Salford financial issues(again…)

[Dave T]

1 minute ago, RP London said:

absolutely agree, especially the last paragraph. What the RFL now need to do is to work out how they can stop this happening though. Mid season clubs going bust is terrible for the comp, pre season maybe not so much. How do you guarantee situations, a set of accounts wont necessarily show you what you need and you cannot have all costs secured 6 months ahead of time etc.. its a tough one... is it a case of letting them go to show you mean it, but thats been done before and it doesnt stop the next club trying this "blagging system"..

I'm just not sure that is a tactic that clubs are using. I genuinely believe that they are doing their best to survive - and in reality there is no good time to go bust!

Because even if Salford needed propping up from June this year, they'd soon drop them like a sack of s**t at the end of the year and let them drop out of the ranks. We've seen loads of clubs go bust.

I think there is an element of always buying time and trying to survive another day. Now in Salford's case that may just be too much and they can never be anything like sustainable at this level, and that may need to be faced into.

[Dave T]

3 minutes ago, Tommygilf said:

I worked in a solicitors dealing with commercial law and property (I hope we didn't have any of the same clients), I think your assessment of King is spot on!

I get what you are saying regarding what has happened, but I think it is either blind to or is willfully ignorant of the other benefits Salford have had. Part of the reason Salford now take loans off the council too is because by defaulting on the CVA made them very unlikeable to creditors.

And that is before us getting to the leniency allegedly being shown by the RFL. The special measures imposed last year seem to have been alleviated with a 315k loan in March yet precisely zero changes appear to have been implemented to prevent or reduce the risk of it happening again. And barely a month or so after the end of the season Salford are asking for nearly half their central funding to be given in advance. Even in 2023 they had signed Croft on a deal they openly said they couldn't afford. 

I can see why others would see a sense of unfairness about this situation. Why should others not take advantage (of particularly the RFL systems) other than not wanting to look bad?

I've avoided the CVA point somewhat as I'm not too sure of the history of it, but I acknowledge that was problematic (and I hated the fan share issue). 

On the special measures, is there anything about the 2023/24 special measures piece - it does just seem to have been a bit of a throwaway comment in one of Matt Shaw's articles. Do we know what was the size of the advance in 2023? I've done a very quick search and nowt came up.

On your last para - I'm not sure what you mean really. What systems could other clubs take advantage of? They absolutely can make agreements with their own councils (this does link back to the catchment area piece on grading), and advances of central funding has happened before and will happen again. 

[RP London]

4 minutes ago, Dave T said:

I'm just not sure that is a tactic that clubs are using. I genuinely believe that they are doing their best to survive - and in reality there is no good time to go bust!

Because even if Salford needed propping up from June this year, they'd soon drop them like a sack of s**t at the end of the year and let them drop out of the ranks. We've seen loads of clubs go bust.

I think there is an element of always buying time and trying to survive another day. Now in Salford's case that may just be too much and they can never be anything like sustainable at this level, and that may need to be faced into.

I certainly think there is a little of the "what you going to do now" coming from Salford at the moment and its the last ditch of a club that is 100% not sustainable in its current guise. I think the RFL are fully aware too and you're right they know that they can be ditched at the end of the year not matter whether they fluke 11th or buy it with money they dont have, something they have not been able to do so easily previously. 

The problem the RFL face is this can happen again with someone else, is there a way to stop it? and I am really struggling to see what it is.

[Tommygilf]

6 minutes ago, RP London said:

absolutely agree, especially the last paragraph. What the RFL now need to do is to work out how they can stop this happening though. Mid season clubs going bust is terrible for the comp, pre season maybe not so much. How do you guarantee situations, a set of accounts wont necessarily show you what you need and you cannot have all costs secured 6 months ahead of time etc.. its a tough one... is it a case of letting them go to show you mean it, but thats been done before and it doesnt stop the next club trying this "blagging system"..

It definitely is difficult. I don't think we can go towards a car crash we can see happening like this and say the system is working, nor can we just allow clubs to behave like Salford have for years with essentially no punishment. Likewise I don't think a Bradford type solution is the answer either. Essentially the club needs to be in special measures, taking over and running properly so that what emerges at the other side isn't ran on a delusion as it seems to be now.

Perhaps some sort of revenue based Salary cap is what needs to be brought in. 

