Owls in Crisis: Part three: How a bitter feud between Strafford and Grierson left Wednesday board 'broken'

Yet despite what was to come – which included mention of interest from a Bahraini sheikh – the March 25 meeting actually began in far more humdrum fashion with a discussion about potential cost-cutting followed by manager Alan Irvine joining proceedings

A short discussion with Irvine included his hopes of signing a loan player before the deadline, which was that day, and which ultimately came to nothing. But the calm during Irvine's presence disappeared when he left the meeting and the discussion turned to the financial position.

Grierson and chairman Lee Strafford clashed over whether Strafford would put money into the club. Grierson said he believed Strafford had said he would not but the chairman disputed this and said he would but not "until the actual shortfall had been identified and all other options explored". Grierson then asked for support from other directors and when none was forthcoming, the minutes record he then withdrew the point.

Chief executive Nick Parker said cash-flow projections indicated the club had enough money to get through to June 25 but there were "risk areas" surrounding a VAT payment, the rate of season-ticket sales and whether the last match of the season against Crystal Palace was chosen for live TV coverage.

Bank interest charges of 500,000 had been moved back to September and the club "is holding back on purchase ledger payments at the moment".

Later, the issue of Wednesday's sponsorship deal with Sheffield Children's Hospital was raised.

The two-year deal, which had been driven by Strafford, involved the hospital logo going on the team's shirt for free which had dramatically increased shirt sales but denied the opportunity for commercial sponsorship.

But Grierson and Mick Wright, a former director who was continuing to attend board meetings, said "we should not be giving it away after this sponsorship has expired".

When the saga of the investment search came up, it was reported the club was speaking to a member of the Irish-based Drumaville consortium, who had previously invested in Sunderland, but there was difficulty contacting Malaysian businessman Tony Fernandez.

Likewise, nothing had been heard from former West Ham chairman Eggert Magnusson or from a Bahraini sheikh who had also arrived on the seemingly never-ending conveyor belt of would-be Owls investors.

There was also mention of two more American companies plus an Israeli group who would only consider investment when it was clear what division Wednesday would be in next season.

Parker said he was still "fairly confident" of Club 9 Sports doing a deal "as this group are spending money on lawyers etc".

Although the previous board meeting had heard the proposed investment had dipped to $5m up front with $2m next season, Grierson said it was crucial they had at least 10m to commit.

When the meeting moved to its last item of 'any other business' the fireworks really began.

After Grierson objected to Strafford's use of online postings on fans' forums in which he said "he had been undermined by the old guard", the finance director read a statement to the board. The contents were so damning of Strafford's performance as chairman that one of them would have to go. Ultimately, it was Strafford but not before he had landed some heavy retaliatory blows on his way out.

Grieson Statement

Finance director Bob Grierson's statement to the board about Lee Strafford began with him refuting suggestions he had undermined the chairman and said Strafford had "totally disregarded" advice he had been given. It continued:

"You have lied to the fans and us and are still doing so. You lied when you were co-opted to the board saying you had investors who would only invest if you were running the club and that the investment would be concluded by 31 March, 2009. You said to the board you would do nothing that would affect the Profit and Loss Account.

"You have consistently said you had unearthed new revenue streams that was (sic) funding the increased player budget.

"The accounts show that far from finding new revenue streams you have destroyed existing profitable cost centres. The accounts show we now have reduced profits or are making losses at all cost centres and have increased Ground and Administration costs. This is without taking account of the 747,000 of exceptional costs.

"You have been pleading with fans to renew season tickets in December saying it was in order to enable you to ascertain the player budget early for next season. The facts are that the money was needed desperately to shore up the cash-flow to prevent the club from having to request the bank to appoint an administrator.

"With regard to mismanagement I refute this charge totally.

"You were co-opted onto the board when the accounts and cash-flow showed we had headroom at the bank in December, 2008 of 2.5m and would have 1m headroom in May, 2009.

