A Debt-Free Future for the Bluebirds?

In his recent statement on Cardiff City’s official website, major shareholder Tan Sri Vincent Tan outlined his financial commitment to the club. He said: “To date, I have invested a total of £40.8 million, which comprises of £34.8 million in loans and £6 million in equity.” 

Tan continued: “Going forward, Cardiff City is expecting a cash injection in the amount of £35 million to meet its financial obligations from now until May 2013, including a substantial amount for squad strengthening within budgets. Of this amount, £10 million has been earmarked to settle the long-standing Langston debt, which if accepted by Langston will go a long way to cleaning up the balance sheet of the club. This further £35 million cash injection, coupled with my earlier investment of £40.8 million, will add up to a very sizeable £75.8 million invested in the club. 

“In addition to this, we have budgeted £10 million for new Premier League standard training facilities and £12 million to increase the stadium capacity to 35,000 seats. Add this further capital expenditure and our investment in Cardiff City will have ballooned to £97.8 million. With a contingency provision of another £2.2 million, our total investment will reach £100 million.” 

The club’s recent radical re-branding exercise has been reluctantly accepted by many fans in the belief that the club could soon be debt-free as a result of Tan’s investment. The £34.8 million in loans he has already given the Bluebirds are attracting interest at a rate of 7% per annum according to the latest set of accounts, but Chief Executive Alan Whiteley has strongly suggested that the Malaysian business magnate will convert his debts into equity once the Langston issue has finally been resolved. 

Whiteley recently told the South Wales Echo: “Vincent Tan’s money is in as debt at the moment. He has, though, made a statement that if Langston come to the party and sign up in terms of the offer we have made to them, he will start to look at restructuring the balance sheet to put the club in an even better position. That would be a debt to equity conversion.” 

Something didn’t seem quite right when I read Tan Sri Vincent Tan’s statement last week, but it wasn’t until this afternoon that I was able to put my finger on exactly what was bothering me. Tan said he has invested £6 million in the club in the form of equity, whereas I had been convinced that the figure was £11 million. That’s because I was one of the attendees at the General Meeting of shareholders which took place at the Cardiff City Stadium on 28 July 2011, a report of which can be found on this blog. 

Fortunately, I still have all of the relevant paperwork from that particular meeting in my possession. In his notice to the shareholders, Chairman Dato’ Chan Tien Ghee clearly stated that the following debt to equity conversions were set to take place: 

£2,850,000 owed to PMG Estates Ltd would immediately be converted into 18,164,436 new ordinary shares at a subscription price of 15.69p per share. 

£500,000 owed to director Michael Isaac would immediately be converted into 3,186,743 new ordinary shares at a subscription price of 15.69p per share. 

£400,000 owed to director Steve Borley’s company CMB Engineering would be converted into 2,549,395 new ordinary shares at 15.69p per share. 

£5,089,441 owed to Vincent Tan and his fellow Malaysian investors would be converted into 32,437,482 new ordinary shares at 15.69p per share. 

Documents filed at Companies House in October 2011 indicate that the debt to equity conversions involving Michael Isaac and Steve Borley went ahead as planned. However, the latest set of accounts, which were published in March 2012, reveal the PMG debt to equity conversion did not take place because the club defaulted on repayments to Paul Guy’s company, thereby rendering the amended loan agreement void. 

No mention is made in the accounts of the Malaysian investors’ proposed £5 million debt to equity conversion, but share returns filed at Companies House in October 2011 suggest it didn’t happen and Tan Sri Vincent Tan’s recent website statement appears to confirm as much. 

According to the latest paperwork which is publicly available, 101,079,418 of the new ordinary shares created by the May 2010 and July 2011 share issues have now been allotted, which leaves a balance of 263,577,301 shares. At the current share subscription price of 15.69p, the unallocated equities are worth approximately £41.3 million. 

