THE Daily Echo can today reveal the exact figures behind the Saints board’s ‘Plan B’ – and where they went wrong.
Plan B set a cash target of £15m to be raised from “asset disposals and cost reductions” in the event of Saints failing to win promotion in 2006/07.
In many ways the plan’s five areas of savings were a success, except in one crucial point.
1) Plan B said £10m must be raked in from selling players. As it was, almost £14m was brought in.
2) The sales of the insurance business and radio station previously owned by Southampton Leisure Holdings PLC be sold for £400,000. Tha figure was met.
3) The renegotiation of the stadium debt be reduced by £1.3m.
Norwich Union agreed to release the £1.2m debt service reserve account, meaning a shortfall of just £100,000 on the Plan B forecast.
4) Reduction in player and coaches costs. This was supposed to save £2.5m, but in fact they rose by £1m.
The Daily Echo has obtained a copy of the PLC board meeting report which states: “The shortfall arises because we have sold players on reasonably low wages, replaced them with players on higher wages and have been unable to move some of our higher wage earners on.”
The likes of Gareth Bale, Martin Cranie, Chris Baird and Leon Best all left St Mary’s in the summer of 2007, bringing in over £9m in fees.
But all four of the former academy graduates would not have been on lucrative contracts at Saints – certainly not compared to the likes of Marek Saganowski, Jason Euell and Stern John who were subsequently brought in.
5) Reducing in other operating costs was supposed to save £800,000, but actually saved £600,000 – £300,000 in PLC costs and £300,000 in Saints FC administrative costs.
The board report, written at the end of June 2007, added: “Reasonable success has been achieved in meeting the £15m Plan B target. To date, £14.2m has been raised, but that position is expected to worsen with expected player purchases over the next few days.”
Finance director David Jones later wrote to the board on August 30, 2007, saying: “(today) we sold Kenwyne Jones to Sunderland for £6m, in exchange for Stern John.
“The manager plans to add two further players prior to the end of August.”
Saints made £4.9m on Jones with regards to transfer fee, sell on clause and saving of wages, and John’s wages and agent’s fee came to £400,000.
Around £1.7m was set aside for the signing of a defender and a midfielder and £1.2m was lost on the non-sale of Grzegorz Rasiak, whose departure for around £1.2m had been included in the budget to be sold in January.
Jones wrote: “Whilst there has been an improvement in the financial position, we are still projecting a loss of £8.3m, negative net assets of £1.2m at June 30 2008 and an overdraft of £6.4m by June 30 2008.
“Our financial position remains precarious and reliant on recapitalisation or promotion, or preferably both.
“We are also reliant on ongoing support from our main lenders, Barclays and Norwich Union.”
Back in Augst 2007 Jones also included a “preliminary look” at the 2008/09 season and painted a truly miserable picture.
He wrote: “Not surprisingly the results look terrible, with turnover of £14m, a loss before tax of £17m and a bank overdraft of £16m at June 30, 2009. Clearly this is unsustainable and we will, like this year, need to raise cash and cost savings of around £15m.”
OTHER “potential Plan B measure to be investigated” were also presented to the board in May 2007.
“There are a number of other potential areas where funds can be raised or costs saved which should be investigated and are not currently part of Plan B as it stands as present,”
wrote Jones. They were: 1) The sale of Jacksons Farm 2) The sale and leaseback of Staplewood Training Ground 3) Investors interest free loans repayable upon promotion 4) Staff redundancy programme 5) Renegotiate the release of the Norwich Union Debt Service Reserve Account £1.25m.
That last one was taken up and implemented.
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