[Dave T]

7 minutes ago, LeytherRob said:

My point on this is that the 200k doesn't paint the full picture, because when you tally up all the other bits they've had to do - player sales of Dupree/Crof/Ackers, the one of share sales, the grants - it actually ends up being about 800k p/a shortfall. Salford have manage to secure themselves more 6 figure transfer fees in the past few years than the rest of the league combined in the last 20 years. Which is great, but it's just not sustainable because eventually you just can't find this years Brodie Croft or Jackson Hastings and the whole thing falls apart and the same goes for the share scheme. Those monies should have been spent servicing some of their debt or at least investing in their infrastructure, but it all went on a dream of playoff rugby that hasn't even paid off because crowds have not improved.

I agree on the first half, but I think when it comes to the bit in bold is where we differ. 

Their plan does appear to be invest in player pathways (Academy) and to get far better commercial terms on the stadium (with things like the billboard etc). 

We do know that they seem to have been running with a salary cap lower than almost everyone (maybe just London), and the player sales that you mention supports my point really that they haven't just been acting like a-holes and refusing to try and improve things.

But keeping selling your assets and cutting costs will only get you so far - they need more money coming in. 

[Dave T]

3 minutes ago, RP London said:

I certainly think there is a little of the "what you going to do now" coming from Salford at the moment and its the last ditch of a club that is 100% not sustainable in its current guise. I think the RFL are fully aware too and you're right they know that they can be ditched at the end of the year not matter whether they fluke 11th or buy it with money they dont have, something they have not been able to do so easily previously. 

The problem the RFL face is this can happen again with someone else, is there a way to stop it? and I am really struggling to see what it is.

I think we need to take a step back and ask what would be in that for Salford. Burning your bridges with the RL governing bodies and clubs so much that you get binned in 12m is little different from exiting now. 

They are just trying to survive imo.

[Tommygilf]

4 minutes ago, Dave T said:

I've avoided the CVA point somewhat as I'm not too sure of the history of it, but I acknowledge that was problematic (and I hated the fan share issue). 

On the special measures, is there anything about the 2023/24 special measures piece - it does just seem to have been a bit of a throwaway comment in one of Matt Shaw's articles. Do we know what was the size of the advance in 2023? I've done a very quick search and nowt came up.

On your last para - I'm not sure what you mean really. What systems could other clubs take advantage of? They absolutely can make agreements with their own councils (this does link back to the catchment area piece on grading), and advances of central funding has happened before and will happen again. 

I just think people don't like that the club can be run on such a tenuous basis when others try hard to do things the "right way" and live within their means.

On the last paragraph, it means that clubs could hold the RFL to ransom over their position at especially vulnerable times for them - I don't think it's a good situation at all to be in. It certainly shouldn't be one the a top flight team who finished in the top 4 are in.

[Dave T]

5 minutes ago, Tommygilf said:

It definitely is difficult. I don't think we can go towards a car crash we can see happening like this and say the system is working, nor can we just allow clubs to behave like Salford have for years with essentially no punishment. Likewise I don't think a Bradford type solution is the answer either. Essentially the club needs to be in special measures, taking over and running properly so that what emerges at the other side isn't ran on a delusion as it seems to be now.

Perhaps some sort of revenue based Salary cap is what needs to be brought in. 

I suppose this does go back to what do people want Salford punishing for? I think they did get 'punished' for the CVA move.

I think there is a fair argument to make the financial part of grading more meaningful and maybe the punishments harsher, but if anything they've just gone softer.

[RP London]

Just now, Tommygilf said:

It definitely is difficult. I don't think we can go towards a car crash we can see happening like this and say the system is working, nor can we just allow clubs to behave like Salford have for years with essentially no punishment. Likewise I don't think a Bradford type solution is the answer either. Essentially the club needs to be in special measures, taking over and running properly so that what emerges at the other side isn't ran on a delusion as it seems to be now.

Perhaps some sort of revenue based Salary cap is what needs to be brought in. 

on the last bit... how? what is it based on, is it a rolling cap, is it based on projections etc etc.. really hard to administer. 

While the system isnt working we also have to think about the fact that its been "got around" and so will any system so while we plug one hole you potentially open another, whats the least bad, maybe what we do now is the least bad option, i dont know.

I'd say the biggest issue is that its always been a sticky plaster and never a solution and thats on Salford but you cannot just make them have a higher revenue. As soon as the RFL have to advance funds though they surely HAVE to put in stipulations before they get the advance that have to be in place before the money gets transferred. No "next week" or "next month" but before the money gets moved. 