Tan Sri Vincent Tan last week stated that he is currently owed £34.8 million by the club. The £10 million allegedly earmarked to clear the Langston debt would take that figure to £44.8 million, which is £3.5 million higher than the total value of the shares presently available for allotment. If my calculations are correct, it seems certain that another share issue and another General Meeting will be required in the near future in order for these debts to be converted into equity, let alone the additional debts that will arise from next season’s running costs, the new training centre and the planned stadium expansion. 

Bear in mind that the loans from the overseas investors are currently racking up interest at a rate of 7% per annum, although the accounts state that the lenders have the right to convert any amounts outstanding, including accrued interest, into equity at any time. To put that interest figure into perspective, the failure by the Malaysians to convert the £5 million debt outlined in the July 2011 shareholders’ circular into equity has cost City an additional £350,000 during the last twelve months, while the annual interest on the £14.8 million they loaned the club during the 2010/11 season amounts to more than £1 million. 

Given the fact that the Langston issue is still dragging on and considering the alarming operating losses the club is continuing to make, I cannot see any way in which Cardiff City will be even remotely close to debt-free in the near future. Many Bluebirds fans have accepted and even embraced the re-branding exercise because they believe the club’s financial situation will improve dramatically as a result of it, but I have a feeling they are going to be disappointed, at least in the short term. I sincerely hope I’m wrong about that, but the evidence in the public domain is less than encouraging.

Never mind, it's only a badge...

Pictured left is Cardiff City Football Club’s official crest for the 2012/13 campaign. Absolutely dreadful, isn’t it? The new badge is akin to a 1970’s beer mat. It was described to me by an old school teacher of mine as looking like it belongs on a tin of Welsh fudge. Even the majority of the fans who are in favour of Vincent Tan’s ridiculous re-branding exercise seem to think it looks terrible. In my opinion, it is far and away the worst emblem in the club’s entire history. 

This cheap, nasty and embarrassing effort was produced by Bluebirds officials after several months of planning. At no stage during that process did they see fit to consult with the supporters about their ideas, which is a great pity as there is a considerable amount of talent within the fanbase. Much more talent than there is within the confines of the Cardiff City Stadium, it seems. 

On Friday, the South Wales Echo asked its readers to come up with alternative badge designs. The most popular of the seven options in the newspaper's online poll was submitted by graphic designer Tim Haughton from Cardiff-based public relations and marketing agency Working Word. 

On the same day, another excellent effort appeared on Annis Abraham’s message board. It was designed by City fan Karl Payne and was published in the South Wales Echo on Saturday. That badge has proved very popular with supporters on the internet forums and is easily the best of the new designs that I have seen. 

Those emblems took a pair of talented supporters a matter of hours to produce. The woeful badge which will adorn the team’s shirts next season was designed by Bluebirds officials after deliberations dating back to March. 

Vincent Tan apparently wanted an emblem that was symbolic of a fusion between Welsh and Asian cultures. He’s ended up with an emblem which is symbolic of nothing more than the incompetence with which his football club is run. 

Hopefully, lessons will be learned by club officials following this latest fiasco, but I won’t hold my breath. After all, football is a business, Cardiff City supporters are viewed as consumers, the club’s identity is considered a brand and its crest is unimportant. 

The Malaysian Overlord Strikes on D-Day for the Bluebirds

When I was asked to appear live on the BBC TV news channel earlier this evening, I chose to wear this shirt. It’s a replica of the one that Cardiff City’s players were wearing when my father took me to Ninian Park for the first time in March 1975 on the day before my eighth birthday. Sheffield Wednesday were the Bluebirds’ opponents on that occasion. The Owls were rock bottom of the Second Division table, while City were just one place above them. Predictably, the match ended in a goalless draw. The crowd of 6,621 jeered, slow hand clapped and chanted ‘what a load of rubbish’ at regular intervals throughout the ninety minutes. Midfielder George Smith ripped off his shirt and threw it at manager Jimmy Andrews after being substituted. His replacement, Johnny Vincent, missed a late penalty and City were booed off the field following the final whistle. Both teams were relegated to the Third Division a month later.

