting money. 

We were doing. Elstone had no power to achieve anything.

[Dave T]

18 minutes ago, LeytherRob said:

Whilst I agree with your point, I don't think it really applies in this situation. People have been predicting this since the share scheme back in 2022, rightly pointing out that despite assurances from Paul King that the share offering would give long term stability to the club, that the only successful community share owned clubs operated on a subscription basis and not a one-off sticking plaster. 

For a long time SRD have been relying on income that wouldn't be normally considered 'regular' for a normal RL club, be it transfers, loans, grants or the share scheme. I summarised it earlier in the thread:

You just can't continue to rely on over £0.5M a year in 'bonus' money to plug the gap in your everyday operating costs, and you certainly shouldn't be signing the players they have been doing or taking on an elite academy and the £200k it costs annually to run. SRD should realistically be running a squad not too dissimilar to the Cas squad that started 2024, or the Hull one that finished 2024, not outbidding Huddersfield to add Esan Marsters to a 3/4 line that already boasts 2 of the comps best centres in Tim Lafai and Nene Macdonald - it's just plainly irresponsible and you don't have to be a financial expert to see why there is a such a colossal black hole in their budgets.

I don't disagree overall, but one final point really, £0.5m really is the kind of number that you could go about convincing yourselves that you can plug. It's modest, but obviously more than big enough to be problematic in RL terms.

And while Hudds may have made an offer to Marsters, we don't know that they outbid as such, it was a longer deal than he would have got from Huddss based on his comments. But this was also back in May or so when the outlook may have been far more positive.

[Dave T]

7 minutes ago, Martyn Sadler said:

It seems to me that there is no one with the specific responsibility of developing the Super League competition as a valuable entity with the requisite powers and responsibilities.

We don't have the equivalent of the NFL Commissioner, who is judged by his ability to do that.

He'd probably come in, scrap p&r instantly and be met with a series of LE features asking what he's doing for his £400k salary.