The council can do what it wants with its money just like an investor but as soon as the RFL has to loan money or advance funds then that surely is the point where you get them to "fix the vessel"

[Dave T]

Just now, Tommygilf said:

I just think people don't like that the club can be run on such a tenuous basis when others try hard to do things the "right way" and live within their means.

On the last paragraph, it means that clubs could hold the RFL to ransom over their position at especially vulnerable times for them - I don't think it's a good situation at all to be in. It certainly shouldn't be one the a top flight team who finished in the top 4 are in.

Hey, I get the overarching point here, although I just don't agree that the motives are anywhere near as sinister as others do, but I think my wider concern here is that clubs aren't really living within their means. Sure if you have a rich backer that's great - but London did until last September, and look at them now. 

If the Bradford Bulls debacle showed us anything, it's that this really could happen to pretty much any club in the game. Rather quickly too.

[RP London]

5 minutes ago, Dave T said:

I think we need to take a step back and ask what would be in that for Salford. Burning your bridges with the RL governing bodies and clubs so much that you get binned in 12m is little different from exiting now. 

They are just trying to survive imo.

because they may just making it work, get a new owner and the new owner negotiates with the RFL and rights the wrongs of the last owner giving them a potential reprieve in 12m. Its a current ownership last ditch rather than a club one. 

[Tommygilf]

Just now, Dave T said:

I suppose this does go back to what do people want Salford punishing for? I think they did get 'punished' for the CVA move.

I think there is a fair argument to make the financial part of grading more meaningful and maybe the punishments harsher, but if anything they've just gone softer.

The CVA move saw them get a 2 point deduction in Covid year (when it was on points percentage and even clubs like KR binned off the year on field), and that was pretty much it from an RL POV. I'd imagine it's made getting any sort of loan from anyone other than the council or private individuals (like King himself by the looks of it) impossible. Plenty of fans cooed at how clever they had been however.

They've definitely gone a bit soft imo. But arguably this sort of existential level of financial problems should sit apart from the gradings, which are designed for normally operating clubs.

[Dave T]

1 minute ago, RP London said:

because they may just making it work, get a new owner and the new owner negotiates with the RFL and rights the wrongs of the last owner giving them a potential reprieve in 12m. Its a current ownership last ditch rather than a club one. 

And I think that's fine - that's survival. But I don't see anything, from the clubs or the governing bodies that suggests they are angry with Salford's lack of action here. The narrative appears to be rather sympathetic tbh. Now obviously there could be different views behind closed doors  but even Degsy was very measured and reasonable in his comments on Salford.

[Dave T]

4 minutes ago, Tommygilf said:

The CVA move saw them get a 2 point deduction in Covid year (when it was on points percentage and even clubs like KR binned off the year on field), and that was pretty much it from an RL POV. I'd imagine it's made getting any sort of loan from anyone other than the council or private individuals (like King himself by the looks of it) impossible. Plenty of fans cooed at how clever they had been however.

They've definitely gone a bit soft imo. But arguably this sort of existential level of financial problems should sit apart from the gradings, which are designed for normally operating clubs.

They did sort of have this covered really - under the section titled 'minimum standards' they would previously have seen Salford become a Grade C club if they had gone into Admin (IIRC) which would see them out of SL. Now I don't think that system was perfect and needed a way of planning for years following, but that did feel like quite a good black and white ruling. Although it would mean that a Grade A club could remain in SL - but maybe that's right.

[Charlie]

19 minutes ago, Tommygilf said:

It definitely is difficult. I don't think we can go towards a car crash we can see happening like this and say the system is working, nor can we just allow clubs to behave like Salford have for years with essentially no punishment. Likewise I don't think a Bradford type solution is the answer either. Essentially the club needs to be in special measures, taking over and running properly so that what emerges at the other side isn't ran on a delusion as it seems to be now.

Perhaps some sort of revenue based Salary cap is what needs to be brought in. 

You are aware no club makes money so a revenue based cap is stupid 

[RP London]

Just now, Dave T said:

And I think that's fine - that's survival. But I don't see anything, from the clubs or the governing bodies that suggests they are angry with Salford's lack of action here. The narrative appears to be rather sympathetic tbh. Now obviously there could be different views behind closed doors  but even Degsy was very measured and reasonable in his comments on Salford.

dont get me wrong I do agree, I get the feeling that there is something coming in and everyone who needs to is aware and happy to let them limp into that ownership and come out of it in a better situation.