"By the 21 December, 2009 all this surplus headroom together with the advanced season-ticket money, the corporate hospitality and advertising income had been spent and we were unable to pay the wages.

"To try to resolve the situation we had to forward sell 1.5m of the 2010-11 season tickets, which will not even get us through to 31 May, 2010 and have had to request further bank support.

"Because you didn't understand the match-day ticket pricing structure, you reduced prices by 2 that has cost the club tens of thousands of pounds with little or no increase in attendance.

"You turned down 100,000 in shirt sponsorship deciding to give the sponsorship to the Children's Hospital for nothing. You maintained we would earn more income from Platinum sponsors and shirt sales. To date we have one Platinum sponsor, a close friend of yours who has paid 25,000.

"Whilst we have sold substantially more shirts it is highly unlikely we will achieve the same level of profitability as 2009 despite having two new kits to launch.

"We also look like being faced with a 40,000 write-off of obsolete stock because of bringing forward the launch of the new away kit by five months.

"You decided to change shirt supplier, which could cost us 300,000 in breach of contract. I accept that we have received 300,000 from (new supplier) Puma but have had to contract to them for six years which is a heavy price to pay.

"You decided to bring the concourse catering in house costing the club 250,000 for breach of contract. The concourse catering produced a profit in the form of a license fee of 130,000. To date the catering department including concourse catering has only produced a profit of 36,000."

Grierson went on to state match-day commercial income would show a reduced profit for the first time ever, that two income-generating schemes had to be abandoned because they failed, key staff had left because of Strafford's "wild marketing policy and schemes" and that the chairman had taken on staff from his former internet company PlusNet without going through proper recruitment procedures.

He concluded: "I could go on but to talk about the old guard and mismanagement, I would suggest, is a little hypocritical.

"I would suggest you examine your own financial performance over the last 12 months."

Strafford's response.

After Grierson read out his statement, the minutes record Strafford stating that it was "just a completely unfair and baseless character assassination and asked (Grierson) what he is trying to achieve".

Strafford said he had not lied to the board about why he felt needed to be co-opted, that it was minuted that he felt any investors would need to see independent people on the board – separate from the vendors – for any deal to go ahead.

He had not misled fans about why season tickets had gone on sale earlier as this was always planned and was "actioned before the cash-flow issues became apparent".

Strafford then asked Grierson why he had signed off the budget and when the finance director said he had not, the chairman stated it was minuted everyone had signed it off or it would not have been approved.

He also wanted to know why Grierson "chose to say nothing of the circa 1.5m per year hole that (Grierson) must have been aware of but he and (chief executive) Nick Parker were not".

Grierson said "that he chose not to say anything because if we had hit the revenue numbers there would have been no problem and that if Lee Strafford and Nick Parker were such smart business people why had we not figured it out".

Strafford responded that he and Parker "had had no visibility as to the true financial model" which Grierson rejected.

The minutes record there was silence when Grierson asked if his statement would be accepted into the minutes before Strafford said if Grierson continued down this path there would be a huge issue between them and he would go down a path of identifying that Grierson had deliberately sabotaged everything by withholding the information about the true financial model.

The minutes record Grierson then left the meeting. Director Ken Cooke asked where do we go from here to which Strafford responded "that we can go no further, that the board meeting had been broken and that the board itself was broken".

Strafford later insisted on his own written statement being inserted into the minutes to expand on his response to the allegations made by Grierson. The statement ran to 19 pages and rebutted every allegation the finance director had made.

He accused Grierson of misrepresenting the club's budgetary starting point as being cash neutral when the club actually needed 1.5m to stand still. As a consequence, an optimistic set of revenue assumptions were established on top of this.

In any case, Strafford said he had adopted a flexible approach to costs and was prepared to make cuts or sell players if necessary.

Selling season tickets early was to make clear what budget was available for players to enable better squad planning than in previous years.

Strafford said he had been "amazed" at the size of the cash shortfall in January as the projected shortfall in revenue did not account for it.

