Features
Alex Miller 5 Dec 2017 01:22pm

Net profit

After a historic season, Brighton & Hove Albion FC’s finance director David Jones tells Alex Miller how promotion to the Premier League will transform revenue

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Caption: Finance director David Jones. Photography: Alex Lake
For any football romantic, the tale of the fall and rise of Brighton & Hove Albion is difficult to beat. Just 20 years after a fan-backed buy-out saved the club from liquidation and falling out of the Football League, the south coast club is playing in the Premier League for the first time.

The Seagulls have been on an incredible journey. They lost their stadium and spiritual home, the Goldstone Ground, when it was sold by previous owners to pay off debts. The club was then forced to play 70 miles away in Gillingham for two years, before making a temporary move to the Withdean athletics stadium, closer to home.

But during these testing days, Brighton & Hove Albion simply refused to give in. The ranks of employees who have contributed to the club’s survival and subsequent climb through the leagues are too numerous to mention, but finance and operations director David Jones has been a vital component in the recent successes.

“It is a great credit to the hard work of so many people and a great example of the community pulling together,” confirms Jones. “The club’s triumph means it can now fulfill its potential and is reward for the hard work and investment and because the fans remained loyal.”
Jones, a chartered accountant and a member of the Brighton & Hove Albion board, has been with the club for six years, having previously worked at Southampton and Plymouth Argyle football clubs.

He took a degree in accounting and finance before training with Grant Thornton in Bristol, qualifying in 1985. He reveals: “I have always enjoyed numbers – maths was my best subject at school – so I did a degree in accounting and finance. Moving into the profession was a natural progression.”

Two years after qualifying, he moved into the property industry, first with Wimpey Hobbs, part of the George Wimpey group, and then with Secure Retirement. “After five years in the profession I wanted a new challenge and was attracted to the opportunity of being involved in the day-to-day running of a business and contributing to its success,”
he explains.

At the time, Secure was a listed company specialising in building retirement homes. As it looked to expand its activities, it ended up buying Southampton FC in a reverse takeover in 1997.

“My move into football was by chance. We came across Southampton FC, which was looking to build a new stadium and needed funding and a management team capable of delivering it. After the due diligence process we completed a reverse takeover and I became finance director of the club. It was clear to us at that time that with Sky’s recent involvement, revenues in the football industry were set for substantial growth.”

Onwards and upwards


The Saints had outline planning permission for a new stadium but needed an executive team to manage the project and funding. They found the finance and built St Mary’s Stadium in 2001. Jones recalls: “My 12 years there were certainly a rollercoaster. We had some successful years in the Premier League and enjoyed an FA Cup Final in 2003. However, following relegation in 2005, the club went through a difficult period as the finances dried up and the boardroom squabbles began. Eventually, wealthy new owners were found in 2009 and as is common in football, the new owners bought in their own people and I parted company in 2010.”

Jones made the move west to Plymouth Argyle, a shift that quickly turned sour. “My 11 months at Plymouth was an incredibly difficult time. It involved an administration and a search for a new owner. We learned how to survive with virtually no money. The staff and fans were fantastic; they pulled together and never gave up hope.

Jones was among the directors responsible for finding the club a new owner. “I’m delighted that the new owner, James Brent, has brought financial stability to the club and I am really pleased Plymouth also won promotion last season,” he says.

Undeterred by this experience, Jones was determined to stay in football and was attracted by another south coast club, Brighton, due to its enormous growth potential. But to be an accountant in football can be complicated: it’s an industry that permits – almost encourages – getting into debt. For example Arsenal, generally accepted as one of the best financially run clubs in the Premier League, is criticised by fans for producing profits and running with a cash reserve of close to £150m.

“It is not easy to be an accountant in football,” Jones confirms. “Luckily my family are sports mad, so love my involvement. My wife had never been to a match but now really enjoys the games. My sister lives in South Africa and now we are in the Premier League she gets to see virtually all the Brighton games. My son has recently started a business course at Brighton University and I know it won’t be long before he is tapping me up for tickets and some boardroom hospitality.”

Jones clearly loves the role and the sector and would recommend it: “Jobs in football are few and far between for ACAs, but they do come up. My advice is to keep looking and be quick to apply. Be prepared to accept an entry-level position. Doing some part-time or voluntary work in football helps.”

