Owls financial position deteriorates and Laws pays ultimate price for poor results

ONE of English football's most senior figures became involved with attempts to secure investment to Hillsborough, the minutes to the September 30 board meeting reveal.

Wednesday chief executive Nick Parker is recorded as having held a meeting with Sir Dave Richards, current Premier League chairman and former Owls chairman, "and a gentleman called John Sidebottom having a view to opening up the current investment process along with community projects and stadium development." The minutes continued: "Nick Parker went on to state that (Dave Richards) was genuinely surprised by the company's proposed investment plan, he also has contacts in the Middle East and is a strong voice in regard to money coming into football from overseas."

It is understood Parker arranged the meeting.

Parker said he had also met Paul Ross, a director of a small locally-based investment company, "who apparently has contacts in Oman". Ross said he could get 25m of investment from the Omanis but would want 10 per cent of the money raised. Parker told him the fee arrangement would have to be agreed with the investors, not the club. The chief executive also said there was now interest from a London-based French hedge fund with whom there was to be a meeting the next day.

This group, who already had ownership of an unnamed French club, were "apparently very interested" and were looking to invest between 4m and 5m.

Progress was slow with a previously mentioned Australian consortium and chairman Lee Strafford referred to interest from the Kraft family in the USA, which owns the New England Patriots American football team, which was dependent on whether the Sheffield Wednesday brand sat well with their current portfolio.

Strafford thought the club's PR over the previous five years would have a negative impact but Parker felt they just wanted a Premier League club.

The minutes also recorded more evidence of the growing rift between Strafford and finance director Bob Grierson, who bluntly stated his "belief that in reality there was no group interested in investment and that we were no further forward since last Christmas despite the best efforts of Inner Circle Sports".

Strafford and Parker agreed there was no firm commitment but felt ICS, the USA-based brokers brought in to secure investment, had done better than previous organisations.

Parker said he "was at a loss to understand why investment had not come into Hillsborough bearing in mind the success of other clubs in attracting funding".

Finances were also reported to be tight with Strafford recorded as saying that season tickets for the following season were due to go on sale next month under a direct debit scheme and 1,000 tickets sold would solve the short-term cash problem. But he added that match-day tickets would need to be more expensive to persuade people to buy in advance.

However, it was hard to drive demand with so much spare ground capacity and the club might even have to close the Grandstand next season.

Discussion about the team's performance revealed a close focus on player statistics with manager Brian Laws referring to key performance indicators and chairman Lee Strafford saying a statistician was tracking the figures recorded.

The board was told interest in transfer-listed striker Francis Jeffers from a Spanish club had melted away but "pressure was being put on the player's agent to secure movement".

November 4 2009

SIGNS of the growing financial crisis emerged in November, along with renewed attempts to secure investment – including another reference to a meeting with Premier League chairman Sir Dave Richards.

Chief executive Nick Parker told the board he had met Richards recently "who had explained that potential investors from the Middle East are keen to visit but as yet cannot schedule a date".

Richards has declined to comment publicly but it is understood he did not see his contacts with Wednesday as part of an active attempt on his part to secure investment for the club.

Parker said he had also spoken again with Al Gordon, an investment banker and owner of Nashville Sounds baseball team, and his associate Dan Zwirn, an American financier, who were keen on securing a deal. "We need to get them to visit after their aborted plans last week but it is extremely encouraging they are keen on this."

An Italian group of investors had also emerged with the minutes recording some of the group as former "top Italian league players who are now based in Switzerland."

Directors were also told that representatives of Chicago-based Club 9 Sports, who were to make headlines when their bid emerged two months later, would be coming to the next match.

Parker then warned cash-flow was extremely tight, gates were low and there was a shortfall on corporate hospitality income.

The club planned to borrow money from finance houses called Zebra and Octopus advanced against season-ticket sales for the next season.

And for a second time at recent board meetings, it emerged that finance director Bob Grierson had a different starting point when it came to evaluating the club's finances to that understood by Parker and chairman Lee Strafford.

