Owls in crisis: part one: Questions asked as Wednesday directors fail in efforts to secure fresh investment

The club's chairman, Lee Strafford, had come onto the board four months earlier with a brief to secure badly needed investment but his initial hopes of engineering a 20m injection of funds through a four-party consortium had fizzled out.

With the investment picture uncertain, the April 29 board meeting recorded Strafford setting out on an ambitious path with a season ticket target of 16,500 – significantly more than the 12,000 sold in 2008-09.

He outlined a proposed major sales push, including an overview of the club's business plan which would be given to fans. He felt that "we have managed the disappointment regarding investment not yet having arrived."

Chief executive Nick Parker said the player budget was increasing by 40 per cent and Strafford told the meeting "the message we are trying to put across is what we are doing in comparison to other clubs who are cutting back their budget and that with the right players this should take us to the play-offs."

The minutes also acknowledge the chairman as saying "if things do not work out as planned we may need to sell players and refocus budgets accordingly."

Finance director Bob Grierson agreed with Strafford's sentiment but added the budget must remain "cash neutral which is the same situation that we had followed in previous years."

The "cash neutral" issue was to become a huge bone of contention over the year. Strafford ultimately accused Grierson of misrepresenting the club's previous financial history as "cash neutral" when this had only been achieved by player sales.

The meeting then turned to the vexed issue of investment. After the failure of the initial proposal – a consortium including Indian company Spice Energy and the Middle East-backed Hero Fund – Parker said the main thrust was now directed towards the USA where he and Strafford would be the following week. Strafford said they were also looking to set up another meeting with Jeff Mallett, former president of Yahoo, the owner of Denver Whitecaps in Major League Soccer (MLS) in the USA and an investor in Derby County. Although not stated in the minutes, Strafford and Parker hoped Mallett could advise them about tapping into sports franchise owners in the USA. Parker was also hoping to hear back from "Omani contacts" by the end of the week.

The minutes concluded with Grierson reporting he had received a phone call from Wednesday's former chairman, Dave Allen, who was requesting repayment of outstanding interest (around 250,000) on a debenture he had held in the club.

Grierson said he felt this could be accommodated providing Allen would abide by any agreement struck with other holders of outstanding loans in the club to tie up an eventual investment deal.

May 27, 2009

A YEAR in the life of Sheffield Wednesday's boardroom would not be complete without the shadow of former chairman Dave Allen ghosting down Hillsborough's corridors of power.

And so it was at the May board meeting, when directors discussed what impact Allen's decision to invest in Chesterfield FC would have on the Owls.

To abide by Football League rules on holding a financial interest in more than one club, Allen had already brought his shareholding in Wednesday down to under 10 per cent.

But Allen, a multi-millionaire casino owner, has asked for repayment of outstanding loans in excess of 2m which remain in the club following his resignation from the board three years ago.

The board minutes record Wednesday had sought assurance from the League that the club would not be forced into repayment. In response, Nick Craig, the League's director of legal affairs, had stated there would not be a requirement to repay in full. A decision on whether to accede to Allen's request to pay a portion of outstanding interest was postponed.

Moving on to football matters, manager Brian Laws said poor away form was down to most teams using the multi-ball system whereby a new ball is quickly produced to keep the game moving when the original goes out of play. "Consideration needs to be given as whether we use this system at home," he said.

The manager said the aim for the coming season was the play-offs and performance data on players from recently-acquired ProZone database "will be vital".

Laws, right, asked if the club would pay a bonus for reaching 12th place last season "as theoretically we tied in 10th on the same points with Bristol City and QPR". Chief executive Nick Parker agreed to look into this but the club did not pay the bonus due for a top 10 finish.

Back on finances, Parker revealed the club had received a 300,000 demand for compensation after cancelling a shirt deal to sign up with manufacturer Puma. The minutes also record the appointment of USA-based Inner Circle Sports (ICS) to secure the long-awaited takeover. ICS would receive a two per cent success fee with Parker adding: "One key factor was that we do not lose millions of pounds each year and they felt there are more elements to our business plan than standard Championship clubs who require investment. It was stressed to ICS that we are financially stable, which was a massive eye-opener to them."

