I went to a small gathering of fans with John Mitchell on Thursday night in response to concerns which had been raised with John following the sale of Rowan Vine and the closing of the transfer window with less progress than we had all hoped. The meeting ran for over three hours and John was absolutely open, answering questions on any subject and in some considerable depth, with plenty of opportunity for challenge and response.
I made notes of the session and pulled together a summary as below. John has reviewed this and is happy for it to be published. He asked for minor drafting changes (which have been incorporated) but did not ask to remove anything of significance. I found the whole session enormously encouraging, but make your own minds up:
John Mitchell as Chief Exec
John outlined that the Club had not communicated very well with the fan base, as a consequence the relationship between the Board and the fan-base had suffered. He is committed to changing this, not only by improving communications but its frequency and also being careful not to make any promises that he cannot keep.
The appointment of a full-time Chief Executive was essential to allow the Club to have accountability and someone who will make decisions across the business and provide future direction. This would entail the provision of a five year business plan that clearly identified the goals of the business.
John`s overview of the Club`s Position
The Club has had a yo-yo existence over many years, with a lack of significant decision-making and investment that has lead to the position now where the customer experience at the ground is pretty dire and the Club itself is in a catch-22 situation. Currently the total income for the business is too small to even cover the football budget, and there is no realistic way of expanding the revenue base sufficiently due to the constraints of the ground capacity and space.
To illustrate the problem the Club sells circa 300 pints of beer on a match day Saturday afternoon. Even with the modest attendances at Kenilworth Road the potential is significantly higher; however the facilities at the Club don`t allow it to exploit this area.
The potential of the Club is much more than this. As things stand it is a poor customer proposition, with minimal parking, the risk of vandalism to cars, poor views, uncomfortable, cramped seats, limited catering and toilet facilities.
The Commercial activity is somewhat hampered by this. John is reviewing all such areas of the Club with a view to re-energising various areas. One of those areas was the Club shop, which until recently offered a poor customer experience. Debenhams who are already partners to the Club were asked to work with Tracy Maddox, newly appointed Head of Retail, to review the shop and how to improve it. Since then the shop has been overhauled and when new products start to come through we are confident the customer experience will have improved greatly.
The Club has operated with limited resources and investment, and John and the Board have decided that they will take a medium to long-term view and set themselves robust milestones on a 5 year horizon. The Board sees Reading and Bolton as role models who have transformed themselves from poor financial situations by setting a clear objectives and a vision that will include significant investment in a major new stadium complex, resulting in payback on and off the pitch. In Bolton`s case however they ended up with significant debt and the Board is adamant that Luton`s solution will end up with the Club owning its new stadium and, furthermore, doing so debt-free.
When asked whether he intends to be here in 5 years time John responded that the Board had made it clear from the outset that they would sell if the right investor or investors came along to move the Club forward, and that remains the case, but that otherwise he certainly wants to be around and would love to be here in 5 years and beyond. He was brought up in St Albans and his father took him to Luton, Watford and Tottenham. He now lives in Harpenden and regards Luton as his club.
He confirmed that there had been some interest in buying the Club, but ultimately these had not been right for it and in taking it forward to the next level.
How bad are the finances?
Since coming out of Receivership the club had generated £8.6m in transfer fees, of which circa £3m is still outstanding and will come in over the next 18/24 months. Likewise the football budget over the same period had increased dramatically – in 2004/5 it was £4.2m, this season it will be near £7m.
In seasons 2004/5 & 2005/6 the Club lost £1.9m pre-transfers and the present season expects to lose circa £2.5m pre-transfers. Going forward the Club will need to cover circa £2.5m each year to subsidise these losses. The need to move is essential in order to raise its revenues, otherwise the Club will be under ongoing financial pressure and continue to be more of a selling club until and unless it can expand its income base.
It has just one loan, of £500k, on an interest-free basis, which is repayable once a new stadium is completed, but is otherwise debt-free.
