Good evening and welcome to our latest netcafe.

On Monday evening, DFC Chief executive officer David Johnston did a very good presentation at the Dolphin Centre about the way forward for the club.

If you didn't make it Monday, here's a summary from our website here

http://darlingtonfc.co.uk/the-building-a-sustainable-future-presentation/

Thanks everyone for the questions, David has kindly answered them with the help of Chris Stockdale from the DFCSG.

If you want to ask a question, please mail it to media@darlingtonfc.org. We will try and answer all questions received either tonight or on Saturday – we appreciate that the answers might prompt more questions.!

By the way, have you got your tickets for the York game yet? Check this link here

http://darlingtonfc.co.uk/york-city-tickets-going-well-on-line/

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John Dunn

Assets that can bring money into the club

I was not at the meeting tonight, I live in Stockport and am only just recovering from a Saturday spent in the pubs of Darlington (!) when the match was called off on Saturday.

I understand (from twitter) that DJ said that he wants to create assets that can bring money into the club.

That is obviously extremely sensible.

I think that he also suggested that a 3G pitch would cost ~£400k- £500k to install but would generate £700k per annum.

If that is anywhere near right then even allowing for additional running costs in administering the pitch business and maintaining it that is an astonishingly good return.

Are there any plans to put a business plan / case together to justify the financing of exactly this project?

If these figures are in any way realistic then this as a project would be far and away the most sensible way for fans to contribute to the club.

For example if fans raised £250 k and the club borrows £250 k (from a bank or the fans, giving a commercial return by way of interest) and the club gets an asset which will generate £700k (or anywhere near that) per annum then I would have thought that commercial borrowing of £250 k would not only be sensible it would be crazy not to do it.

Any business would invest in a project which delivers this level of return and it would at a stroke give the club an income stream which would transform its finances.

So are there any plans for this and if so are there any barriers or issues against it? (For example would the creation of the pitch in any way conflict with the lease we have with the rugby club.)

Sorry for rambling on but the idea looks too good to be true and if it isn’t then it is far too good to miss.

Hi John

I looked at 3G/4G pitches several years ago when I was watching “Goal “ share prices (they had 42 pitches across the country at that time) and on investigation quickly realised these assets are both profitable and importantly cash generative. Your figures are slightly out but we would have to re-run my old financial models to determine what the cost would be – a pitch is relatively straight forward but would be c£450k-500k but I would also like to include a clubhouse with bar facilities, space for our future Academy requirements, together with changing rooms and office space to make it our home. This would obviously increase the costs but the net profit that could be generated from a fully operational pitch is a significant sum that would resolve all of our cash flow issues for the foreseeable future and should remove the need for the continual fan contributions.

Naturally we would have to get planning and there is also the issue regarding supply/demand in relation to pitch supply in the Darlington area. This will also affect profitability so we would need to produce a detailed business plan and get approval once our preferred location is known.

It is an area however that I would like to explore as we need to generate assets that produce income for the club.

Thanks

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From Iain Weaver

Hi David

Very good presentation, thank you.

With regards to the DD idea of £40 per month - £480 per year – this could be seen as a huge sum on top of the price of a season ticket / regular match day tickets.

Would it be an idea to look to incorporate a standard standing season ticket for each contributor if you donate this amount with money off a season ticket if you donate less than that figure e.g. donate £360 per year you get £120 off your season ticket, donate £420 you get £180 off your season ticket. I’m basing this on a standard season being around £240 per year. That way you’d be ensuring you get an extra £240 per person who takes up the scheme. I know it isn’t the projected £480 but it may be more achievable.

Another way of spreading the income throughout the year is to have a pay per month season ticket rather than everyone having to pay the full amount in one go. It may make the uptake of season tickets greater if you could spread the cost through the year. I remember this being the case when the Sterling Group ran the club at the Arena after Reynolds went bust, they offered good deals for family season tickets and allowed you to pay in instalments and the club got more season tickets holders during that period.

Kind regards

Iain Weaver

Hi Iain

Thanks for your suggestion, it is certainly something we can look at. One of the clear things to remember however is that the club needs not only the match day revenue we are currently getting but also the additional sums the fans raise through boost the budget, bucket collections, community pledges etc. We need to be careful that the schemes generated are not substitutional for the current income…any scheme we introduce must generate additional revenue.

I will however take this idea forward to the Boards as your idea is worth discussing further.

Thanks

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Hi David,

Thank you for your significant work in securing the club's future.

