Season ticket sales 'vital' for Town

IPSWICH Town fans now effectively hold the keys to the club's financial stability following a restructuring of its debts, it has emerged.

The new agreement with lenders over the club's debts - which at the end of last season totalled just under £30million - means that there should be no need for town to sell players for financial reasons for the next two to three years, chief executive Derek Bowden said yesterday.

A break-even budget made possible by the new arrangement with lenders also offers some scope for the addition of new, more experienced, players to the squad to complement club's promising crop of youngsters.

However, the success of the strategy depends on the club's income, principally from ticket sales and commercial revenue, meeting expectations - and Mr Bowden said the strength of season ticket sales would be vital in planning for the 2006-07 campaign.

The announcement of the debt restructuring earlier this month was initially overshadowed by news of the signings of Gavin Williams and Alan Lee, and of a substantial equity investment in the club by businessman Michael Anderson

Town subsequently handed back Mr Anderson's money - thought to be nearer £500,000 rather than the £1million initially reported - after it emerged that he had failed to disclose his past involvement with two other clubs, Aldershot and Kettering Town, when they hit troubled financial waters in the 1990s.

However, two existing shareholders have also increased their stakes in the clubs and Mr Bowden said yesterday that talks continued with other major holders of shares and loan notes.

Depending on the outcome of the current season there was also a possibility of a further public offer of shares, he said, and it was possible too that another substantial outside investor would come forward. There was nothing on the horizon at present but this could change very quickly, he said.

Mr Bowden said the restructuring of the club's debt had been a vital step towards securing fresh equity, as investors wanted to see their money being used to add to the playing squad rather than go straight back out of the club to service its debt.

In turn, building a squad capable of challenging successfully for promotion would enable the club to return to the Premiership and, with the resulting increase in income, start to repay the capital sum owing to its lenders rather than just cover interest charges.

The club's lenders - Norwich Union, Barclays Bank and Bank of Scotland - had recognised this in talks which had begun shortly after Town's defeat in the promotion play-offs against West Ham United at the end of last season.

Details of the new agreements reached were subject to confidentiality clauses, said Mr Bowden, but they did not involve any financial penalty for the club.

The arrangement did not create a “time bomb” by rolling-up debt so that it became a greater burden in the future and, although the deal would involve “accelerated payments” in the event of promotion to the Premiership, these payments would not be so great as to make instant relegation inevitable.

“We have not mortgaged our future,” said Mr Bowden. “The lenders do not think we have done that either, because they also want to see us promoted and to stay there.

“They have recognised that, for the club to be in a position where it can repay more capital, the team needs to be performing. In the Premiership is where we can start to pay back capital and we nearly got there last season, but we didn't quite.”

Mr Bowden said the strength of the club's academy, particularly Town's success in winning the FA Youth Cup last season, represented an opportunity to build a football-led strategy rather than being forced into changes from year to year.

“For the next two to three years, all things being equal - such as attendances and commercial income holding up - we will not have to sell players for financial reasons,” he said.

Asked what would happen if the club received a significant bid for one of its young players - such as Arsenal's £12million approach for 16-year-old Southampton starlet Theo Walcott - Mr Bowden said that any club in Town's position would have to consider such a bid carefully.

However, it would ultimately be a football decision, with the manager deciding whether retaining the existing player or investing the money in several new ones would best assist the squad in winning promotion.

The club would not be forced to sell a young player with potential at a knock-down price in a “fire sale”, simply to service debt and balance the books.

However, Mr Bowden said that the stability made possible by the debt restructuring did depend on attendances meeting forecasts, with a decline of 10% to 15% for 2006-07 having been budgeted for under the new strategy.

With season ticket sales being a crucial guide to what kind of crowds might be expected, the message to fans was not to delay their renewals.

“The sooner we get certainty about the volume of season tickets, the sooner we can predict the average gate and the sooner we can start to add to the playing squad,” said Mr Bowden.

He agreed that cynics might suspect the club of seeking to secure money from season ticket holders only then to sell players once they had renewed. This was not the club's intention, he said, although very slow ticket sales, in the expectation of departures, could turn out to be “a self-fulfilling prophesy”.

Mr Bowden declined to specify a target for season ticket sales but a reduction in line with the overall decline budgeted for in the average attendance would equate to a total of around 16,000, compared with this season's 18,500.

He acknowledged that the performance of the team between now and the end of the season would have a major influence on season ticket renewals and said that, with the recent additions to the squad and the return of several players from injury, there was every reason to believe the second half of the season would be better than the first.