A few weeks ago I was emailed by Ollie Wright of the Derby County Blog. Ollie was, to say the least, surprised by the article I wrote in response to Bolton's massive £136.5 million debt.
For those that don't remember, I said that despite the fact the number was staggering, it wasn't the end of the world for Bolton Wanderers. Derby County have had their own debt issues in the past but the number was nowhere near that of Bolton's. Ollie and I exchanged a few emails about our thoughts on the situation and whether it would ultimately be Bolton's undoing or if the Trotters could find a way to succeed.
Ollie Wright (OW): I was really interested in your article about the current debt levels at Bolton, which, from the outside looking in, seem staggering. You seem pretty relaxed about the headline number of £136.5m and I take the point of your blogpost - that because the debt is mostly in the shape of a long-term 'soft' loan to the club's owner, the situation is not as parlous as it would seem on the surface.
I have a few questions I wanted to ask, but as I'd like this to take the form of an exchange, I'll ask one at a time.
Firstly, where on earth did all that money go?
Mark Yesilevskiy (MY): Where the money went is really quite difficult to pinpoint. The debt has increased fourfold in the last six years and with relegation to the Championship, it doesn't seem like it will stop any time soon. Where the money went is down to a number of different factors:
1) Overspending in the transfer market. Bolton fans generally despise Gary Megson not only for his style of football but for the financial state he helped put the club in. Megson made Bolton's record transfer signing with the £8.2 million fee payed for Johan Elmander (who never came good on the field) but that wasn't the end-all. Fees of £3.5 million for Gretar Steinsson and £4 million for Zat Knight (with other players coming in on similar numbers) leave you scratching your head. These signings were then put on massive contracts and the financial bleeding ensued.
2) Naivety in the transfer market under Owen Coyle. If you had to wager a guess for how much money Bolton Wanderers recouped from Johan Elmander's move away from the Reebok, would you have guessed £0? Owen Coyle failed to re-sign Elmander and in the end, he walked away for naught. The sale of Gary Cahill is on similar lines. Bolton had paid £5 million to Aston VIlla for him originally and sold him to Chelsea for £8 million with 6 months left in his deal. It's obviously not the best-case scenario but with better management, Cahill could (and likely should) have gone for double or triple that amount.
3) The academy. Bolton put in a large amount of money in getting the Lostock training ground & youth academy up to shape. Permanent fixtures on the ground including dressing rooms and classrooms have cost money but that investment is coming good now. The BWFC U-18s started their season dropping only four points from ten matches.
OW: Wow, so even without signing real marquee names - Elmander aside - it's transfer fees and player wages that have caused a lot of the problems. This does reinforce how difficult it is for clubs below the very top of the Premier League to keep up with the competition. You certainly wonder what will happen to certain other clubs, should they come down next season (I'm thinking mostly of QPR, which is a raging loony bin at the moment).
At some point, the madness of rampant wage inflation has to stop and it will be interesting to see what comes of the current talks over potential financial controls in the PL.
However, the bulk of Bolton's overspend has been underwritten by the owner. I understand that Eddie Davies is a local boy made good - the Trotters' equivalent of the recently deceased Nottingham Forest benefactor, Nigel Doughty. But exactly how deep are his pockets? If last season, Bolton lost over £20m, it seems reasonable to suspect that they will lose even more this season, due to reduced turnover? And even if he is able to keep plugging the gap, is it really healthy for a club to be so dependent on one man's largesse? As far as you know, are the club doing anything to try to get back on an even keel?
MY: Eddie Davies has supported Bolton through and through but as recent transfer dealings suggest, his Bolton-specific pockets are only lined so deeply with cash. That said, investment in the club and facilities, outside of talent, is done more often than not. Burnden Leisure, the company that has Bolton Wanderers and the Reebok Stadium among their holdings, have just announced a joint £100 million investment in Middlebrook, the area directly outside the Reebok.
Bolton will absolutely continue losing money thanks to the reduced income from TV rights and the parachute payments from the Premier League not being anywhere near what they were in the top flight. Of course it isn't healthy but it's just a matter of footballing life. Football, for the most part, is a losing business. Just look at Chelsea, they've finally earned a profit under Roman Abramovich (the first time since he took over, just under 10 years ago) and they have had a lot of on-field success at that time. It took them winning the Champions League to get back in the black. Not all clubs, in fact, the vast minority, are run as well as Bayern Munich and others in the Bundesliga.
Under Owen Coyle, Bolton began stemming the tide. Despite not making any money back on the non-sale of Johan Elmander, his wages were massive for a club of Bolton's size. The same goes with many of the other players signed under Gary Megson. When their contracts ran out last summer, Bolton cut ties with them and effectively halved the wage bill. The only real way that we will see progress in cutting the deficit though is with a return to Premier League football.
Join us for the second half of this lengthy conversation tomorrow.