Ray Trew´s time at Notts County

After having a very busy year at work, this blog has been without new posts for a while now. As of now, I will try to dedicate more of my time to updating the blog (admittedly this decision has been made easier my by new MacBook, a great laptop!!). I will also try to focus more on the smaller clubs and lower leagues. That´s where interesting events take place all the time, but sadly these events are often out-shadowed in the media by the news on Premier League, La Liga etc. So with that, let´s begin 2017 with a piece on Notts County: 

Notts County´s eventful millenium saw a new chapter emerge last month, as the club´s owner Ray Trew announced he was selling his share to local businessman Alan Hardy. Guardian estimated the price to be around £ 3,5 million. Along with sale ends Trew´s time with the Magpies, which began in 2010 after some of the most colourful events the club has seen.

Back in 2010, the club was in shambles. The takevover by Munto finance that took place in 2009 had left the club in severe financial difficulties. Munto initially promised great things; money, notable additions to the squad, talks of promotion, even achieving Premier League status was mentioned. Former manager of England´s national team, Sven-Göran Eriksson was appointed as the director of football and his right hand man, Hans Backe as the manager. Kasper Schmeichel was brough in from Manchester City, and Sol Campbell was also added to the squad.

Sven-Göran Eriksson, Photo By Doha Stadium Plus Qatar (Flickr: Sven Goran Eriksson) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

As things progressed, it became more and more evident that the promises made were hollow, and the club was never going to strive for the things Munto had promised the fans. Eriksson quickly left, feeling betrayed. Campbell famously played only one match for Notts County, against Morecambe  on 19th of September, 2009. Backe resigned after just two months in charge. After getting their hopes up due to big promises made, as the house of cards came trembling down the fans were left with a club in shambles, and an uncetain future. The whole Munto –case is well documented in several sources, one excellent read can be found here.

I also recommend watching the BBC documentary on the subject; The Trillion Dollar Con Man, which can be found on YouTube.

In February 2010, Ray Trew bought the club along with its debts for mere £ 1. In 2010,  Trew founded the company ”Notts County Football Club 1862 Plc, which acquired the club. Later the name was changed to Meadow Lane (Nottingham) Limited. According to Notts County´s accounts of 2011, Meadow Lane (Nottingham) Limited then proceeded to sell its entire share holding in the club to Ray Trew.

By the time Trew bought Notts County,  the club was in deep financial difficulties, as the debts he inherited were  as much as ~ £ 7 million. Trew, who made his fortune through his company Contracting Solutions Group, decided not to take the club into administration, and proceeded to repay the loans. In April 2010, he revealed to Nottingham Post that the club´s wage bill was an ”astronomical” £ 4,8 million. On top of that, Trew revealed that should the club achieve promotion to League One, squad bonuses would be huge as well, much bigger than the price money from the promotion would be. But Trew was not backing away from the challenge, confidently telling Nottingham Post:  ”But we're smitten with the club and with winning promotion and we will find the money to meet that cost.” While Trew did aim to bring financial stability to the club, he was also optimistic about the future in the long run, saying: I'm absolutely convinced we will get promoted. We've set ourselves the goal of getting promotion this season and going straight through League One next season and then consolidating in the Championship for a number of years. We're not going to say our ambition is to get to the Premier League. Yes, it would be our ultimate ambition but we have got to be realistic.” As it turned out, the season 2009-10 did see Notts County achieve that promotion to League One.

Looking at the balance sheet of that time, a couple of things should be pointed out. Firstly, Notts County´s accounts have been so called abbreviated accounts, meaning that they only include a balance sheet, not profit & loss account or cash flow statement. As interesting as it would be,  using these accounts we therefore have no way of telling what the club´s turnover, operating costs etc. were. Secondly, Notts County Football Club Limited was the name adopted in early 2012, prior to that the company´s name was Blenheim 1862 Limited. The accounts for financial year 06/2011 (released in February 2012) are therefore under the name Notts County Football Club Limited, whereas accounts of 06/2010, are filed as Blenheim 1862 Limited.

Interestingly enough, the figures of 06/2010 still show a huge amount of debt, even though Trew was already the owner at this point.  Total liabilities were slightly over £ 8 million. What needs to be pointed out here is that since there aren´t too many notes included in the abbreviated accounts, there is no way of telling excatly what part of this debt are interest bearing liabilities and how much of it is non-interest bearing, such as accounts payable, or deferred payments. Still, it´s safe to say that most likely quite of bit of those liabilities were actual debt.

