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Pay peanuts get monkeys

6 years ago

It is some time since I wrote the piece ‘Blood on the Carpet’ for the Mag, so as another dismal season comes to a close and the sticker on the back of my car fades. The one on the back window is peeling off in sympathy. A sign of cost cutting as I couldn’t get the ones I wanted from the club and the new ones don’t last. I wonder who cheapened even the stickers within the club so that we buy more of them.

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I thought I would have a look at the business model that is being religiously adhered to by our once great old club.

Having run an engineering company for the last 20 years I have been dismayed like many as to the running of Newcastle United and some of the curious decisions being made, not only the football variety as these would take far too long to detail, and they have been well discussed on this website and others. It is more the business model that serves the interests of the club in order to carry out its on-field activities.

Going back to the early days of when Chris Mort was chairman, there was a statement by the club that their figures to grow Newcastle United was based upon 40,000 fans coming through the turnstiles on each home game. I will return to this figure later on as it does appear to be something that is still relevant to the senior management of NUFC in light of recent events.

The next is that they would buy the cheapest young talent and only those with a sell on value, the days of older players and marquee signings were over. The club were going to in effect grow their own players with emphasis being placed on youth and the academy, with youngsters being brought in from all over the globe to be fed into the system and eventually the first team.

Effectively Newcastle United would be run as a business with strict business lines to be followed. It was said that the club would be self-sufficient, however the owner would help fund the club to the sum of £XX million each year. At no time was any reference made to what the product on the pitch would be, so maybe we shouldn’t be surprised at what it actually is at this moment in time.

Where does this vision of the future for Newcastle fall down, well almost at the start. With the relegation season of 2009 it was stated by the club that the owner had had to put £28 million into the club as a result of relegation.

If as they had previously said they had worked all the figures out on the 40k then this should not have been necessary, as they had the parachute payment from the Premier League, they also offloaded a number of high profile players who didn’t want to be at the club, saving even more in cash flow recruiting in lower paying players to fill the gaps.

The club then promoted the unfortunate Chris Hughton to manager, who incidentally covered himself and the squad in glory by achieving promotion at the first attempt.

The changes in savings here and the fact that the club averaged 44k at each home match should have seen the club manage without needing to have an injection of cash from the owner, even in the second tier of English football the figures here do not add up, as the injected cash was held against the club as an interest free loan.

On promotion the Club management effectively started using the business model that they are using today. Relying heavily on Graham Carr’s scouting ability and their own hard ball attitude to negotiating, here too there is a problem in that they then said that the club would not buy players on the ‘never never’ with the fees being paid over the life of the player’s contract, it would only pay cash for players at the time of the transfer.

This flies in the face of most companies, let alone football clubs, if we consider rightly that a player is a capital asset it is not unreasonable to provision this over a number of years, all the football clubs do it and so the club would then break with its own way of operation and introduce this method out of sync with the rest of football. This also has a knock-on effect in limiting the players that can be bought as the cash required needs to be there, so that the amount the club can bid for players is reduced.

The policy of selling on players for profit is in some ways commendable; however it is seriously flawed from a number of angles. If the club are now saying by their actions that no fresh injection of cash to buy players, then you are left with the money generated of players sales and what is generated as profit by the club.

If it is player sales, then as seen with the transfers of all the players out, that money has been used to buy more players at lesser cost each to make up the numbers, if players leave on a Bosman ruling then you have to replace them with like players where no fee is payable. There however comes a stumbling block as I think has happened with a number of players who the club have reportedly gone after, in that agents and players on a Bosman often demand a signing on fee, Bafitimbi Gomis being a case in point.

It would appear that the club is unwilling or unable to meet these demands; it could be both as it would be considered as a transfer fee and that money would have already spent.

This has a diminishing value of the playing squad and value of the club overall. You will also not bring the right calibre of people into the club, they will see it as only a temporary measure or a stepping stone to better things so when there are problems they will look to get out as fast as possible, they have no affinity with the club.

This constant change in the squad also has a detrimental effect in that there is no stability within the main players on the pitch.