I dont think they way they have acted, though, is "fine", I also dont think the way the RFL have dealt with it is fine either. Salford from what I can see have limped through the grading process to keep, by hook or by crook, their super league place. Of course that is sensible for the club but (here I totally agree with Masked Poster, i'm just not sure how we solve it) is it really fine on the other clubs that are working within their means to be kept out of super league due to the incumbency bias that we all accept is in the gradings. Those clubs that are now not getting their chance because of this type of, frankly, sh**housery?? Yes its survival if you just look at it from a salford point of view but is it "fair" on others.

[LeytherRob]

2 minutes ago, Dave T said:

I agree on the first half, but I think when it comes to the bit in bold is where we differ. 

Their plan does appear to be invest in player pathways (Academy) and to get far better commercial terms on the stadium (with things like the billboard etc). 

We do know that they seem to have been running with a salary cap lower than almost everyone (maybe just London), and the player sales that you mention supports my point really that they haven't just been acting like a-holes and refusing to try and improve things.

But keeping selling your assets and cutting costs will only get you so far - they need more money coming in. 

But we know they haven't in the case with the billboard because the finance agreement they took out for it is uploaded to companies house. So whilst they are looking to invest into additional revenue streams they are doing it with borrowed money whilst they spend over sums of money they haven't even received yet on preseason trips to Portugal. The academy is an investment but into the on field and not the business, short term it's actually an extra £300k a year they already didn't have - to be honest I'm surprised they were even successful in the application considering they were replacing a club that had ditched theirs for financial reasons and SRD were off the back of special measures last year with no visible positive change in their financial circumstances.

Yes they need more money coming in and need to keep competitive, but you just can't continue to operate a spend over half a million more than your standard income just assuming you'll have another inflated transfer or council bailout to cover the shortfall. You spend what you can afford and not everyone can afford the same but that's the harsh reality SRD need to face, just like others have before.

 

[dboy]

1 hour ago, Charlie said:

Every club lives on handouts ? Just from owners, you’d think Salford’s potential owners would realise they’d have to pay the difference like the others do 

Salford are the only SL club failing to service CVAs and taking loans from a council that they never repay.

You're confusing hand-outs with having a benefactor.

[dboy]

10 minutes ago, Charlie said:

You are aware no club makes money so a revenue based cap is stupid 

Revenue and profit are not the same thing.

[Dave T]

3 minutes ago, RP London said:

dont get me wrong I do agree, I get the feeling that there is something coming in and everyone who needs to is aware and happy to let them limp into that ownership and come out of it in a better situation.

I dont think they way they have acted, though, is "fine", I also dont think the way the RFL have dealt with it is fine either. Salford from what I can see have limped through the grading process to keep, by hook or by crook, their super league place. Of course that is sensible for the club but (here I totally agree with Masked Poster, i'm just not sure how we solve it) is it really fine on the other clubs that are working within their means to be kept out of super league due to the incumbency bias that we all accept is in the gradings. Those clubs that are now not getting their chance because of this type of, frankly, sh**housery?? Yes its survival if you just look at it from a salford point of view but is it "fair" on others.

I'm not sure I buy the fairness argument to be honest mate.

Why is it not seen as fair that Salford have a supportive council that helps with funding but Warrington have a private individual that underwrites our shortfall?

I'm not sure I see any fairness piece in the slightest here. It's not like they have been handed a bonus £500k - it's an advance.

Really, the only claims of unfairness here can be around the CVA and RFL advances - nothing else is relevant to anyone else.

The CVA punishment was a bit of a fudge, but as Tommy points out, there are real world consequences of that too.

RFL advances - they've had two now apparently, and we have to assume the first one was settled. Hopefully this latest one will be settled rather than the worst case scenario of them going bust.

I don't really buy these vague claims of unfairness. 

Toulouse have huge LA funding (and are hampered with huge costs too).

Fev have had serious financial issues, as have Halifax and now London. 

Bradford have had all sorts going on - plenty of allegations of dodgy stuff there too.

All of these clubs are doing what they have to, I do think that argument is a bit of a slippery road.

Sure, firm up the rules, and I do agree with Tommy on % of revenue on the cap as we used to have.