After Grierson commented on the budget being on target last year but the club was now short of cash, Parker said that "the management accounts did not tie in with the budget that had been presented to the club's bank and are not what (investment brokers) Inner Circle Sports are working from".

Earlier, manager Brian Laws had talked the board through recent displays with the minutes recording a decision needed to be made on defender Richard Wood, whose value was declining as his contract ran out at the end of the season.

A new contract had been offered but the player wanted 8,000 per week which would be the highest wages at the club.

During the meeting, Parker received a call from Ipswich but Wood eventually went to Coventry two weeks later, with Wednesday understood to have initially received a 200,000 loan fee, a further 100,000 when the transfer became permanent in January, plus potential add-ons.

Laws also referred to key performance indicators being used to monitor player performance and said if trends continued the Owls were going to end up a mid-table team with a probability of scoring 70 goals. But he added the team was also conceding too many.

Money needed in summer or 'we will not be able to survive'

November 25 2009

THE club's annual meeting passed off peacefully on November 24 but the next day war broke out in the boardroom as the strain of increasing financial pressure took its toll.

Shortly after the start of the meeting, finance director Bob Grierson declared the club was "weeks away from insolvency" and he was considering resignation.

During the initial discussions on finance, chief executive Nick Parker revealed "we have ceased paying some creditors for the moment" as the first hard indications of what would become a very real threat of administration clearly emerged.

Grierson said "all directors should consider their personal responsibilities as they are liable for their actions".

Parker then stated "that he does not believe we are trading insolvently" and that the Co-operative Bank had assured the club it would receive money from a finance house, advanced against early season-ticket sales, during the next month.

The finance director said he felt "the budget was appropriating next year's cash and plugging this year's hole". But chairman Lee Strafford responded that bringing forward season ticket sales was "a one-time shift and by next year the direct debit scheme will be run in-house so funds would be collected for the related season".

Grierson asked if Strafford and Parker were prepared to put money into the club. Strafford responded that the whole board "had agreed to set an aggressive budget and also that a player sale would be the fall-back plan which is minuted".

The chairman was then asked by Grierson if Strafford and Parker "were running the club into administration in order to create a pre-pack opportunity".

Strafford responded that the tone of the last few board meetings was that "certain directors" believed this was the case which was "very unhealthy".

Grierson then expressed concern over the "huge" capital expenditure to date, which had created "no upside", and that the player budget had not been cut from 6.5m when season-ticket sales fell short.

Parker responded that the overall cost of the capital spend, including terminating a catering contract and acquiring a new ticketing system, was less than 500,000.

Grierson said if no money comes in June and July "we will not be able to survive". He said 2m had to be found very quickly though Parker said "the number was more like 1.5m".

Grierson questioned the signings of manager Brian Laws, pictured left, "as three (unnamed) players signed by him are all on high wages and had delivered nothing".

He was against changing the manager at this point but this could indeed become a possibility. With the Owls sliding towards the bottom of the league, Laws was ultimately sacked three weeks later.

Amid the recriminations and fears over finance, the prospect of investment took a back seat but towards the end of the meeting Parker told the board he was "80 per cent certain of investment" and had received a letter of intent document the previous night. The proposal was for a deal worth 20m, including a bank write-off of around 10m, with the investors wanting to finalise by December 11. Although not named, the investors were Chicago-based Club 9 Sports.

December 2009

THE crisis in the boardroom had not quite reached a critical level by December – but the team's performance on the pitch had.

After a calamitous run of results through the autumn, the directors took the decision to sack manager Brian Laws after a 3-0 defeat at home to Leicester left the Owls in the Championship's bottom three.

There was no full board meeting during the month but directors did gather to discuss Laws's replacement. A briefing drawn up for the board provided an insight into how Wednesday approached the recruitment process – and confirmation that Alan Shearer had been interested in the job.

