Ahead of the Cambridge United Shareholders Meeting on 30th April 2018 CFU gathered and published a list of 26 questions that fans wanted to be asked of the Board. The questions, and the associated answers, are set out below. Most were asked, and answered, on the night.
The answers here are provided directly by the CUFC Board of Directors and (just as with the questions) have not been revised or edited by CFU. The Club has also provided an introductory comment.
Introductory comment from CUFC
At the Shareholders Meeting on 30 April, Shaun Grady and Steve Chamberlain confirmed that the approach establishing an Executive Committee of the Board was put into place following the resignation as the Chairman of the Board on 16 December 2017.
Under this structure Graham Daniels has oversight responsibility for football operations working closely with Ben Strang, Shaun Grady has oversight responsibility for business operations, working closely with Henry Comfort, and Steve Chamberlain has oversight for Finance.
Prior to that change discussions and decisions took place involving the Board as a whole.
Q1. Has Paul Barry increased his stake in the club, as there has been no official acknowledgement to that effect?
Yes. As regards official acknowledgement:
a) The Club issued a statement to this effect on 9th February 2018.
b) The statement was reproduced in the Match – day programme.
c) The statement was posted on the official Club web-site, and remains accessible in the News Archive.
d) This fact was the subject of an interview with BBC Cambridgeshire and reported widely in local media.
e) The shareholdings in Cambridge United are recorded in our Companies House filings and reports.
Q2. Is the Manchester United money still ring fenced? If not, when and how did this change?
The revenue from the two FAC games against Manchester United was never ring-fenced as such.
It was used initially to upgrade the facilities at the Abbey Stadium, including the building of the Premier Travel Suite, the 8Build Lounge, improvements to the pitch and the dressing rooms. The club was carrying a working capital deficit at the time which was recovered and further monies from this fixture were applied to the ongoing running of the Club.
Q3. At the 2017 Shareholders Meeting, in March, the Finance Director predicted a small surplus for the current year (2016/17). What occurred between that prediction being issued and reported on and the actual turnout at the end of June being a loss of nearly £700,000, even though there had been additional inputs by Directors?
The anticipated surplus that was communicated was based on our understanding of the accounts from January 2017 – the February and March accounts were not available when the statement was made.
The reasons for the deteriorating financial position from that point have been described in the report to shareholders.
These included additional first team signings in the January transfer window, a sharp fall in sign-up for the summer soccer schools programme (the revenue from which falls within the 2016-17 accounting period), and falling gate receipts (and associated incomes) and lower hospitality income (all against forecast).
We also, unexpectedly, had to settle a number of substantial catering invoices that were under query.
Q4. What has changed from last year where we were predicting a break even position or small surplus in operating profits?
See the answer to (3) above.
Q5. When Messrs Grady and Daniels were interviewed on the radio in December, following the departure of Mr Doggett, they refuted speculation that the Club was facing losses in the region of £600k. We now know this speculation was not far from the truth. Did these Directors mislead fans and shareholders?
Media interviews took place at short notice after the unexpected resignation of Dave Doggett. The purpose and focus of these interviews was to communicate how the Board would be organised going forward.
It was not intended to discuss the financial situation at that time as the final position for the year had not been disclosed and wouldn’t be until it was shared with Shareholders following review by Accountants.
When figures for the amount of a potential loss were mentioned by journalists, the response had been that the quoted numbers weren’t recognised. This was a statement made in good faith at that time.
Q6. In the Directors report, the club says it expects “to show a small loss this season [2017-18]”. Does this take account of monies received from the sales of Will Norris and Luke Berry, or are these excluded?
Yes. The club continues to run at a significant structural deficit and has done for a number of years. The Norris and Berry transfer monies will offset some of that loss and the final position for 17/18 will be much improved on 16/17. In setting the 18/19 budget we are trying to eliminate that structural deficit. It won’t be done over a single season but our goal – which we still believe is achievable – is to deliver a business that is break even each year.
Q7. Has the Board implemented any cost reductions or identified increased net income, to help ensure the aim of breaking even in 2018-19?
Yes. A new business model has now been implemented which involves a far greater level of day to day involvement of Directors. The full Board continues to receive a detailed financial update every month.
As the majority owner now, Paul Barry is also providing constructive challenge to the proposed 2018-19 business planning, to ensure future forecast revenues are realistic and achievable. This budgeting process is ongoing.