Quick couple of questions:

1). What's your view on the potential 'Sports Hub' at The Arena, could this be an opportunity to take the club to the next level?

2). Are we actively looking at the opportunity of bringing a local private investor on board, who could build the club in collaboration with the fans?

Many Thanks,

Steve Bishop

Hi Steve

The Sports Hub project whilst being a very bold vision clearly needs a supporting business plan showing all of the financial models before I can comment on its suitability for DFC.

If we deal with the vision first ; the concept of a sporting village within the town is clearly a good idea, regenerating the area and creating employment and opportunity and as the largest sporting club in Darlington it would make sense that we have a presence there.

The business plan however is currently not available and until I can see what the financial implications are for DFC, I will not jeopardise the future of our club unless the commercial deal is beneficial for us. Any move to the village would need to enable us to create our own income generating assets that I mentioned on Monday evening and we would also need to understand clearly what the plans are for a ground.

If the plans assume we are playing in the Arena, there are certain pre-requisites

• Our League rules insist that we have primacy of tenure – this means our fixtures need to take precedent over any other clubs playing there
• The proposal for the Arena is for a plastic pitch – we cannot relocate on this assumption as whilst that would be ok for the National League, the current FA League requirements do not allow league games to be played on plastic (you can however play Champions League or FA Cup ties on plastic!).

In its current form, the Arena in my opinion is not really fit for purpose. The fan experience with 2,000 fans in a 25,000 capacity stadium is not ideal and there is ageing infrastructure that could result in increasing operational costs. We will however have to wait for the plans to be developed and ensure that our requirements are clearly understood if there is to be any further development or re-development.

So obviously there is a lot to discuss and I am sure we will be involved in future meetings but I must stress….we will only relocate if we get the right commercial deal for DFC.

In relation to your second question, the club is always open to any proposal concerning investment but the current club structure prohibits any individual from obtaining more than 15% of the equity. Following the problems of recent years, the articles and rules were created to protect the club from falling into any one individual’s hands and thus the fan owned model was developed.

Therein lies an immediate conflict as I am assuming that any individual who wanted to invest significantly into the club would want a serious say if not control over how the club was run on a daily basis. This is currently not permitted.

If however the Boards did decide that external investment coming in was in the interests of the club, the fans would have to vote to accept that, so it is a very complex position. Needless to say, we are not inundated with offers either so this is the driving reason behind our approach to develop income generating assets that make the club both self-sufficient and financially sustainable.

Thanks

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Derek Webster

Firstly thank you for such an open and honest presentation yesterday.

After reflection on the points raised I now feel it’s time to bring in outside investment, myself and a number of my retired friends would be willing to invest a little more but I suspect the majority of fans have given as much as they possibly can.

Is there room for a quasi model where we can have outside investment but possibly retain 49% and have a blocking vote when it comes to voting on anything contentious?

This would perhaps keep the fan ownership model intact but easier for outside investment.

Hi Derek

This is an option but there would need to be an investor willing to come in with significant capital to make a difference .

£1 million does not go far in this league, it may take us 3 years to get us into the National League but beyond that we will need that sum per season.

Getting into the Football League ironically generates a significant windfall from Sky and from Cat 3 Academy status. This together with our current turnover (not including increased crowd revenue) would give us a budget that would mean we could compete in that league. It’s poor management , coaching and player recruitment that ultimately results in teams falling out of the league.

The equity structure could be changed if the fans wanted and voted for it and we could ensure a balance of voting rights that could block any decision that the fans deemed was not in the best interests of the club. However we do not have a list of individuals queuing up to get involved so this is probably a moot point.

Obviously as a club we would consider any serious external investment should it present itself and we would discuss this with the DFCSG to determine whether it would be worth pursuing .

Thanks

D

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From Richard Matthews

I refer to last night’s meeting. There was mention of the 500 Club and its influence on the funding.

However I would like to pay tribute to Glen and Mary Bowes who have tirelessly worked on developing the 50/50 draw ( not mentioned ) I am not a 500 Club Member and  rarely support the bucket collection but I contribute £5 to every home game for the draw. ( approx. £90/year equates to £45 extra to the Club ) This now contributes at least three times as much money as when first started and I know quite a few winners who make a contribution from their winnings. So approx. £12k/year.

I believe this is a more beneficial source of revenue than a few pints over the bar and so should be aggressively advertised.

I sometimes attend the reserve games and have to say I am very impressed with the standard of football played. I am keeping my fingers crossed that we may have at least two or three potential stars of the future one of which is Dale Milburn who will be pushing for a game in the first team in the near future. These lads could help massively to improve our finances.