Is the Board serious about a new stadium?
Absolutely. It is the main priority for the Club to achieve in order that it can progress and compete at the highest level. The Board recently appointed leading architects in football stadia, The Miller Partnership, who include amongst its designs, Pride Park, The Walkers Stadium, The Ricoh Arena, Stadium of Light, Hull and many parts of the new Old Trafford. The brief to Millers was that Luton`s stadium had to be unique and iconic, drawing on lessons from the many stadia built in recent years, but clearly having features that would make it unmistakeably Luton`s ground. It will retain the feel that the fans are tight to the pitch, which gives Kenilworth Road its special atmosphere.
It was announced today by Rosemound Developments Limited that it had signed contracts with Cliff Bassett for an enabling development at J12 of the M1, that included the Club being provided with a £25m contribution towards its stadium construction costs and the freehold of the 30 acre stadium site that sits within the overall 250 acres of the development area. Rosemound are one of the best-known developers of distribution sites, with a client list that includes Tesco and Excel Logistics, and sites including the Daventry International Rail Freight Terminal. The enabling development proposed for J12 was based around 5 distribution units (warehouses), and Rosemound are absolutely credible partners for such a development.
Where should the new ground be?
There was a long discussion about the credibility of J12 and the various options. John pointed out that moving the Club away from Kenilworth Road was also a key part of the Council`s strategic plan to regenerate parts of the town. He agreed that he had been surprised that the Council had not taken the opportunity offered by the Vauxhall site to insist upon a relocation of the Club as part of the planning considerations for that site. However it hadn`t and that opportunity had passed as indeed had some other sites as well. While in an ideal world it would have been preferable to build the new stadium within the Borough itself, the fact is that there are presently no feasible sites that deliver against the Clubs requirements, paid for stadium, freehold, no debt and once again be in control of its future.
J10 was discussed at some length. Although many supporters insist that was the best option, the fact remains that previous owners of the Club had also owned that land, and despite owning both for three and a half years had not even submitted a planning application. When the present Board took control of the Club they had expended significant energy in trying to conclude a deal, resulting in offers for the land rising from circa £8m to over £12m. Matters were complicated further when key areas, such as the freehold of the stadium site along with naming rights were changed/removed and the club was left with no option but to then explore other suitable sites. The Council had always tried to assist the Club, but it was not their land and there was little they could do to assist.
In contrast J12 is a far better structured deal and meets all the Club`s key requirements. It will own the Stadium outright, be debt-free, money in the bank and be in control. It will retain all its commercial rights, such as the stadium naming rights.
Is it credible that we can own a stadium such as this debt-free?
Yes. The stadium will cost circa £33m to build, including fit out. Cliff Bassett and Rosemound have contracted to provide a £25m contribution towards these costs, and further sums will come from grants (Football Trust) and premier club seating.
In addition the naming rights to the new stadium are extremely valuable. IMG had placed an interim naming rights value at circa £10m, based upon traffic flows passing on the M1. However this did not take in to account the mainline railway which will pass to the East of the stadium, and John believes that the naming rights may fetch closer to £20m.
The Board presently calculates that on the day the stadium is handed over, it would also see the Club with a surplus of funds to assist its future business.
Sounds great but it won`t get permission at J12?
John is confident that it should get approval, although it may be turned down initially, but it is a good site, on poor green belt, adjacent to a major motorway rebuild including significant improvements to J12 itself. The Compulsory Purchase Order for a new junction on the motorway was already underway (7 Feb apparently).
The developer, its consultants and professional team are specialists in this field and know what they are doing, and also believe they will ultimately succeed.
There will always be resistance to any proposal, but this development will provide benefits to the area too, including 1500 parking spaces which should resolve the difficulties with current rail commuters parking in the village itself. The developers and Club are about to start a long consultation period with all interested parties and are keen that the facilities provide as much community use/benefits as possible.