[Dave T]

11 minutes ago, LeytherRob said:

But we know they haven't in the case with the billboard because the finance agreement they took out for it is uploaded to companies house. So whilst they are looking to invest into additional revenue streams they are doing it with borrowed money whilst they spend over sums of money they haven't even received yet on preseason trips to Portugal. The academy is an investment but into the on field and not the business, short term it's actually an extra £300k a year they already didn't have - to be honest I'm surprised they were even successful in the application considering they were replacing a club that had ditched theirs for financial reasons and SRD were off the back of special measures last year with no visible positive change in their financial circumstances.

Yes they need more money coming in and need to keep competitive, but you just can't continue to operate a spend over half a million more than your standard income just assuming you'll have another inflated transfer or council bailout to cover the shortfall. You spend what you can afford and not everyone can afford the same but that's the harsh reality SRD need to face, just like others have before.

 

The stadium (inc billboard) are revenue driving initiatives. It's perfectly reasonable to be funded on finance, providing the initiative delivers.

The Academy is more of a long term play in that it is likely to improve squad costs and hopefully performance.

They should both have positive impacts on the P&L though (to different levels and at different times) which was my point really. We want them to improve their financials - these are two things that they are doing to work towards that.

[LeytherRob]

2 minutes ago, Dave T said:

I'm not sure I buy the fairness argument to be honest mate.

Why is it not seen as fair that Salford have a supportive council that helps with funding but Warrington have a private individual that underwrites our shortfall?

I'm not sure I see any fairness piece in the slightest here. It's not like they have been handed a bonus £500k - it's an advance.

Really, the only claims of unfairness here can be around the CVA and RFL advances - nothing else is relevant to anyone else.

The CVA punishment was a bit of a fudge, but as Tommy points out, there are real world consequences of that too.

RFL advances - they've had two now apparently, and we have to assume the first one was settled. Hopefully this latest one will be settled rather than the worst case scenario of them going bust.

I don't really buy these vague claims of unfairness. 

Toulouse have huge LA funding (and are hampered with huge costs too).

Fev have had serious financial issues, as have Halifax and now London. 

Bradford have had all sorts going on - plenty of allegations of dodgy stuff there too.

All of these clubs are doing what they have to, I do think that argument is a bit of a slippery road.

Sure, firm up the rules, and I do agree with Tommy on % of revenue on the cap as we used to have.

Much of what Salford have received via the council basically amounts to rescue packages, reacting to issues. Very little of it has been proactive, project-based investment in the club. They're plugging leaks as and when they come up to keep the ship afloat and that is a completely difference set of circumstances to any club with an owner looking to proactively invest. At no point would a LA ever go to a sporting organisation offering more money so they could increase spend, it is very much a cap in hand relationship.

[Charlie]

17 minutes ago, dboy said:

Revenue and profit are not the same thing.

Most clubs are losing money though which is fine as long as someone is happy to cover the cost. But I don’t think a revenue based cap would work. Personally I think the cap needs raising 

[LeytherRob]

8 minutes ago, Dave T said:

The stadium (inc billboard) are revenue driving initiatives. It's perfectly reasonable to be funded on finance, providing the initiative delivers.

The Academy is more of a long term play in that it is likely to improve squad costs and hopefully performance.

They should both have positive impacts on the P&L though (to different levels and at different times) which was my point really. We want them to improve their financials - these are two things that they are doing to work towards that.

Only if you can afford it which you'll know all too well coming from banking. No one is saying it isn't good to invest in future or that we don't want them to improve financials, but making fairly modest investments on borrowed money whilst also completely self-sabotaging their bottom line by loading up on financial commitments they can't afford on players/pre season trips is not the way to run a sports club when there is no safety net. 

If someone takes out a bank loan to invest in a friends business where he's going to get a good profit share moving forward that's great, if they do it whilst they're also struggling to put food on the table then they are a certified lunatic and should be called out as such. 

 

 

[Dave T]

10 minutes ago, LeytherRob said:

Much of what Salford have received via the council basically amounts to rescue packages, reacting to issues. Very little of it has been proactive, project-based investment in the club. They're plugging leaks as and when they come up to keep the ship afloat and that is a completely difference set of circumstances to any club with an owner looking to proactively invest. At no point would a LA ever go to a sporting organisation offering more money so they could increase spend, it is very much a cap in hand relationship.

Yeah, that's fair, and it's clearly not a good way to run your club - I suppose my challenge though is that isn't something that is unfair or something for other clubs to be annoyed about.