It was a pretty grim start to life as a Cardiff fan all things considered, but the side did contain three players who are high in the rankings of my all-time favourite Bluebirds. The men concerned are Phil Dwyer, John Buchanan and Willie Anderson. Not exactly the greatest trio of footballers this planet has ever produced, but every one a legend as far as I’m concerned. 

Tan Sri Vincent Tan won’t recognise those names. He never saw any of them play in the blue of Cardiff City. Indeed, there aren’t too many players he has seen play in the blue of Cardiff City. By all accounts, Mr Tan didn’t see his first game of professional football until May 2010 and he’s only seen a handful of games since then. Nevertheless, the Malaysian overlord has today dictated that the club I have been devoted to since I was schoolboy should radically alter its identity. The claim from the club’s subservient board of directors is that the bizarre changes they are implementing are necessary in order for the Bluebirds to reap future financial rewards from a worldwide commercial market. And if you believe that load of nonsense, you’ll believe anything. 

Cardiff City is a mid-ranking Championship club that recently managed to sell just 23,000 tickets for a play-off semi-final against West Ham United. Under the circumstances, perhaps a commercial marketing strategy in South Wales might be more appropriate. 

As far as I’m concerned, a significant part of Cardiff City Football Club has died today. During the last thirty seven years, I’ve firmly nailed my colours to the mast and those colours have always been blue. According to the club’s owners, the future is red. I wish them well with that, and with their attempts to generate fire and passion. I just hope the supporters don’t end up getting burnt by this particular dragon. 

A Big Red Cloud

Ever since Tan Sri Vincent Tan’s radical plans to alter Cardiff City’s identity became public knowledge, it has seemed as if a large, dark cloud has been hovering over the club. Unsurprisingly, the re-branding revelations provoked plenty of heated debate within the fanbase and the issue has proved the most divisive in the Bluebirds’ history. From a personal standpoint, the last month has been something of a watershed and I know there are other long-term City supporters who share similar feelings, but where the club itself goes from here is anyone’s guess.

While many fans are apparently happy to accept any changes the current owners wish to impose upon them providing the Malaysian money keeps rolling in, some of us are now seriously questioning the levels of our commitment to the club in light of recent events. But regardless of where you stand on the subject of the re-branding, there can be no doubting that the feelgood factor which had built up around the Bluebirds since the arrival of Malky Mackay has rapidly evaporated.

The level of bickering on the fans’ message boards is understandable given the circumstances, but one of the things that has bothered me most about this ignominious episode is the amount of rubbish that has been written about the meetings which took place at the Cardiff City Stadium on Tuesday 8 May and Thursday 10 May.

I had the misfortune to be present at both of those gatherings and therefore I’m in a position to clarify what was actually said during them. In retrospect, it is obvious that the reports I drew up for the Cardiff City Mad website were not detailed enough, so hopefully the following information may make matters a little clearer for anyone who is interested:

1) During the first meeting on Tuesday 8 May, Chief Executive Alan Whiteley stated unequivocally that the proposed investment package from Tan Sri Vincent Tan was dependant upon a final settlement of the Langston loan notes debt. Mr Whiteley sounded confident that an agreement with Sam Hammam would be reached in the near future, but he was very clear in his assertion that a successful conclusion to the long-running Langston saga was fundamental to any further investment from the club’s Malaysian benefactor.

2) The Chief Executive also stated on several occasions during the 8 May meeting that the proposed re-branding would be implemented ahead of the 2012/13 season regardless of whether the investment package came to fruition or not. The alterations to the club’s kit and its badge were said by Mr Whiteley to be “non-negotiable.”

3) During both meetings, it was stated by club officials that Tan Sri Vincent Tan sees the colour red and the dragon emblem as being symbolic of a fusion between Welsh and Malaysian cultures. It was also claimed that Mr Tan views red as being a more powerful and lucky colour than blue. There were vague suggestions that red is easier to market in the Far East, but the fans present were given no indications of any actual strategies or business plans that were attached to the proposed changes. Direct questions were asked by several of us in that particular regard, but they were not met with any definitive answers by the Chief Executive or his staff.