Headcount has been reduced where that was appropriate. We have reviewed the income that staff costs on the non-football activities generate to ensure these costs create a return on the investment.
Q8. Has any money been ring-fenced for redevelopment?
No. The Club are working closely with Grosvenor and Wrenbridge to develop a scheme that will be affordable for a redeveloped stadium at The Abbey site.
Paul has committed to help support the Club through the Abbey re-development, and any disruption this may involve, given it is so crucial to creating a sustainable future for the Club.
Q9. Was a business plan for the school holiday programme prepared and approved by the Board of Directors in advance of its start date? How was its progress monitored and by whom. At what point was the Board informed that its budget would not be achieved?
Yes, there was a business plan for the summer soccer school programme presented to and approved by the Board.
As reported to Shareholders, the Board acknowledge that, with hindsight, the revenue forecasts were overly optimistic and that there had been insufficient challenge brought to the business plan. Delivery of the Business plan was also affected by the fact that the Programme Manager left his position at a critical stage of its delivery.
The programme will continue, on a more focussed basis on a high quality product in the region which the Board still believe Cambridge United is well placed to provide.
Q10. The annual report says that the Board will take a more day-to-day role in the running of the club in future. I assume this monitoring role previously fell to the now-departed CEO, so does the Board accept this is a damning assessment of both his performance and that of the Board itself in not picking up on the spiralling costs in-year?
As above, the Club now has a new operating model that involves a far greater level of Director scrutiny.
Fans and Shareholders should not overlook the huge contribution that Jez George made to the recovery and growth of Cambridge United over the last several years.
Q11. Does the Board accept that the 16-17 operating loss (£694k), when compared to the 15-16 loss (£387k), appears even worse when one considers (a) that 15-16 included £170k expenditure relating to the departure of Richard Money and (b) that 16-17 includes £250k FAC revenue and a £195k increase in external funding?
That may be the case, but it is important now to look to the future. The level of deficit resulted from failure to deliver the levels of revenues the business plan anticipated.
We now have a new Board structure in place working much more closely with the Club management, and working closely with Paul Barry as majority shareholder.
What is critical now is that we work hard to deliver on our business plan going forward to ensure the Club recovers its financial position going and being prepared to make changes if and when it appears that is not happening.
Q12. The CUFC website “Who’s Who” section lists 32 members of staff (excluding Board members). Of the 32 people listed, 25 have job titles that include “Chief”, “Head”, and “Manager” etc. Is it possible for a company the size of CUFC to financially sustain so many senior roles (eg Luton have 14 and Mansfield have 12)? Why is it that CUFC has all these senior roles, when other clubs in the league seem to be able to manager greater success with fewer senior staff? What is the wage bill for these staff as a % of turnover?
The job titles given to officials at football clubs across L2 vary greatly, as will the associated roles and salaries. For this reason we do not think it is appropriate to try to make these sort of comparisons with other clubs.
We would add that we have a group of talented, hard- working and extremely committed group of employees at Cambridge United and the Board are working closely with them so that they deliver their business and professional goals.
Q13. Does the club plan to carry on with the excess staff levels or will they try and live within its means?
Q14. What is the budget for backroom staff, compared with the playing budget?
The Board accepts that the distribution of costs across the first team playing squad, the coaching team, analysts, fitness professionals, the academy, commercial, administration, ground staff etc must be monitored closely and balanced properly.
Currently, approximately 75% of football salary budget is on players with the balance of 25% on staff.
Q15. Youth set up appears to cost the club £120k - why is this and when are we going to see a return for home grown players sold?
It is crucial that the Club encourages the development of young players by bringing them through the Academy system and then giving them first team opportunities, including in the EFL.
Our goal is that young players and academy products become part of a successful first team, and to develop as assets to progress to careers with Clubs at higher levels and generate income for the Club.
Cambridge United has a proud history and great track record in this respect, and we want that ensure that we are doing all the right things to enable that to continue.
Graham Daniels highlighted the importance of developing young players at the Shareholders Meeting.
Q16. What unbudgeted costs were incurred for the stadium and pitch maintenance and what was the amount of that additional cost?
The costs, totalling around £60,000 were spread across both pitch and Stadium maintenance.
Q17. How much is spent on non-first-team personnel?
This is covered by our answer to (14) above.