John showed us more detailed drawings of the proposed stadium. These are close to the finished position, subject only to internal room layout changes which should be concluded in 10 days or so.
So what is the timetable?
This may change a little, but the current timescale is scheduled as follows:
Masterplan fix for the entire site is expected to be ready by the end of April
Consultation / public enquiry period through to end of November 07
Submission of planning application December 07
Determination by June 2008
Anticipated Stadium handover to the Club in June 2010,
Why delay the application?
There will inevitably be objections, and the Board has been advised that consultation in advance and well ahead of the application would be appropriate.
On to football itself ?
John has been involved in the game for most of his life, and has never seen so many injuries afflict a club over a long period of the same season. Since the Club came out of receivership, it had achieved a huge amount of football success in a short period, and this is the first stumble along the way and everyone needs to be patient. We have good management and he believes the team will turn the position around.
During the transfer window the Club made eleven offers for players, including two bids of £500k and one at £400k. These bids were not made at the eleventh hour, but in trying buy players, it can be a long-process and it is not always easy to conclude quickly, which is why deals in the transfer window appear to happen at the last moment. John is not a fan of the transfer window, which puts pressure on smaller clubs at a significant disadvantage when bigger and wealthier clubs consistently come knocking on your door for players, often late in the day.
In the case of Rowan Vine we absolutely did not want to sell him, and rejected three/four offers for him. But other influences often kick in and if a player is then led to believe he will significantly benefit financially at a bigger club, it is almost impossible to hold on to them.
In addition to recent signings Drew Talbot and Matty Spring, we had also agreed terms with other clubs for three players during the transfer window, one decided not to move, one would not consider us and the other unfortunately failed a medical.
Part of the problem for Luton (and illustrating why we need a decent ground complex) is that players spend most of their time at the clubs training ground. In Luton`s case that currently means they turn up at Kenilworth Road, change, drive to the training ground and after training drive back to the club, often wet, muddy and sweaty, in order to shower. When you look at the increasing number of other clubs that have new stadiums and first class training facilities, it is hardly surprising that we are finding it harder to attract new players and thereby have to look mainly in the divisions below us. This all comes back to ensuring we move forward with our relocation plans and to the day when we really can compete on level terms.
But Mike Newell hardly helps does he with his criticism of agents?
John agrees 100% with what Mike said about agents. The disappointing thing is that more people in the game haven`t spoken out in support of him. John does not believe that Mike`s comments have deterred players from coming to the Club – if a player has the chance to move his agent should not stop that player from bettering himself, and if Luton offers that chance Mike will do everything to make it happen.
Relationships between Mike and the Board?
It is no secret that Mike Newell and Bill Tomlins have had issues. One of the reasons John was appointed as Chief Executive was to improve the links between the Board and Mike.
He normally will see Mike two or three times a week where they discuss the football needs of the Club as determined by the Manager. Mike and John see all incoming offers for players, with Mike determining player values, if and when appropriate. Players signing or re-signing, again John will discuss with Mike all offers to players. General policy now is that they will seek to avoid players reaching less than 18 months to run on their contracts. Likewise they are currently talking to Leon Barnett (who is contracted to 2009) and Kevin Foley, and have today agreed new terms with Dean Morgan and Paul Underwood.
In John`s view there is a much stronger dialogue than ever between Board members and Mike.
Subject of course to results and relationships, does John think Mike sees himself here in 5 years?
Yes absolutely. Mike is looking forward to Luton being in a new stadium that will undoubtedly ensure the Club has a stronger financial base to compete at the highest level. He is excited by the potential of his team and the opportunity for the Club to relocate. He is confident that players lesser known, such as Calvin Andrew have tremendous potential and in training defenders hate playing against Drew Talbot. Yes they may not be that well known today, but neither were Carlos Edwards, Dean Morgan, Marcus Heikkinen and Rowan Vine before Mike brought them in.
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