June 25, 2009

IT was at the June meeting of the board last summer that grumblings and dissent among directors over the club's financial future began to bubble over.

At one point, finance director Bob Grierson challenged chairman Lee Strafford on whether he would put his own money into the club and he also questioned how "real" the prospect of investment was.

Grierson initially queried the level of season ticket sales warning the target of 16,500 would not be met unless the number of new buyers rather than renewals significantly increased.

Fellow director Geoff Hulley expressed surprise there had been no surge in sales, which had passed 12,000, following the release of the new season's fixtures and Ken Cooke pointed out that as 1,100 had been given away free to children "only 11,400" had been paid for.

Cooke then said the club had fallen behind Sheffield United in commercial activities but Strafford said the overall conclusion was that there was an opportunity for greater commercial revenue to be generated. Although Grierson agreed, he said this would not be huge.

Chief executive Nick Parker said big changes were being made to improve facilities for fans and if this was not done "we would stagnate and drift backwards."

He mentioned the poor level of pie sales and beer and indicated changes would be made. One planned change involved scrapping an existing catering contract to bring sales in-house.

Strafford said Wednesday were trying to catch up with other clubs and he felt the club's bank, the Co-operative, were supportive to such moves.

Cooke said, although he applauded many of the changes, he believed the Owls were spending "considerable amounts of money without knowing the end effect."

Parker said the cost of removing the caterer was included in the current cash-flow projection but Grierson said the 250,000 payment was "a problem."

The chief executive said he would go back to the caterer and offer to spread the payments over three years – a deal that was agreed, though the Yorkshire Post has since learnt that Wednesday had difficulty finding the second due payment of around 70,000 and ultimately paid it late this summer.

Grierson then went on to outline his concerns about cash flow, highlighting the previous season's "unsuccessful ticket give-away approach" and a general need to be more cautious with cash.

Strafford said the catering changes "did not look like a risk to him."

The finance director then asked how "real" the prospect of investment was, with Cooke raising the same issue.

Strafford said that the involvement of USA-based Inner Circle Sports as brokers meant "we had now got the best team in the world behind this project and the question was now how good a deal would we get rather than what deal would we get."

Parker backed Strafford's stance and told Grierson the basic terms would be to bring in 20m up front and a further 20m once the club reached the Premier League.

Grierson expressed more concern about cash-flow if investment did not come in and asked Strafford if he was prepared to put money into the company if the need arose.

Strafford said it had never been his intention to put any personal money in and Grierson had not respected how much he had risked in terms of business reputation and time commitment for no personal reward.

Grierson asked what would happen if cash-flow does not stack up and, though Parker said costs would be cut and revenues increased, the finance director continued that he "was not convinced."

Strafford and Grierson then had a "disagreement" over previous discussions about the effects of increased spending with the chairman adamant the entire board knew that business development would hit the balance sheet.

Cash-flow headroom had not been breached and was now healthier than last year. He also insisted "we will not create a problem with the bank regarding the cash-flow."

Parker and Grierson agreed the entire business rests on its cash position, though Grierson added that he believed the budget to be "exceedingly optimistic."

A split also emerged over the position of former director Mick Wright, chairman of ELG Haniel Metals, who still had an outstanding loan of 600,000 in the club.

Cooke told the board it was his belief "an indication had

been given" that Wright would rejoin the board – a position disputed by Strafford. He said Grierson had "on an unprompted basis" called for Wright's return and cautioned such a move had to be properly thought through.

Hulley described Wright as an "ideal character" but Strafford said the move "would not be conducive" to the ongoing investment process and could send out the wrong signal.

Parker then said it had been agreed Wright could attend board meetings and receive all the information provided to directors but Grierson then interjected that this would make Wright a "shadow director", which, although not stated in the minutes, would carry responsibilities under company law.

Grierson said the board should meet with Wright to discuss his role but it was still his intention to propose he was co-opted.

Towards the end of the meeting, Strafford told the board a grant submission would be made for 2m to 3m to develop a proposed community centre under the Leppings Lane stand which would be part of Wednesday's bid to host World Cup matches in 2018.

August 3, 2009

ON the eve of the new season, the August 3 board meeting initially focused on the long-running attempts to bring investment to Hillsborough.