Q18. Let every penny of every transaction made by the club be available for scrutiny by CFU. No hiding behind so-called ‘confidentiality’ and commercial sensitivity rubbish. Let our fans group know exactly the +/- in our accounts.
The financial transactions the Club enter into are with external suppliers, customers and, of course other Football Clubs. As in any business these dealings are subject to confidentiality provisions, which the Club would breach by disclosing externally. CFU have an elected member on the Board of Directors. The comments from some Shareholders at the Shareholders meeting of wanting an annual audit of accounts was noted.
Q19. On what date did the CUFC Board vote to set up a company for the China Project?
The Board considered the merits of this joint venture on several occasions at different Board meetings. At various stages the Board approved the setting up of a corporate entity and entering into agreements. The venture has the full support of the Board and continues to discuss the venture on a monthly basis. See the answer to Q20 for more information.
Q20. According to Companies House, a new Company - CAMBRIDGE UNITED CHINA COLLABORATIONS LIMITED - was incorporated in November 2017. CUFC Ltd appears to have invested £300,000 in this venture. Please could the board give some indication of the business case for this investment? When can we expect a return on the investment? In light of the significant losses recently revealed in the last FY's accounts was it really sensible to commit £300,000 to this venture? Jez George is listed as a Director. What is the structure of the Board of this new company?
The China joint venture is a low-risk attempt to create a new revenue stream to invest in the Football Club. Fans and shareholders should be assured that Cambridge United has not put any money into this business, only its intellectual property. The Club will also make some coaches available to participate in delivering the programme. The capital that has been invested by our third party joint venture partner.
Given his role in establishing this business, Jez George is a Director of the JV Company. Other Directors are Shaun Grady and Christoph Loch (both Directors of Cambridge United), our joint venture partner and an independent Director who acts as Chairman.
Q21. Does Jeremy George still have a role at the club? Does he draw any income from the club? If he is CEO, what does he do day-to-day, with Ben Strang in charge of Football Operations, Nick Fairbairn in charge of Partnerships, for instance?
Cambridge United announced on 9th February 2018 that Jez George has left his position as CEO of the Club. This was widely reported in local media and covered in an article in the subsequent match day programme.
The statement was published on the official Club website and remains accessible via the News Archive. Jez George therefore has no day to day involvement in the Club.
Given his prior involvement in both projects, Jez George is currently engaged as a consultant on the China Project, and with respect to the potential redevelopment of the Abbey Stadium.
Q22. Why has the club changed reporting accountants to KPMG this year? Is there any cost implication for the change?
KPMG is a leading national and regional accountancy firm.
Q23. How does one qualify to be a CUFC director? Does it depend on expertise, investment or democracy ...... that kind of thing?
It is not a pre-requisite of any director to invest money in the Club, except for purchasing a minimum number of shares (£1,250).
Potential new directors will normally be approached by the existing Board or Paul Barry, but anyone who believes they have the skills to serve as a director, to contribute to the growth and prosperity of the Club, is free to approach the Club.
In due course, the planned redevelopment of the Abbey Stadium may require new and additional Board level skills and experience.
Q24. Is the board going to review its misguided policy regarding concessions in Main Stand Blocks C & D? This has resulted in angering many long term fans who have financially supported the Club through difficult times for many years. Instead of producing additional income (at the expense of alienating many loyal fans, some of which have not renewed their season tickets) I suspect this commercial decision has back-fired. In order to reunite all those affected and to get fans back on side, will the board reverse this ill-thought out policy? Irrespective of a “price suitable for everyone somewhere in the ground” all fans have their favourite communal area bonded over many years.
The Club announced on its #UNITEDSSINCE1912 season ticket campaign on 9th April 2018.
At the same time the Club confirmed that the restrictions on concession tickets in the Main Stand Blocks C and D would be lifted.
Q25. How many shares does each board member own?
This information is available via Companies House.
Note: For convenience, CFU has copied below the information available on the Companies House website regarding current shareholdings:
SK Chamberlain 225,000
E Clarke 3,297,330
DG Daniels 5,204
SF Grady 225,000
Dr CH Loch 225,000
R Sargent 5,262,341
D Matthew-Jones* 1,218
* As Fans Elected Director D Matthews-Jones represents CFU which currently holds 3,089,632 shares
Q26. Will the Club make it a pre-requisite of the new first team coach to give academy graduates and young players more opportunities in the Football League?
Please see the answer to (15) above
9TH MAY 2019