This constant change and the fact the club refuses to take note that most players coming from lesser foreign leagues take time to adapt to the rigours of Premiership football. If you look at any side then you will find players who are struggling to adapt in their first season, some never adapt and have to be sold on for less than they cost, further reducing the funding available to buy new players. This constant change also has an effect on the park as it is difficult to get a settled side from one season to the next, let alone allowing for injuries and suspensions. This means the club suffers and a club that isn’t doing well on the pitch doesn’t attract the better sponsorship off it and starts on a downward spiral.

Then there is the ever reducing numbers in both numbers and quality. If you look at the better squads, and I don’t mean that you have to look at Chelsea and Manchester City at the top of the league and with mega money to spend, you find that they have 3 keepers and 2 outfield players for each position, in that there is a first eleven and then very able deputies who can fill the vacancy in injury or suspension to the first choice player. This reserve if you want, is also capable of challenging the first choice.

The juniors and younger members of the squad are there to gain experience and fill in where necessary.

In any business the cash flow is important, however, after that there is divergence of how the business is run due to the nature of the business. It is no secret that Ashley has made his money in retailing, in which he is highly successful, he piles it high and sells it very cheap. The football is a different issue and business; you don’t pile players high and sell them cheap. They are high value items, capital equipment if you wish, some players’ value will go up as well as down and not all will be a success. They have to be handled well, almost like the family’s best vase.

It is important in any business to get the right management and to communicate with your staff, suppliers and customers. This is most probably the area that the club fail on the most. It’s obvious looking at the structure within the club from the top, it has one of the smallest boards in the Premier League, and this consists of a chairman, a managing director and a finance director. The day to day running consists of 2 people with the MD and the Finance Director.

They do a good job of alienating the press, having banned more journalists than any other club I can remember, not good when you want to get your message across. The message that the club are not interested in cups and only the league matters, is a double whammy.

It says to the players we are not interested and you are only here to be sold on, so most know when they are bought that it doesn’t matter how long they sign the contract for they will not see the end of it. Provided they put in a decent shift on the park they will get a move to a club, where either more money is on offer or the club want to try for trophies, that description probably fits almost all other Premiership and championship teams. As most of them know they won’t win the league but they will have a good go at the cups. Only the players that can’t move or that others don’t want, the poorer performers, will be left until they run their contracts down and leave on a Bosman.

It is general business sense to get someone in who knows the business, if the owner doesn’t run the business himself. This means finding the correct person for the right role, the club are lacking in this department big style.

At present there is about as much football knowledge that you could put on a first class stamp and have room for war and peace left. The club in football matters would seem to be reactive and not proactive, in that they have a wait and see policy to see how things unfold rather than moving forward and getting what or who they want.

The policy that the club appear to use is one where they look at who is available and how much they cost, rather than who can do a good job and move the club forward. When Pardew was appointed he was available and cheap, having been sacked by Southampton. When Pardew left in January, the club hadn’t moved forward in any way since the day he joined.

Other clubs have overtaken Newcastle in player recruitment, Swansea being a case in point who have lost or sacked managers but still retain the same philosophy for going forward. Instead of getting a manager/Head coach who was able to get the team to safety and plan for next season. If they had needed to spend on compensation it would have only been offset by what they had received from Crystal Palace. Instead they chose to promote from within, this is not always a bad move if the second in command has the required experience.

Being a coach or assistant doesn’t automatically qualify you for the top job, they are very different. I have met a lot of engineers over the years that were good at their jobs but you wouldn’t promote them, as they would either ruffle feathers in the company leading to staff leaving, or upsetting other areas of the company. They often aren’t able to communicate effectively what they want, or don’t have the authority to stamp their own mark on the job.

One other thing on this subject of management and communication is the ramblings of the managers/head coaches position at Newcastle. They have both suffered from delirious outpourings. This may be due to the fact I believe they have a clause in the contract that restricts what they say. Basically this amounts to a gagging order and by the fact that Alan Pardew still continues with it, suggests that it is inserted in perpetuity. So getting to the truth is difficult and they will never criticise the actual culprit for the problems.