I was very impressed with your presentation and enthusiasm.( Tommy Wright also speaks well ) It was a blessing in disguise that we were unable to attain promotion last year to provide the Club with some time to progress the finances. It would be good to attain promotion this year but realistically a push for promotion next season will be more realistic and giving time to consider changing to Full Time Status.

Best Regards,

Richard Matthews  ( 50 years support )

Hi Richard

Yes I totally agree Glen & Mary have worked tirelessly and deserve significant praise and their activities should be promoted.

The reserves do take time to develop but I am also confident that the likes of Dale and Vinny will soon start to get places on the bench and hopefully break into the first team in the future. Tommy is very keen on the development of youth talent and I am sure they will flourish moving forwards.

Just a quick point I need to correct – I quoted at the presentation the other evening that the reserves cost us c£55k a year. This was total wrong, they actually cost £8k and are self-funded so there is no impact on the first team finances. The Youth set up is actually £55k and again are self-funded. Apologies for my mistake, I was pre-occupied with other financial figures.

Thanks

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We'd like to thank all our match and matchball sponsors this season -- check this link here.

http://darlingtonfc.co.uk/thanks-to-this-seasons-match-sponsors-and-matchball-sponsors/

If you want to sponsor a game, drop joanne a line on hospitality@darlingtonfc.org

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From Ian Roberts

Hi

At last night's meeting, the new Sporting Village was discussed. Could one option be that we move the Football club, and not just a 4G pitch, from Blackwell Meadows to a purpose built ground in the new venue?

Regards

Beardedian

Hi Ian

This is all up for discussion but yes I would agree that if we do have to move from a planning and council perspective then my first priority is to negotiate our own ground and associated facilities. Looking at our infrastructure, all of the stands at BM have been designed on a modular basis (even the tin shed), so there would be a cost associated with moving them but it is entirely feasible to take them with us. The money raised by the fans to date therefore has not been wasted.

I must stress however this is all still subject to the business plan and our discussions over the coming months.

Thanks

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From Andrew Park

Is the long term stability of the club at risk, as it seems to appear that the fans are having the bail the club out again with its 'annual' cash call?

Hi Andrew

No this is not the case, this cash requirement is to satisfy 2 things

1). To remove the legacy debt position from last year – This places daily pressure through creditor management and must be resolved

2). To provide a smoothed monthly cash flow so we clearly know what we are receiving and when. If you remember from my presentation I talked about our fixed cost position at the start of the season whereby the players were all on contracts and therefore we have a fixed monthly cost to cover. The budget was then set with our income being calculated against a crowd figure of 1800 fans per game. That income covers our costs but if crowds fall below the 1800 figure, naturally the income is less than the expenditure on a monthly basis.

The 1800 crowd estimation was based on the previous season plus a small amount of growth with our return to Darlington.

What cannot continue is the Directors having to put cash into the business to placate irate creditors and a direct debit monthly scheme would help this hugely. The cash flow does return positive by season end as you will have seen from one of my slides but there is obviously a shortfall around March due to our fixtures schedule and this will have to be covered and DFC is actively working on strategies to do that by end of Feb.

Thanks

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From Andrew Gibson

Thanks for all your continued work for our club.

Could I please ask why the concession age is at 60. I was very surprised to

find this at such a low age range. Pensioners now retire at 68 and whilst I

appreciate the sentiment at maybe keeping the concession rate low, it maybe

should be increased in-line with state pension age.

Regards

Andy

Hi Andy

Having looked into this following your question, I have been advised that the concession age is 62 for season tickets this season whereas the pay on the gate level is 60. This is an anomaly and any future increases will be done in consultation with DFC & DFCSG.

The proposed strategy is to gradually raise concession age to 66/67 inline with state retirement age by 2019 or 2020.

Thanks

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From Rita O’Neill

Hello David

You spoke about potential opportunities around the sporting village concept or development of revenue generating assets, presumably at a location other than Blackwell Meadows. This suggests that we may walk away from the infrastructure we have invested in, and continue to invest in, at Blackwell Meadows. The fans and the club have worked hard to raise the funds for Blackwell Meadows infrastructure and if it were abandoned the club would be left with an ongoing commitment to repay the loan capital with nothing to show for it.

With this in mind do you believe a re-location away from Blackwell Meadows is a viable proposition in the short or medium term?

Would re-location also require repayment of grants DFC received for Blackwell Meadows?