He admits the journey with the Seagulls has been harder than he had expected. “Brighton & Hove Albion is a club with massive potential, a new state-of-the-art stadium and a committed owner and chairman [Tony Bloom]. When I joined the club almost six years ago, I was confident that promotion could be achieved in a five-year time frame. But in many ways it has been tougher than I imagined. The Championship is competitive and having lost in the playoff semi-finals in three of the previous four seasons, it was great to finally achieve automatic promotion to the Premier League.

“Off the pitch the club has made an enormous leap from leasing the athletics stadium at Withdean, to completing our £103m, 30,000 capacity American Express Community Stadium.” Since the move to the Amex, attendances have risen from 7,352 at Withdean as the new stadium finally met the latent local demand for tickets. This season has seen sell out games, and the club has in excess of 22,000 season ticket holders and 1901 Club members.

“The Amex Effect” cannot be underestimated. Since 2009 Brighton’s total revenue has grown by an unprecedented 473%, says Jones. “But there was also a lot to do in terms of implementing financial awareness, systems and processes to drive revenues and cut overheads.”

Jones was promoted to finance and operations director in March 2015. He also oversees the supporter services, facilities management and health and safety areas, and manages the club’s relationship with caterers Sodexo.

Club accounts


The accounts for the 2015/16 season show a turnover of £24.6m, up from £23.7m in 2014/15 (in 2011, Brighton’s revenue was just £7.5m). But the club is not out of the woods yet. It made an overall annual loss of £25.8m, compared with £10.4m in the previous year, after investing in the squad, and its net debt has risen by £25.6m from £140.5m to £166.1m. Although Jones describes it as the “friendliest” of debt, because it is entirely owed to Bloom and is interest-free, it shows how much the club is dependent on him. 

Still, Jones says they’re fortunate to have him: “Tony Bloom loves the club and is passionate about it. His family has been involved for years; his grandfather was the vice chairman in the 1970s and 1980s. He has invested over £250m of his own money including £100m for the new stadium and £30m for a new training ground. He’s funding the club’s losses and provided the funding for a team capable of winning promotion to the Premier League.”

But now that the Seagulls have made the journey to the promised land, what does the future hold? “From a systems point of view, we have already made the necessary changes. Based on my Premier League experience at Southampton, I recognised that Brighton operated like a Premier League club in everything it did, even before promotion,” he says.

“I don’t see the need for major changes operationally in the short-term because of the reorganisation two years ago. I now have both financial and operational responsibilities and work closely with the senior management team in all areas of the business. We have good people in all the key positions.

“The changes we implemented have allowed [CEO] Paul Barber more time to focus on the football side of the business, working closely with the chairman, the manager and the head of recruitment. We essentially operate two budgets, an operating budget and a football budget. The operating budget we run to best business practices, trying to maximise revenues and reduce costs wherever possible. The more we can make at the operational level, the more we can contribute to the football side of the business.

“The size of the football budget has been largely down to the chairman and how much he was preparedto commit, while at the same time living within the game’s financial regulations such as Financial Fair Play (FFP) and its profitability and sustainability rules.”

Promotion to the Premier League has had and will continue to have a profound effect on the club’s revenues. Competing in it for a single season is worth a minimum of £175m to Brighton & Hove Albion.

A worst-case scenario would be that the club is relegated after one year. If that were the case, it would still earn approximately £100m from TV revenues, followed by a further £75m over two years from “parachute payments” given to all clubs who are relegated from the Premier League.

Budgeting 


The budget will continue to change dramatically with the Premier League TV monies and improved commercials, “but we will also increase player wages and pay bigger transfer fees. We expect to make modest profits in the Premier League, compared to the significant losses we have reported in the Championship,” Jones predicts.

The club has also confirmed that despite ongoing losses, it will meet the new profit and sustainability rules in 2015/16, which permit losses calculated over a rolling three-year period up to a maximum of £39m, ie an annual average of £13m, assuming that any losses in excess of £5m are covered by owners injecting equity.

This may seem incongruous – the latest available accounts show a £26m loss, twice the limit – but can be explained because losses defined under FFP are not the same as published accounts. Clubs are permitted to exclude some costs, such as depreciation, youth development, community schemes and any promotion-related bonuses.

While Brighton & Hove Albion will be looking to remain in the Premier League this season, there is a longer-term plan. “We need to consolidate our position in the Premier League. But we would like to push on and be a regular top 10 challenger with a realistic chance of European qualification and a realistic chance of winning cup competitions,” says Jones.

And while he has no intention of leaving Brighton, he hopes that when the time does come he will have left behind a positive legacy.
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