Once a permanent fixture in the Premiership, the future of Bolton Wanderers Football Club looks bleak after it announced that the club is in debt to the tune of £163.8m. Whilst a significant amount of this is debt owed to owner Phil Gartside, the announcement does little to calm the fears about the long term future of the club. After suffering relegation in May 2012, drastic cuts to playing staff and more importantly the wage bill have happened but it has simply placed a bandage over what is now a gaping wound.
Owner Gartside has spoken candidly about the debt and the implications it has on Bolton:
“This year’s results show the difficulties faced in the football business when a club has enjoyed a sustained and successful period in the Premier League, in our case 11 years, then suffers relegation back to the Football League Championship. The widening gap between the leagues makes the transition difficult “
In a world where interest in the Premiership continues to grow, interest in the lower leagues in England is diminishing. This is despite efforts by both the Football League and the FA to make the Championship more attractive and appealing to a wider audience. The product itself is sold with one of the most competitive leagues in the world, with several teams in with a chance of promotion. BBC coverage has increased as has satellite providers like Sky and BT but the financial model supporting it is not comparable to its bigger brother. Bolton has seen its share of broadcast revenues more than halved from £42m a year whilst in the Premiership to £19m this season in the championship. More worryingly that amount is thought to also include the £16m parachute payment paid by the Premiership in an effort to bridge the gap.
The TV money brought into the club makes up around 65% of its revenue with the club reportedly seeing turnover at around £28.5m. With operating costs (including player and staff wages) standing at £37.4m, Bolton are losing more money than they are bringing in. Two things need to be taken into consideration however when looking at the operating costs. Firstly the wage bill has been significantly reduced since last year (down from £55.3m) which was a fundament need following relegation. Added into this, this year’s figure is slightly elevated after having to pay out on a variety of player contracts and terminations. Next year, their operating costs should be closer to the £31m mark, which is a much healthier position but doesn’t help pay off the debt that has accumulated.
The grim reality for the club is that they have two roads that they can potentially go down. The first is to invest to get back into the Premiership and the riches that accompany it. In one of the most competitive and toughest leagues in the world, gaining promotion even for a newly relegated club is no foregone conclusion. They need a squad capable of pushing for honours and strong enough to see off fellow competitors. Manager Dougie Feeman has built a strong nucleus to his squad with experienced players like Neil Danns, David Wheater and Jermaine Beckford creating the spine of the team. However strength in depth is something at his team sorely lacks and they currently find themselves in the lower half of the table and fighting for each point. The second option is the road less favourable. Dramatically cut costs, through player sales and wage freezes, focusing on maintaining their position in the championship as much as possible. Looking to the future and bringing in low cost youngsters with sell on potential will dramatically slash the wage bill and push Bolton towards profit. The problem with this scenario is two fold – firstly Bolton’s youth setup is not one of the better ones in England and fails to compete against the likes of Derby, Southampton and Crewe as talent pools. Secondly, deinvesting in the playing staff could also result in a slide in the wrong direction. Whilst the revenue that the Championship is not exactly anything to write home about, it is still significantly better than that found in leagues 1 and 2. Relegation to the lower leagues could result in Bolton being stuck in quicksand, with only one real outcome possible.
Neither option is favourable to Gartside who continues to plough his support and money into the club he loves. Getting out of the championship and back to the Premiership is the main goal but first finding a way to restructure the clubs debt is a must. The club cannot afford to continue to lose money season over season so quick decisions must be made to avoid the worst case scenario – administration. With the newly created Financial Fair play rules dictating that clubs can only operate at losses of £4-5m without facing punishment, Gartside does not have time to wait and see what happens. Selling the club to a wealthy foreign investor may be the right approach but it will be hard for Gartside to let go of the club he has built and holds so closely to his heart.