I think in John Carver this is a classic example of someone who has the passion for the job but doesn’t have either the temperament or the experience. He has almost exclusively been the number two and not the one in control or setting the agenda, his style is also from what I can see abrasive, leading to dressing room disharmony. John has also only been a manager in Canada and with all respect to our friends in Canada, I don’t think there is the same pressure as managing your hometown club in the Premiership. John has not done himself any favours with some of his soundbites after games where he has criticised players and commitment, this only lessens the commitment of those players.

The club appear to have chosen outlets for the communication with fans, for a long time it was Sky Sports. More recently it would appear to be the Chronicle and sister papers since they have been let back into the fold.

The next is the Fans Forum; I have mixed feelings about this. Now I freely admit I am not a member but it does occur to me that to be on this you have to be vetted by the club. Surely that should be a fans committee with all the fans groups being selected, not just the ones the club favours. I am not saying that forum members do not get their point across but I am saying that it looks contrived by the club.

The club recently reduced the number of these meetings from 4 to 3, when I would have thought more communication would be better than less. They have now brought forward the last meeting of this year in light of current unrest. This smacks of panic in that with reducing crowd numbers and demonstrations they do not want negative publicity. If the protests continue they cannot keep this as in-house as they would like, due to national media getting hold of the first protest.

The problem for the management of the club in the protests and the lack of bums on seats is nothing to do with revenue, as these are offset by the TV deals and the sponsor money for the Kit and shirt deals. It’s the fact that it looks poor on the screen when you are trying to advertise a product or company that is attached to the club, and make no mistake, whether we like it or not Sports Direct is attached to Newcastle United.

With the matches being beamed around the world there is hardly a shot of any game at St James Park that doesn’t have a Sports Direct advertising hording in it. If Sports Direct paid a fair market price for this extensive advertising in all the best places around the stadium, then Newcastle United would be able to pay off the interest free loan to its owner and he would get the tax incentives from it albeit via Sports Direct.

The club also make a big issue of the fact that Mike Ashley doesn’t take any salary as a director out of Newcastle United, he doesn’t need to as he get it through his golden goose of Sports Direct shares and MASH holdings where he is the sole beneficiary. There is one other Director and that is the Secretary of Sports Direct. Again, the only reason for this is by law he must have two directors.

For any senior management having so called yes men can be a blessing, if as would appear in Newcastle United’s case that the person at the top is a control freak and wants to make every decision.

As someone who has both worked with and had to manage yes men, take it from me they are a nightmare. They will agree with you about everything, even when it is blindingly obvious the right answer would be to say no and argue the case. When left to their own devices, invariably they make the wrong decisions as they aren’t being told what to do and effectively micro-managed.  Often this is the case of management that is promoted from within to save on the costs of recruiting the correct, strong staff required. Now where has that happened?

So where do I personally see this going…well in essence not very well if we carry on with the status quo? If and I do mean IF we escape relegation, then I would expect wholesale changes. I expect Sissoko, Krul, Tiote and Janmat to be sold in order to fund the so called rebuilding. This will amount to no more than 5 signings being bought from the lower continental leagues to shore up the first team squad.

If you take into consideration the fringe players and other members of the first team squad that are out of contract and those angling after a move, next season will be more of the same. On the manager front no one will be brought into the club that the club will have to pay compensation for, or that will not have John Carver as their first team coach. That narrows the list of those who will come down quite a bit.

If on the other hand we are relegated then there could be extended contracts for some of the players that are not fit for the Premiership. There will be promotion of the younger members of the squad, who at present are not getting game time, to the first team squad. However, I would expect Charnley, Carver, Stone and Woodman to keep their jobs.

I actually don’t think this is the way forward and I hope I am proved wrong by the club, but I do think they will revert to type.

What I would like to see is an MD that could run a football club as a football club, the present incumbent of this position couldn’t in effect run a bath. Then a Manager, or as on the continent a Director of Football and a Head coach, that can work together to move the club in the right direction, then we need a decent amount spent on players who want to and are fit to wear the shirt.


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