Five years on, how far have we come? (Part 1 of 2)

“Derby under Nigel Clough: 18th, 14th, 19th, 12th.  Currently 13th #specialone” – Mark Douglas, chief sports writer at The Journal

It was an off-hand tweet from a North East-based journalist who admitted, when I challenged him on it, that he didn’t really know the situation at Derby, but he has a point.  On the face of it, we are going nowhere, heartened last season by (just about) not finishing in the bottom half of the Championship for the first time in four seasons since relegation from the Premier League.

How much longer can we tolerate mid-table mediocrity, before a tipping point is reached and fans – either by voting with their feet, or by turning up the heat inside Pride Park – start to call for change?

Most fans understood that there were reasons beyond the manager’s control for his struggles in the first couple of seasons, but that we haven’t looked like promotion candidates for any sustained period since 2006/7 remains a source of frustration.   Even the staunchest of Clough loyalists needs to see continuing league progress to justify their faith in the manager’s ability.  Whether we will improve upon last season’s 12th this time round remains to be seen.

Yes, Clough has presided over swingeing cuts to the wagebill (maybe George Osborne should give him a call) and yes, he was tasked with getting rid of unsellable shithouses like Claude Davis, but the transitional period is well and truly over.  That stuff is historical now.  It’s time to look forwards.

But first, a quick look back.  I did a graph a while ago which charts Derby’s league positions for each season since just before the First World War (maybe I should get out more): –

DCFC league positions from 1912 (on the left) to 2012. Our current positions are close to our historical lowest point

The graph shows that the last few seasons are among our lowest league finishes in the past 100 years.  Other than the brief dip into the third division in the early 1980s – the club’s historical nadir – this is the worst we have been since the pre-Brian Clough era.

And with certain clubs busy debt-financing their respective pushes towards the Promised Land (isn’t that what PL stands for?), there seems to be little hope of the Rams suddenly shaking off their torpor and fighting their way back into the top tier any time soon.

However, maybe there is some hope in the the much-vaunted introduction of Financial Fair Play.  FFP is supposed to bring a degree of sanity to finances in the Football League and in theory, levelling the playing field should give us a natural advantage over most clubs, given that Derby are still one of the biggest clubs in England when it comes to attendances.

FFP is designed to favour clubs who generate more revenue and to deter the sort of ‘casino’ owners who are ready to make loan capital available for a crack at promotion.  Our ex-CEO Tom Glick was one of the key men behind its adoption by the Football League and it was something he constantly referenced when justifying the board’s relatively parsimonious approach to the transfer market.

But despite all the talk of balancing the books and financial responsibility, Derby still lost £8m in 2011/2.  I tweeted the football business journalist Marc Webber to ask what on earth could be done when a club who have made a policy of working towards balancing the books are left losing so much money, while still only treading water in mid-table.  His reply: “hopefully by FL [Football League] doing better sponsor[ship] deals & feeding that money back down.  But I don’t think that will happen.”

As it stands, you’re either in the Premier League, receiving huge cheques for TV rights, or you’re nowhere – and that is unlikely to change.

Webber went on to point out that Derby are “one of the more proactive [clubs] in trying to find new revenues with big screen & dynamic ticketing”, but tinkering around with such schemes to generate a couple of extra quid here and there clearly isn’t going to bridge the gap caused by paying the players high sums – or raise enough money to pay the sort of players who would get us promoted in short order.  Even a stadium naming-rights deal, the possibility of which was raised at the recent Fans Forum by Sam Rush, wouldn’t generate anything like enough money for us to balance the books, even for a season – Rush suggested that this would likely be a “six-figure deal”, so no more than would be required to buy one decent Championship player.

Glick said he “had a notion” that a club could be run sustainably while challenging at the top of the league, but unless FFP shakes things up drastically, it seems that the vast majority of Championship clubs will continue to spend much more than they earn for the foreseeable future.

To pick two examples, Brighton and Bristol City have both come out and said that they will struggle to meet the criteria of FFP – and there’s no way on this earth that the likes of Nottingham Forest or Leicester will (hence the giant and, in Forest’s case, potentially destructive pressure from their owners to get promoted this year).

Meanwhile, Cardiff City recently announced £13.6m losses for 2011/12 – a season when they enjoyed the financial windfall of reaching the league cup final.  This came on top of losses of £11.8m in the previous financial year.  With their total debts likely to pass £100m by the time their next results are announced, it really is a case of promotion or bust for the Redbirds.

Elsewhere, Birmingham City are in financial distress and haven’t even released accounts for the last two years, while Bolton Wanderers, backed by a Nigel Doughty-esque local boy done good, have declared debts of well over £100m.  To name but two clubs who tried to compete in the Premier League and came down in trouble, for one reason or another.  I suspect it’s significant that at the time of writing, 13th-placed Derby are still above all three of the clubs who were relegated to the Championship last season, despite those clubs being in receipt of hefty parachute payments and carrying, on paper, far superior squads.

When Glick announced our £7.5m losses in 2010/11, he confirmed that we would lose a similar amount in the next reporting year.  This year, however, there was no word at all on what we can expect to see in the 2012/3 figures.  In the 2011/2 accounts, the club state that there will be another loss ‘in line with the budgeted target’, but they do not reveal what this target is.  The club have decided to do no press inteviews at all on the subject, saying that this is because new chief exec Sam Rush wasn’t in post during the period covered by the figures.

If losses for 2012/3 are similar to those of the previous two seasons, this would take the club’s total debts to over £40m, mostly owed to GSE.  Rush’s line on the situation was this : –

“The simple truth is that somebody has to cover our working capital needs, as well as make continued investments in our squad and wider infrastructure.  The ownership group’s strength offers the club that much-needed financial stability.”

No more talk of breaking even, or self-sustaining – GSE are going to have to keep lending the club money to keep it going and competing by financing deals for new players.  Indeed, after Glick had told supporters to expect Derby to “trade neutral” last summer, the Rams suddenly announced the signing of Conor Sammon for £1.2m, just before the end of the August transfer window.

Read on in Part 2…

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