Thanks

Rita O’Neill

Hi Rita

Can I refer to my previous answers? At this stage there are no concrete plans to move away from BM and it is all subject to the business plan for the sporting village concept proving to be commercially viable. If the Council however proceed with the scheme and prevent any further development at BM then we would be faced with moving BUT I would naturally look for compensation if this was the case.

I do however think that will get a decision in the next 12 months so after this we can decide how we proceed.

At present yes we would have to repay grants but again that is all in the mix regarding the larger scheme etc. Regardless of whether we move or not all community shares will retain their value and will be repayable on request as per the terms in the prospectus.

In addition, the infrastructure which we have invested in is designed to be modular and can be relocated so assets won’t necessarily have to be left in place at BM.

Thanks for your ongoing support for our club!

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From Neil Johnson

What is the Sports Village proposal so far and is it a re-working of the shopping development, 
that delayed the BM deal?
The proposal is still not defined and the council has asked for a detailed business plan. 
Once we see this we will then be in a position to discuss our options

In relation to your strategy for the club’s future may I pose a question for your consideration please. 
 No mention was made as to Darlington Football Club going fully professional.  
Are you able to advise what the likelihood is of this happening? 
Thank you,  Derek Burnley.
Hi Derek

Are there any potential investors interested at the moment? 
If so will we hear anything from these investors any time soon? If not where does this leave us as a club?
Hi Adam

Hi, Andrew.

From Colin Legg

Hi David
Thanks for your tremendous efforts to move the club forward, it's a tricky ask to know which way to turn, 
if the town is actually goin to have a sports village ? 
then the football club would surely be a prime mover in it, 
I just hope the council do not abdicate their responsibilities as before leaving George to hang out to dry, 
any town would welcome an asset like the arena, but I would not want a great big stadium with no fans in it again
 , it's a big challenge to get it right , 
best wishes 
Colin Legg

Hi Colin

 We now have a good working relationship with the Council and I am confident that they will act in the best interests of the town. Rest assured we will have a strong voice in these discussions.

 Thanks

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Peter Haygarth

I missed Monday's meeting and the only details I have are what has been published online.

1. Can you elaborate on the details of the £65k legacy debt?

2. The affiliate marketing drive sounds interesting, however could you clarify what exactly this is?

3. Our attendances have been disappointing since the return to Darlo and I urge the board to ask the fans for their suggestions to improve this.

For my part I believe that the matchday entry price is too expensive and I believe that fans/members should be given a vote on different pricing scenarios - similar to the manner in which we vote for each season's strips.

Prices for children should be reduced to £1 - with the exception of games where we are likely to get a large crowd.

4. Can you clarify whether any of the "Boost the Budget" fund, raised by the fans earlier in the season, is remaining? The official website article implies there is nothing left in this fund.

5. Regarding the proposed Sports Hub, is there some chance that the club could relocate back to the Arena?

And what is the highest level we would be allowed to play at if we had a 4G pitch?

Thanks for all your hard work!

Hi Peter

1). The legacy debt is to a number of different creditors and the value was carried over from last season. The aged debt profile has changed however with the older debts cleared and replaced by new ones. This needs to be cleared as it is hampering our ability to run the club on a daily basis and is consuming significant management time and stress in managing the creditors.

2). The affiliate marketing will be announced shortly so I don’t want to disclose this until we are ready – apologies

3). The admission price is a difficult one as if we had not raised prices I think our debt position may have been worse. The planned budget at the start of the season when all of the player contracts had been signed (so we had a large fixed cost) showed we were going to lose c£90k this season which would have left us c£155k in debt by the end of the season. This position would have been untenable and risked the future of the club so I felt we had no alternative but to raise prices. This was my decision and if it has contributed to reduced number then it is unfortunate, but financially I think it has proved to be correct as we are now predicting a £10k loss. Admittedly we have gained some income through transfer trading but this is nowhere near the £80k difference.

Both DFCSG & DFC however are working hard on strategies to improve the matchday experience and over the coming months, into next season, hope fans will see visible improvements. Also there is a plan to launch a survey, probably in the close season, to get fans' feedback on everything to do with DFC, Blackwell Meadows, etc.

4). Approximately £2.7k is forecast to come in per month until the end of the season.

5). Again it is too early to say until we can see the plans. The 4G pitch will not be used for matches only for training and to create revenue through 6-aside leagues etc

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Many thanks everyone for the questions, and thanks also to David and Chris for taking the time to answer them.