The former Newcastle and England star's interest was contingent on investment coming into the club, which effectively ruled him out at that time, but in all Wednesday had 28 expressions of interest in the vacancy.

They included a number of high-profile names, including Northern Ireland manager Nigel Worthington, former Arsenal and England international Tony Adams and former Scotland manager George Burley.

The process had intended to begin a series of interviews on January 11 but, in the event, Alan Irvine, to the surprise of many, was sacked by Preston North End and Wednesday moved quickly to appoint him.

The briefing provided a run-through of problems during Laws's reign which had contributed to his departure.

These included the difficulty club captain Darren Purse, signed by Laws in the summer, had in settling – though he went on to have a much improved second half of the season.

The departure of defender Richard Wood had also had an effect when the team had been struggling defensively and a decision to adopt a more attacking style had backfired.

The players' professionalism was also called into question and it was suggested there were splits in the dressing room. ProZone, a statistical database on players' performances the club had acquired earlier in the year, was also not being fully utilised.

The briefing said Laws's performance had been under review since the summer and was put under close scrutiny from the 4-1 defeat at Watford, on October 23, onwards. He had then been told he needed to quickly reverse the team's fortunes after a 4-0 home loss to West Brom a month later. After a further three defeats, he left.

Caretaker manager Sean McAuley was highly praised in the briefing with the possibility raised that he could remain in post until the end of the season.

The briefing acknowledged the selection of a manager would be affected by whether the club could secure investment but added that a better overall management structure had to be put in place. Without investment, the new manager "would be working with one of the most constrained budgets in the Championship".

A list of key attributes in a new manager included strong leadership, a winning mentality, an ability to carry the mental burden of managing Sheffield Wednesday and a strong recruitment network.January 26 2010

A NEW Year had brought improved fortunes on the pitch but off it there was more rancour in the boardroom, a second resignation threat and talk of imminent administration.

The appointment of Alan Irvine had delivered a string of victories with the Owls pulling away from the relegation zone by the time the board met on January 26.

But long-awaited investment had still not materialised and amid rising tension over increasing debt, finance director Bob Grierson threatened to resign for a second time.

The meeting initially focused on investment with chief executive Nick Parker saying the club's bank, the Co-operative, and would-be new owners, Chicago-based Club 9 Sports, were in dialogue and a phone call due that day was expected to deliver agreement with the bank.

The Co-operative was prepared to write off virtually half of the 25m it was owed but Parker also revealed there was "one question the investors are dubious about which is retaining Championship status".

But he said they were looking to provide initial investment on February 14 with a view to providing the rest if Wednesday avoided relegation.

However, former director Mick Wright, who had been invited to attend meetings but was not formally co-opted onto the board, believed this was a delaying tactic.

Parker said the investors had only discussed the deal with the bank for the first time last week and added that USA-based brokers Inner Circle Sports (ICS) were still trying to identify other investors. He mentioned continuing interest from prospective Italian investors, who had first been mentioned at November 4's board meeting, and that ICS were still tracking down a further investor with a property background plus four other possible leads.

Moving on to the growing financial crisis, Parker said the club still needed to sell a player but the only interest had been from Nottingham Forest, who had offered 1m plus add-ons if they were promoted for defender Tommy Spurr.

Chairman Lee Strafford, Grierson and manager Alan Irvine had all been consulted and felt the offer was "derisory".

But Grierson said there was still a serious problem with cash-flow and if nothing happens in the near future, the club will not exist by March 31 based on the current projections.

Wright, who has an outstanding loan of 600,000 in the club, suggested when similar problems had emerged before, there had been an option for directors to put money in or find other directors who could.

Grierson asked whether Parker or Strafford would be prepared to put money in and both declined. Strafford said one or two people had expressed an interest in the past but they had not materialised and this particular avenue was dead.

The disputed issue of the club's budget starting point reared its head again with Parker pointing out "that the club has been cash negative not just this year but in previous years and it would have been better if that had been made clear before now".

He said that previously the club had had to sell players or receive external funding and "if cash injections were taken out of the scenario the club was not cash neutral and did need a cash injection each year".

