Woodstock Jag

Yep. Tremendous, isn’t it? I’m picking the team for the Dunfermline game. Yep. Tremendous isn’t it? It’s not like kits with fan names on it have already been done by Hearts and Morton, two other fan owned clubs. A fan-owned football club. Tremendous, isn’t it? It’s almost as though there’s a diverse merchandise offering that appeals to different segments of the support. Tremendous, isn’t it? “Don’t lose money… but for God’s sake don’t try and increase revenues! That’s cheating!”

Enjoying your Beer and Sandwiches with Parody, Jim?

I am confident that your number is wrong because you’ve used two completely different numbers from those that are used in the calculation of a current ratio. You chose as your numerator a projected operating loss figure. The numerator is in fact the aggregate of different current assets, including but not limited to cash. You chose as your denominator a figure which you keep referring to as “cash”. This is weird because cash is an asset, not a liability. It would have nothing to do with a denominator. It’s part of the numerator. But even then, the Club statement actually says: “the draft accounts for the last financial year show that the club only has £75,000 more assets than liabilities on its balance sheet“ That statement already implies a current ratio greater than 1 at FYE 2023-24. Because if the current assets are larger than than current liabilities, a bigger number divided by a smaller number always gives you a number bigger than 1. I will not be providing you with information contained in confidential management accounts. As a shareholder you will be provided with the Club’s Annual Accounts ahead of its next AGM. You will be able to deduce the current ratio from that information, assuming you look at the right numbers. Or you are free to ask the Club to provide that information. Now you absolutely are correct if your point is that a six-figure loss-making budget would push the current ratio below 1 in season 2024-25, absent a further cash injection. The Club explicitly acknowledged this in their statement: “Should you, the fans, alongside our shareholders, determine when the time comes that it is no longer appropriate to progress with the second tranche of investment then it creates a risk that the club could run out of cash reserves before the end of the season. The reality is that this would probably not happen, but it can’t be ruled out in the event of unexpected adverse conditions (e.g. stadium damage or exceptionally poor on-field results and consequential reduction in prize money). Without the second tranche of investment, we would make it through to the summer. But then we would have to seriously consider how the club proceeds.” Asked and answered. The aggregate of legacy liabilities (from 2022-23) and well publicised six figure loss (for 2023-24) explain why there isn’t much left of the tranche 1 investment.

I would simply observe here that Jim has misunderstood what a current ratio is. It is not arrived at by dividing the annual operating losses by the cash reserves. It is arrived at by dividing the total current assets by the total current liabilities. So neither of the figures Jim has quoted (£280k or £75k) are used in the calculation. His number of 0.26 is junk in terms of both its numerator and its denominator.

Ask the Club Board. It was their disclosure statement. The decision to disclose the budgeted loss figure was a matter for the Club Board, not TJF. The budget is prepared by the Club Board, using commercially sensitive information, and that information is only shared with the trustees for the purposes of the CTA’s scrutiny and approval process. For the trustees to disclose sensitive financial information about the football club, like specific financial figures that aren’t already in the public domain, without the Club Board’s consent, would be a clear breach of confidence. So obviously we’re not going to do that. The Club Board decided to disclose the £280k figure, with our encouragement, at the Q&A. However it is worth noting that their disclosure exercise was principally backward-looking: it was about what had happened in 2023-24, rather than what was forecast to happen in 2024-25.

He’s talking bollocks. As usual.

Hello Jim. We’re going to appoint a woman as men’s team manager to boost our woke credentials and to upset your wee WhatsApp group. Hope that’s okay. Kind Regards The Shadow Board

It's posting your content, Jim. With approval! Far be it for me to suggest that "the enemy of my enemy is my friend" - but perhaps pause to reflect a moment there?

I’m not sure how the Jags For Good STs/comps to Academy folk etc were accounted for in last year’s numbers. Just going off the numbers we were given when we asked mid-August!

The important thing for sustainability is also converting those on U18 and student concessionaires into fully-fledged adult ST holders as they enter the world of work.

I don’t have up-to-date numbers to hand, but as of just over a fortnight ago it was just shy of 2800, and I’m assuming it’s risen slightly since then. Last season there were just over 2900. There has been a slight overall decrease in adult STs and a slight increase in concessionary STs. Almost all of the overall difference between the two top line figures is U16s STs.

Isn’t it to signal “hold” or “pause” as in “I’m not taking it yet, don’t start your runs”?

Correct, but 80% of £5 million is the same as 100% of £4 million. The mechanism involves increasing the value of the assets, by adding cash to the balance sheet. We're not. The Club is issuing new equity to shore-up its balance-sheet. In the knowledge that it remains a loss-making company and has poor liquidity.