4) Towards the end of the meeting on 8 May, a straw poll of the thirteen fans in attendance was held on the subject of the re-branding. This poll was conducted by club officials on the clear understanding of all present that the opinions being expressed were personal and in no way representative of the membership of the Cardiff City Supporters’ Club, the Cardiff City Supporters’ Trust, the Cardiff City Away Travel Group or the club’s wider fanbase.

While he was Twittering away in the days following the alleged message board leak, Bluebirds director Steve Borley suggested the fans needed to see the whole story behind the re-branding proposals before they reached any firm conclusions. Mr Borley was, of course, entirely correct, and yet it’s now almost a month since the plans first emerged and the supporters are still none the wiser about the situation. The reasoning behind the ideas to switch from blue to red and substitute the Bluebird for a dragon have yet to be properly outlined by any of the club’s officials.

In his open letter to fans of Thursday 10 May, Chairman Dato’ Chan Tien Ghee said: “The new club crest and home colours which were being discussed were intended to demonstrate the symbolic fusion of Welsh and Asian cultures through the use of the colour red and the predominant featuring of a historical Welsh dragon under the Cardiff City FC name. This would have been a springboard for the successful commercialisation and promotion of the club and its brand, driving international revenues and allowing us to fund transfers and success locally, thereby giving the club the best chance of competing at the higher reaches of competition.”

TG’s words sound impressive enough, but what do they actually mean in real terms? How would altering a mid-ranking Championship club’s colours from blue to red and changing its badge from a Bluebird to a dragon have resulted in any commercial successes and what kind of international revenues was the Chairman referring to? Your guesses are as good as mine.

In an interview with the South Wales Echo on Friday 18 May, Finance Director Doug Lee hinted that the re-branding exercise was aimed more towards attracting sponsorship from the Far East than replica shirt sales in that region, but he didn’t give any indication as to why the team’s colour needed to be red or the club’s emblem needed to be a dragon in order to achieve such a goal.

Like many supporters, the re-branding plans didn’t make the slightest bit of sense to me, but then my knowledge of Far Eastern cultures and worldwide marketing strategies is limited to say the least. Having said that, I would have assumed that if playing in a red kit as opposed to a blue one was a genuine route towards commercial success and a debt-free future, then other Championship clubs such as Birmingham, Ipswich and Leicester would be following a similar path. But, as far as I am aware, they are not.

There now appears to be a reasonably large percentage of City fans who believe that because Tan Sri Vincent Tan is a highly-successful businessman and a dollar billionaire, his judgement cannot be questioned. Perhaps those who hold such a view should consider that Mr Tan has never previously owned a professional football club, he apparently saw his first live game of football in May 2010, he has seen a handful of matches since then and, according to the Chief Executive, he has only been taking an active interest in the running of Cardiff City during the last five or six months.

To my knowledge, the club’s major shareholder has never publicly said anything of note in regard to his association with Cardiff City. The spokesman for the Malaysian investors has always been the Chairman, Dato’ Chan Tien Ghee. I have been present during three events at which TG has spoken and was hugely impressed by him on each occasion. He came across as a thoroughly decent person and one who fully understands what this football club means to its supporters.

When he addressed the shareholders at the General Meeting in July of last year, TG admitted that he and his Malaysian colleagues had been on a steep learning curve since taking control of the club. He said he regarded Cardiff City as an institution rather than a business and talked of cutting out unnecessary spending while building firm foundations for the future. During the last two years I have developed a great deal of respect for the Chairman, which has made the recent re-branding revelations all the more difficult to stomach.

