Tuesday, 9 May 2017

Charlton Athletic Takeover Attempt - The right move?

I noticed the recent article on the Kent Live news that the rumoured Charlton Athletic bid from the Australian Football Consortium (AFC) had stalled owing to a lack of capital raise.

While any move to oust Duchatelet as owner should be seen as a good thing I can’t but help think that if a consortium has trouble in even raising the suggested purchase price then questions must be raised as to their ability to maintain the ongoing financial commitment that is required for a football club.

Let’s not kid ourselves here.  Breaking even is an admirable goal and might be achievable but currently not many clubs do achieve this.  The Deloitte 2016 annual review of football  gave an average annual loss for the 2014/15 season of £1.7m for League One clubs and £0.5m for League Two clubs.

Charlton’s losses run even larger than this and given the term of existing players’ contracts, the commitment made to the training ground and the size of the Valley generally such losses cannot be curtailed immediately.

In fact the AFC’s website states that “A critical component of AFC’s strategy will be to invest heavily into the training facility so that the club can attract and develop local talent and provide them with the opportunity to represent their club at a senior level.”

Given all this, any investor would need a sizable war chest just to allow the club to continue in its current form.  This is just not going to come from a scratch investment company such as AFC. The last thing that fans want is a nervous wait while the company struggles with a whip around in order to avoid bankruptcy.  

Any debt to finance these losses would need to be raised from external commercial lenders such as banks (rather than a benevolent owner) at commercial rates and with suitable security over assets such as the football stadium.

I'm no Duchatelet fan but while I'm sure that the AFC has a board with the necessary football experience (unlike our current CEO and owner) we need to ensure that they have the adequate resources to go along with it.

Kent Live Article
Deloitte Annual Review of Football

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