That's not how shares issues work. Come on, Jim. This is basic stuff. Shares are not property of the company. Shares are the property of whoever holds them, conferring rights in relation to the company. When new shares are subscribed for, new capital goes into the company. It's not like PropCo, where literal assets of the company were removed from the balance sheet and given to a different company. That literally was selling off assets. None of the assets are removed from the company's balance sheet when new share capital is issued. In fact, the assets actually increase! That's the whole point of it. When Donald McClymont put £500k in for shares, the assets of the company increased by £500k. What changed in an adverse direction is the proportion of share capital held by existing shareholders, so their rights were diluted. Dilution obviously has down-side for existing shareholders. Those are a legitimate part of the discussion as to its desirability. But the one thing it definitely isn't is "selling off assets".

I've already explained the contrary rationale on this. This was the first budget scrutiny exercise under the Club-Trust Agreement. The lion's share of the gap was down to one item (projected fan revenues). We judged that it was better to influence the budgeting assumptions through that process, rather than to become trigger-happy. You can legitimately disagree with that judgment call, but it's the one we took. No it isn't. That's the purpose of having a budget scrutiny exercise! I'm not defending them. It's for the Club Board to defend the assumptions in their forecasts and budgets. I'm explaining why the Trustees opted to use the budget scrutiny process to encourage that the assumptions be changed, rather than their legal powers to remove directors, at a time when, let's remember, there was already considerable Club Board churn and a period of stability was (in our judgment) essential. What the Club Board was guilty of, principally, was over-optimistic projections. If they had said at the outset that the path to break-even would take longer, and would be more difficult, I suspect the average fan would have accepted that. The scale of the task they had was not one that could credibly be turned-around inside barely two seasons. That is why I emphasise the structural position. Clearly, they do not have the same explanations/excuses if they come back with a budget that shows no progress towards eliminating losses in 2025-26.

Again Jim, sorry, but you're wrong. Why is the relevant figure £700k? There was an operating loss in excess of £350k in season 2022-23. This was even after unbudgeted upside of £280k from the Rangers game and even after an (almost six-figure) subsidy from the Academy which had been paying for modern apprentices. The change to the Women's team funding between 2022-23 and 2023-24 was de-minimis against the backdrop of the Club's budget. This meant the structural position (ie reflecting things that would not recur, or which could not be assumed to recur in future seasons) was that the Club's structural deficit was in excess of £700k. £350k + £280k + modern apprentices = a sum greater than £700k. Why is it necessary to include the modern apprentices in the structural position? Unless your view is that the Club should not have taken on the cost of the modern apprentices, the figure is in excess of £700k, not merely in excess of £600k. The "funding" for the Youth team, referred to in the Club Statement, is in reality the taking-on of those modern apprentices, who should have been on the Club's books in the first place, but weren't. As the Club statement explains, key grant funding for Academies is tied (in-part) to covering the costs of modern apprentices, so simply refusing to have the Club meet this cost one way or another would have been robbing Peter to pay Paul. Why are you wrong about the change in level of TJF funding in 2023-24? Yet again, there wasn't "£200k" from TJF. In 2022-23 there was about £30k from TJF (Dunfermline cup sponsorship, donation to player budget in January, and miscellaneous other sponsorship). In 2023-24 there was c£185k (£50k in June, £10k in other months, plus other itemised sponsorship) from TJF. From that £185k you need to deduct the Club's costs of providing the hospitality day. Simply put, you are inflating the increased income from TJF by about £40-50k. Why are you wrong to say there were no residual debts going into 2023-24? We had residual current liabilities at the end of 2022-23, as the relevant publicly available annual accounts show, of about £250k. Those liabilities were only subsequently cleared by the injection of capital, in October 2023, which fell in the 2023-24 financial year.

The January figure was pie in the sky. Totally unachievable on those timescales. The mistake was trying to claim it was a sensible base in the first place given the £700k structural shortfall that needed tackled. Concern that it was arrived-at in the first place is legitimate, but what matters is that the budget we now have is a much more realistic one against which any outcomes can sensibly be judged. The £280k figure is as “de-risked” a figure as the Club Board is going to get. There is potential to close the gap if (relative to the competitiveness of the footballing budget) frankly quite modest outcomes are achieved.

(1) Class C shares would be about 20% of the voting share capital in the event tranche 2 goes ahead on the terms envisaged (2) So broadly speaking, yes, that’s what it implies. And that it was worth about £4 million before the first tranche No, because the Club is still losing money. But the mere absence of happiness isn’t a reason to sack directors left, right and centre.

"I have a Partick Thistle Board that can eliminate a structural deficit overnight, but you don't know them, they go to another school"

Okay now that we've ascertained that Jim wants the entire Club Board to resign (bar perhaps the two Fan Reps who joined the Board after the 2024-25 budget was set) perhaps he'd like to name the individuals he thinks should replace them?

Yes or No, Jim?