He said he had been bemused by Grierson's threat to resign because of what he claimed was an unprecedented cash crisis when during the finance director's tenure "the club had gone from a debt-free position to over 30m in unserviceable debt and had also had to call on director loans and personal guarantees in the recent past."

Strafford said he had "no doubt whatsoever that it will be shown that the net shortfall in cash correlates more to the missing 1.5m... than any mismanagement by myself and Nick Parker.

"It is quite clear that (Grierson's) actions have been driven by at best a lack of transparency and at worst a clear attempt to remove myself from the club in an unwarranted reaction to what he perceived as me attacking him."

The chairman then went on to provide an extensive list of where the club had been failing 18 months previously, before he joined the board, which included what he described as a completely unrealistic valuation of the club which no credible investors would engage with.

He also pointed out that contrary to Grierson's claim, attendances had increased significantly due to lower prices and tickets being given away in the previous season.

He defended the change in kit supplier and sponsorship deal with Sheffield Children's Hospital which had improved quality and dramatically improved the club's PR.

Drawing to a conclusion, Strafford stated that over the last 12 months:

Shirt sales had gone from 8,108 to 16,638.

Average attendances from 19,168 to 23,604.

Retail sales from 848,177 to 1,178,443.

Average spend per fan at games from 1.10 a head to 1.32.

Commercial revenue from 4,246,424 to 5,433,882.

The increases had required small and controlled investment and were needed to reverse the systematic decline and under-investment in the club. He insisted if the 1.5m starting deficit had been known, it would have impacted on the budget process and investment prioritisation.

May 2010

THE season ended in relegation, a desperate blow for a club drowning in debt and fighting for survival.

A day after the Owls were relegated the fragile, but still intact, board met to discuss plans for the League One campaign before revisiting the investment saga which this time intriguingly featured the former Sheffield United manager Bryan Robson and Premier League chairman Sir Dave Richards.

There was also the matter of a projected 4m hole in the accounts to fill.

As manager Alan Irvine discussed the future of the squad, chairman Lee Strafford said an agent had already phoned him that morning to say there was a lot of interest in goalkeeper Lee Grant with two strong contenders in particular.

Grant eventually signed for Burnley on the eve of the new season for a fee of between 750,000 and 1m.

Irvine told the board his intention was to match Norwich City's approach to relegation to League One which had seen the East Anglian team assemble a team good enough for the Championship and promoted as champions at the first attempt.

Irvine said he was aware of the financial situation but was not keen on loan players.

He would have no hesitation in signing Neil Mellor from Preston – which he subsequently did – and expected a bid from Barnsley for defender Mark Beevers but said he preferred not to lose him or fellow defender Tommy Spurr.

Finance director Bob Grierson said the club would want to sell striker Marcus Tudgay as well as Grant from a financial view.

Director Ken Cooke asked about the financial situation with chief executive Nick Parker responding there was a 4m hole to fill over the course of the coming season based on conservative projections.

Grierson said the club was currently totally dependent on season-ticket sales and Parker added that 1m would be needed from player sales by August.

The minutes also record that a letter was being drafted that day regarding the VAT situation though they do not clarify what for. Wednesday were served with a winding-up petition for unpaid tax the following month.

Former director Mick Wright, who was continuing to attend meetings by invitation from the board, commented that "supporters are going to react very badly that we cannot meet the bill for HMRC (Her Majesty's Revenue and Customs)".

As the meeting drew to a close, Parker updated the investment situation which included another array of would-be suitors.

Although Club 9 Sports were now assumed to be unable to put a deal together, former West Ham chairman Eggert Magnusson "appears to be getting active" and Parker planned to meet him that week.

There was interest from an Indian group who were due to meet the club's brokers, Inner Circle Sports, in New York, a London property developer was also interested along with a Thai venture capital fund which had been accessed through connections with Premier League chairman Sir Dave Richards and former Sheffield United manager and England captain Bryan Robson.