Parker and Grierson then disagreed over the wage bill with Parker stating the only increase had been on players while Grierson asserted administrative costs had gone up.

The finance director then said that given the current situation and time he had given to the club he is considering whether to resign in the immediate future.

Parker said the plan was still to sell a player, with Grierson asking if anything was being done to activate a sale.

Wright then suggested former manager Brian Laws, now at Burnley, might be interested in goalkeeper Lee Grant. Parker volunteered to go ahead and contact him.

With tensions running high, Grierson asked if the administrators were being called in immediately or if the investment process would rescue the situation. He added the situation was so serious that something drastic had to be done.

Wright asked Grierson whether there was any room for discussion with the bank who said that "if we go beyond the line they would want out of any deal".

Parker said the club needed 1.5m each year to stand still and that banks will not lend on transfer sales.

Strafford then questioned whether the bank would really allow the club to go into administration as it would want to protect its financial position and the bank was also happy with changes that had been made over the last year.

Grierson said he did not know but the club had to get back to a viable footing to maintain the bank's support. He then suggested appointing an agent who could sell anyone in the squad.

Geoff Hulley suggested an emergency board meeting to be held as soon as possible and for Parker to keep everyone appraised of any player situation. The minutes record: "The story for the media is that we need to free up some money to allow the manager to negotiate the market".

Wright said he was concerned that the club had stated at its annual meeting that it was generating money. Strafford said this referred to the previous year not current year.

American investment not looking good as bank seeks assurances and directors refuse to inject funds

February 24 2010

HOPES of American investment were beginning to dissolve by the time of the February board meeting and with alternatives desperately sought, directors were told of interest from former West Ham chairman Eggert Magnusson

Chief executive Nick Parker began by saying the "news from USA is not good". Club 9 Sports could now only provide $5m up front and $2m in the summer – as opposed to original hopes of a deal worth 20m in total – with "uncertainty of the club's league position resulting in this project being considered high risk at this point".

He then said Magnusson attended the recent match against Ipswich and is interested. However, Parker said he had "answered questions mainly about the banking arrangement but Magnusson needs to be sure and to get the money in place".

Amid the seemingly never ending line of potential investors, it was reported that USA-based brokers Inner Circle Sports (ICS) had spoken to Malaysian businessman Tony Fernandez but that "he is on holiday at present".

ICS had also contacted members of the Drummaville Consortium who had previously bought into Sunderland.

There was also mention of a group from Bangladesh from which "no news had been forthcoming" while chairman Lee Strafford said the former head of the Stock Exchange, Mike Feltham, was visiting the next day and he also had some leads.

When the discussion moved on to finance, the minutes recorded Strafford and Parker had met an official from the Co-operative Bank the previous day who had asked for a proposal going forward.

The short-term cash issue was discussed, with the bank told "that given the current economic and football landscape that there is potential for investment not being forthcoming in the next two to three years".

The bank would be willing to move its due interest payment (of 500,000) as long as the club could push back a VAT payment which was due and fill a short term "hole" of 250,000.

Strafford told the bank any shortfall could be found within the boardroom or from outside sources.

Finance director Bob Grierson asked if Strafford was asking the board for a contribution – Strafford said yes – but Grierson said he was not prepared to do this. Other directors Geoff Hulley and Ken Cooke felt it was not sensible to increase loans at all. It then emerged that Parker had investigated Football League rules on unpaid tax and he confirmed that the rule in question, which imposes a transfer embargo, only applied to PAYE, not VAT.

The minutes said Parker "is now checking whether we can defer paying". Grierson said failure to pay would incur penalties and it was agreed a payment plan to avoid penalties would be developed.

Cooke, Hulley and Parker all agreed with Grierson's assertion that "there must not be any discussions with third parties which would alert them to the desperation of the financial situation".

Ultimately, neither the chairman nor any other directors put money into the club by the end of the season and it is understood none have done so since.