This is me speaking purely personally here. The Club Board's projections for fan revenues at the AGM in January were completely unrealistic. Their aspiration was for fan revenues (across TJF, Centenary Fund and other non-matchday sources) to be in the region of £380-400k in 2024-25 (according to the AGM slide pack). They based this partly on the proportion of fan revenues realised at some larger fan-owned clubs, like Hearts. When the Trustees saw those figures, we queried whether the assumed growth target on fan-based revenues was a realistic one, suggesting that it was much more likely that fan revenues would be in the region of £250k (a similar amount to 2023-24). We pointed out that the existing figures for 2023-24 were based partly on TJF bringing forward a significant one-off contribution of £50k in June 2023, and that had only been possible because of TJF member funds accumulated in the Club's financial year 2022-23. A large one-off payment wasn't likely to be repeated, albeit our members' pledge was likely to rise for 2024-25 from £10,000pm to £12,500pm if members approved it (which they did in June 2024). We didn't throw the toys out the pram about it publicly (though we did say in our post-AGM report in January that we felt the growth targets for 2024-25 and 2025-26 on commercial, hospitality and fan revenues were "ambitious" - which in hindsight may have been too subtle a euphemism for some readers). The Club Board, crucially, listened to our concerns and revised down their forecasts for fan revenue when pulling together their proposals for the 2024-25 budget. That £150k or so discrepancy explains a significant chunk of the difference between Football Club (which lost £170k last year) being able to reach a break-even budget and it not being able to do so. Revising down fan revenue forecasts meant a break-even budget would (a) take longer and (b) need to be more dependent on commercial and hospitality revenue growth and (if that doesn't materialise at the quantum needed) cuts to spending commitments. The fact that it will take longer means that, while the company is still loss-making, it will burn through more capital than was originally envisaged. That places greater pressure on cashflow than the original forecasts would have assumed, and means a bigger cashflow buffer (the so-called "margin of safety") is needed. And yet, I hasten to add, the Club Board maintains that any cashflow pressures can be managed in season 2024-25. That we (the Trustees) now get sight of the management accounts means we can monitor this regularly. We won't be shy in saying so if those assurances look to be ill-founded. Ideally, the forecast revision would have been communicated closer to the time of the setting of the Club Budget. TJF pressed for the disclosure piece to be developed and published in the early summer, but for a series of resourcing reasons on the Club side, it didn't materialise as soon as we'd have liked. This is ultimately a question of soft power versus raw power. Jim seems to think that the solution to every problem is to remove directors (that he doesn't like). Sometimes at Football Clubs, there is a place for that, if a particular individual or group of individuals are failing/disruptive and a clear alternative leadership group would do a better job without them. There are, however, other fans who contact us who express concerns about the high level of turnover in the Club's leadership team. That was one of the questions asked at the Q&A by a TJF member earlier in the week. So there is a balance to be struck between "flexing the muscles" as a majority shareholder and building a cooperative relationship that fosters trust and encourages skilled and talented people to join the Club Board. This is particularly important as we move towards a more skills-based recruitment approach under the Corporate Governance Manual that the Club Board has been tasked with delivering. We took the view earlier this year, with the budget scrutiny process just around the corner, that the more productive exertion of influence under fan-ownership (and the new CTA) would be to communicate our concerns about mistakes in the forecasts and ask for them to be revised. We achieved that outcome, and the resulting budget is therefore a much more meaningful one. We, as it were, "derisked" a key element of the budget, which the Club Board could more sensibly be held to in terms of delivery. Clearly if the Club Board were to repeatedly make material forecasting errors, or fail to respond to critical feedback in the budget scrutiny process, that would be a different scenario to be assessed at the time on its own merits. But I should say that, in the first ever budget scrutiny process, the Club Board was responsive to trustee questioning and feedback on (a) off-field revenue growth targets (b) footballing income assumptions and (c) cost controls.

Several errors in here I'll focus on the most obvious of them and the most directly relevant to TJF. In 2022-23, TJF contributed £20k to the Football Club (in January 2023). In 2023-24, it contributed about £185k to the Club itself, mostly through the pledge and partly through the hospitality day. So that's actually only a £145k up-lift in income, not £200k. Your numbers are plucked out of thin air and this should be properly understood by all those who read them.

"They have said" - by your own admission you weren't even at the Q&A. Correction: he (and another director at the time) provided soft loans which were fully repaid. They aren't "selling assets". They're proposing to issue new shares for an injection of capital. Something the Club has done whenever any new shareholder has come on the scene, and isn't buying shares off an existing shareholder. It's how Billy Allan became a shareholder. It's how David Beattie became a shareholder. It's how Colin Weir became a shareholder. Hell, it's technically how Environmental Air Conditioning Limited became a shareholder!

There is not yet a formal proposal with the Trustees. The Club Board has simply given an outline of the state of play of their discussions with Donald about the second tranche. We have a reasonably clear idea of what would be involved, because it’s the second part of an investment, the core structure for which is contained in the original Investment Agreement documents. As the majority shareholder, the trustees have seen the July management accounts of the company and will continue to receive detailed and regular financial updates from the Club. We will also expect relevant financial information to be provided in any proposal document as and when advanced by the Club Board, so that fans can fully understand what is being proposed and why. They didn’t say “they have no Plan B”. They said that cashflow could be managed this season if tranche 2 was rejected, but that it would force some difficult choices for the Club for its 2025-26 budget.