Chief executive Nick Parker said USA-based brokers Inner Circle Sports (ICS), appointed in May, had contacted 60 potential investors and were looking to narrow down the list to between 10 and 20 prime targets. Parker said 10 was a realistic number.

No names had so far been provided but chairman Lee Strafford said ICS did have "people who are genuinely interested in investing in English football clubs and he hoped that everything could be completed prior to Christmas."

Parker added he firmly believed this was a transaction which could be carried out quickly and Strafford said the final value of the investment could be anywhere between 20m and 60m "as ICS were now talking to the right people and being proactive."

The chief executive said ICS had met with the club's bank, the Co-operative, who were very positive and supportive at a high level. Strafford believed some of the potential investors may come over to watch games which Parker believed might be the "clincher as atmosphere at stadiums was ranked very highly."

Parker told the meeting the grant application (to the government's myplace fund) for 2.7m for a proposed community centre under the Leppings Lane stand had been unsuccessful because it was not up to the required standard.

The chief executive also told the board pressure was being exerted on Sheffield council for stadium development planning permission linked to the club's bid to host matches for the 2018 World Cup.

The meeting then returned to the status of former director Mick Wright, who had been present throughout the meeting, and whether he would be co-opted onto the board.

Parker stated he had the same status as all those present other than documentation would not be lodged with Companies House. But changing the board structure now might upset the investment process as it would raise too many short-term questions.

Wright said he did not see his appointment as negative, he had substantial funds invested (an outstanding 600,000 loan) and he had been asked to represent the interests of former director Keith Addy.

He would further cement the bond between the existing major shareholders.

He said he had great international experience and fronted a company with a turnover in excess of 2bn.

Ken Cooke supported Wright but Strafford said it was critical not to upset the investment process and, whether it was justified or not, a significant proportion of fans felt negative towards the old board.

Parker said Wright joining the board could be viewed as an attempt to shore up the board structure to prevent an investor coming in.

At which point, Wright agreed to accept the status quo pending the outcome of the ICS process.

August 26, 2009

THE soap opera surrounding Wednesday's attempts to secure investment continued at the August 26 board meeting with an update on the progress of USA-based brokers Inner Circle Sports (ICS).

Chief executive Nick Parker said ICS currently had 11 interested parties on its books, including what was described as "an Australian connection."

There were another 14 parties with which ICS had yet to conclude details and a further 14 still to be contacted. Thirty-five more had expressed no interest but ICS were still attempting to widen the scope.

Parker said that later that day he and chairman Lee Strafford were due to have a conference call with Al Gordon, an investment banker and owner of Nashville Sounds baseball team. Parker said Gordon had previously come close to acquiring an interest in three other major English football clubs.

Parker said another American contact was now being pursued "who has access to a group in Miami that were looking to buy Everton but are interested in English football in general."

Manager Brian Laws then joined the meeting and had the immediate difficulty of explaining the previous night's defeat to Port Vale in the League Cup. Wednesday had fielded a weakened team and had Francis Jeffers sent off for a head-butt.

Laws apologised and accepted there was a need to make up the financial shortfall caused.

Finance director Bob Grierson asked Laws if the lesson learned was that "we cannot change seven players from one game to the next."

Laws said, with hindsight, there had maybe been two changes too many but the team should still have been good enough. The manager reported enquiries from Carlisle United and an unnamed Spanish club in Jeffers, who had been transfer-listed.

With an apparent eye to generating income, Grierson asked if there was any interest from Everton in promising defender Mark Beevers and though Laws replied nothing as yet, the board all felt it would make sense to begin to engineer some positive interest.

After Laws left the meeting, the board discussed plans to sell season tickets for the following season early with Grierson stating a need to "return to our culture of prudence on cost control."

He said it was the first season for some time that not all the executive boxes had been sold prior to start of season.

The issue of Dave Allen's outstanding loans in the club was raised by Grierson and Parker said the club's bank, the Co-operative, had informed Allen it was content with the current arrangement with all those who had unpaid loans and "would not deal on an individual basis."

Parker also said that publicity surrounding a proposed 22m ground redevelopment "centred around PR for the 2018 World Cup bid and was designed to persuade the council to put in the first tranche of funding".