When TG and his associates initially got involved with Cardiff City, I hoped they would steady what appeared to be a sinking ship and set the club on a course whereby it would finally become a properly-run, self-sufficient business. The early signs were encouraging but the financial results for the 2010/11 season set the alarm bells ringing as far as I was concerned. When they were published in March of this year, the accounts revealed record losses of more than £12 million. Doug Lee has recently confirmed that the club is still losing around £1 million a month, so we can assume the accounts for 2011/12 will show a similar deficit. Many fans seem relatively comfortable with this situation simply because Malaysians are wealthy men, but I find it frightening that the club is losing even more money now than it was when Peter Ridsdale was in charge. Considering a large percentage of the historical debts remain unpaid and the playing squad is relatively small by Championship standards, I can’t work out where all the money is going.

The investment package allegedly proposed by Tan Sri Vincent Tan undoubtedly sounded attractive on the face of it, but let’s put things into perspective for a moment. One month ago, Cardiff City managed to sell just 23,000 tickets for a play-off semi-final against the biggest club in the Championship, and approximately 2,000 of those were sold to visiting fans. The Bluebirds were hammered 5-0 on aggregate and were clearly outclassed over the two legs. Nevertheless, there is now serious talk about increasing the capacity of the Cardiff City Stadium to 35,000, building state-of-the-art training facilities, engaging in worldwide marketing strategies, generating large amounts of revenue from merchandising and sponsorship in the Far East and even the club being floated on the stock exchange. Quite frankly, the whole thing is ridiculous. Before you know it, we’ll be talking about being bigger than Barcelona again.

From my personal perspective, the timing of this shambolic affair couldn’t have been much worse. In recent years, I’ve been feeling increasingly detached from the club and from professional football in general. While the Dave Jones era was a relatively successful one for Cardiff City, the man’s dour demeanour and the effect he seemed to have on his players left me feeling more and more disconnected from the team I have followed since I was an eight year-old. Despite promotion challenges, cup runs and Wembley appearances, supporting the Bluebirds was slowly but surely beginning to feel like a chore. I didn’t like the attitude of the manager, I didn’t like the attitude of a number of his players, I didn’t like the culture that had developed within the club and I was losing faith in the game itself.

The arrival of Malky Mackay last summer was like a breath of fresh air. The way in which the new manager set about his job changed my outlook considerably and reignited my enthusiasm for the Bluebirds. Although I wasn’t always convinced by the Scotsman’s tactics or team selections, I nevertheless enjoyed the 2011/12 season more than I had enjoyed any other for many years. Mackay quickly instilled the kind of work ethic in his players that had been missing at the club for some time. He also brought in a number of promising youngsters, made regular efforts to engage with the fans and ensured that his team did likewise. Despite their limitations, I strongly believed that the manager and his players fully deserved my support and I ended up following the team to 23 away games, which is my biggest tally since the early-Nineties. Despite nagging doubts about the ongoing financial situation, I genuinely felt the club was heading in the right direction on all fronts. Therefore, the shock news about the re-branding plans came not only as a bolt out of the blue (if you’ll pardon the pun), but also as a huge kick in the teeth.

Being a Bluebirds supporter can often be a depressing experience, but the last month has been just about as soul-destroying as any that I can remember. The tame manner of the play-off capitulation was disappointing enough, but that was nothing by comparison to what followed. The way in which this latest off-field fiasco has been handled by the club and the subsequent reactions of some of its fans has left me feeling extremely bitter and disillusioned. As things stand, I honestly don’t know how much longer I can to continue pouring large amounts of my time, energy and money into an activity that brings so little pleasure and so much frustration.

The fact that the owners and officials were prepared to make radical alterations to Cardiff City’s identity without any consultation with the fanbase speaks volumes about the way in which Bluebirds supporters are regarded by the club’s hierarchy, and the fact that so many fans were prepared to accept and even welcome those changes speaks volumes about the club’s support. The circus that is Cardiff City rolls on, but my dedication to the club has diminished significantly in recent weeks. Perhaps I’ll see things differently by the time the new season begins, but at the moment the summer break has never felt more appealing.