In the figures of 2011 we see the action Trew took to ease the debt burden. Share capital increased to £ 6 milion, as (according to accounts of 06/2011) 5 500 000 ordinary shares of £ 1 each were issued with a nominal value of £ 5 500 000 for a consideration of £ 5 500 000. Using this equity, a large amount of liabilities were paid, and at the end of the financial year 06/2011 total liabilities were down to £ 3,8 million. A large amount still, but substantially down from previous year´s £ 8 million.

Trew was to invest new equity again in 2012-2013, as the accounts of 06/2013 indicate a £ 3,25 million increase in share capital, bringing the total amount to £ 9,25 million. And this wasn´t to be the last time either, in 2014-2015 the equity again increased to £ 11,25 million. According to the accounts of 06/2015, Trew converted a loan of £ 2 million into ordinary share capital. Going from equity of £ 0,5 to £ 11,25 million in roughly five years is obviously not a small investment, and was a clear indication of Trew´s commitment to the club. As a result, the club´s liabilities were brought down to £ 3,5 million by 06/2015. As said earlier, this amount also includes non-interest bearing liabilities, and based on the accounts it is impossible to say what the exact amount of interest bearing liabilities was.

Despite Trew´s efforts to increase the club´s share capital, it hasn't´t been enough to increase equity to positive, not even close. This is because total shareholders´ funds main components are share capital and profit & loss accounts. Due to heavy losses the club had been making, the total shareholders´ funds had remained firmly negative. As I wrote earlier, since the abbreviated accounts do not include profit & loss accounts, there is no way of telling what the club´s turnover has been. But we can estimate the total result by calculating it from the accumulated profit & loss account included in the shareholders´ funds.

As a result of the disastrous Munto –era, the bloated cost structure caused the total result of 06/2010 to be a staggering £ -4,5 million. The club did manage to achieve a promotion to League 1 that season. As a result, cutting operating costs was not such an easy tasks, despite Trew´s initial intentions to do so. High earners Kasper Schmeichel and Johnnie Jackson left over the summer of 2010, but in August Trew told Nottingham Post that the club´s salaries for next season were to be around £ 100 000 higher than in the previous season. Trew said; ”If we had remained in League Two, we would have reduced our wage bill. But we won the title and we have ambitions for this club to progress further and challenge for promotion into the Championship”. Obviously revenues in League One were higher as well, so the total result did improve, but still remained negative, at £ -2 million. In 2012, total result was roughly the same, at £ -2,1 million, but improved after that. Still, the club hasn´t managed to record any profit up until 2015, and as the auditors noted in the accounts of 2015, ”the company depends on funding from various sources”. Then again, there aren´t too many clubs recording profits in League –level football.

Results-wise, the club hasn´t really progressed during Trew´s tenure. Promotion to League 1 was followed by a difficult season, as the club secured their position in League One only on the final day of the season, eventually placing 19th. Magpies hung on in League One for three more seasons until 2015, when they placed 21st and were relegated back to League Two.

With the relegation back to League Two, and a 17th position last season, the club are pretty much close to were they started when Trew came to the club. Since Trew took over the club, 11 managers have tried their luck in six years, but results have been weak. Especially in the past few years, supporters haven´t had much to cheer for. Therefore it is not suprising that many of the fans are optimistic about the new era that is about to begin. Fans are hopeful that Hardy can take the club forward, and bring financial stability. The problem is, in football those two rarely go hand in hand. Finding financial stability and profitability is rare, and the cost may well be disappointing results on the pitch. But whatever happens in the future or how dissapointed the fans are at the current situaton of the club, it should not be forgotten that Trew did save the club back in 2010, and invested quite a bit of his own money. If the rumoured selling price of £ 3,5 million is even close to the truth, it is well below his total investment to the club.

As for Alan Hardy, the founder and chief executive of interiors firm Paragorn, the situation could hardly be more challenging. Notts County are currently in 23rd position in League 2. Even though there is still lots of football to be played this season, relegation to Conference –level seems very much like a possibility. Fans are certainly hoping Hardy can breath some new life to the club. Because relegation to the Conference would  certainly be a sad fate for the oldest football club in the world. 

Meadow Lane, across the river from Nottingham Forest´s City Ground. Photo: Wikimedia Commons