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Diary: Funding promotion

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P1010443

It’s nearly time for the clocks to go back and we are sitting really rather prettily on the top of the league table. Beaten only twice whilst boasting the division’s top scorer and with important players like Madden, Mantom and Luke Williams still to make much of an impact, things look very rosy in our garden.

Of course, the elephant in the room, or rather in a field, is the continuing delay in starting construction on the much-discussed new stadium. Early in the month, Chairman Peter Swann spoke to Radio Humberside to discuss the latest issues. He was typically bullish, saying it is “definitely when” not if the work will start. It was clearly a message design to encourage fans and allay fears. The fact remains, however, that we do not seem to be any closer to construction starting than when the project was first mentioned more than three years ago.

It is this combination of on-pitch success and off-field stagnation which are putting a few clouds on the horizon for Scunthorpe United. As Swann himself pointed out, “if we are successful this year and we manage to get into the Championship, to play it in Glanford Park is great, to have another season here is great, but the revenue loss to us is in the millions because of the extra gate receipts and the capability of making more out of the matchday experience.”

Putting aside for a moment the issue of tempting fate by talking about promotion as early as October, one challenge we will have to overcome is the impact of Financial Fair Play regulations. In League One, a club must notionally stick to a wage cap of 60% of income but, and it’s a big but, in this division clubs are allowed to include money injected by owners in the definition of income. This is why we have not had any problems with transfer bans despite declaring a wages-to-turnover ratio of 157% in our most recent set of accounts.

However, in the Championship, the rules are different. Clubs can only count money they generate as a business (e.g. gate receipts, TV money and merchandising) plus a limited amount of cash from the owner. As it currently stands, a Championship club can lose £5 million and an owner can cover up to a further £8 million. A total loss of £13 million. Which should be plenty, shouldn’t it? Well, perhaps. But when you bear in mind that our current deficit is probably going to be more than the £3.18 million loss from 14/15, given the extra investment in players over the last few transfer windows. You can soon chip away at that £13 million. Failure to comply results in a transfer ban which lasts until you get your house in order and show that you can return to acceptable levels.

Of course, financial fair play is not the only issue. Mr. Swann’s generosity is surely not unlimited and even his deep pockets cannot be bottomless so without the increase in income from the new ground, to what extent can he continue to bankroll our rise up the divisions? After all, this current team has been expensively assembled and boasts several players who could already be playing in a higher league.

It is a different feel from the teams which won promotion in 2007 and again in 2009, which were largely cobbled together from non-league and the lower divisions. This isn’t intended as a slight on Graham Alexander, after all Mark Robins showed just how hard it is to mould a team no matter how big your chequebook is and being big spenders brings its own pressures in terms of expectation and the attitudes of other teams.

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My point is that our previous forays into the Championship happened in spite of our budget, not because of it. Having reached that level, we were hopelessly out-gunned, as we saw in 2010 when Hayes and Hooper left and replaced with Bobby Grant and Chris Dagnall. We had the smallest budget in the division; famously, Blackpool won promotion with the second smallest and yet it was widely reported as being more than twice as big as ours.

If we are being honest, a club our size doesn’t belong in the second tier: it’s well above our natural level, so the only way we can hope to get there is through clever management, financial backing or just dumb luck. If we truly want to establish ourselves at that level, we will desperately need to increase our income, which has been Swann’s message all along. Yet, until the first (Scunthorpe-made) steel section is sunk into that field, there remains a risk that having done the hard work of getting into the Championship, we won’t have the financial clout to be able to stay there for long.

We will have to hope that the chairman will continue to put his hand in his pocket to fund the first team, as far as FFP allows, to continue Graham Alexander’s outstanding work. But that’s not going to be sustainable forever. Every delay with the new stadium brings that into sharper focus.

George Young

Written by Matt Blanchard

Part of the team since 2007, before becoming editor in 2013. Undertaken the role of match summariser during Scunthorpe United live match commentaries for BBC Radio Humberside. Seasonal contributor to football titles FourFourTwo and When Saturday Comes and a finalist at the Football Blogging Awards in 2014.

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