Let's see if Ryan Reynolds can do it on a rainy night during the January transfer window in the Championship
Mailbag! Also includes: How will the Venkys exit Blackburn?
Welcome to the second edition of the Q&A, where you, the subscribers, pose the Qs and I’ll be trying come up with straight As.
If you are a paid subscriber and have a question you would like me to answer in next week’s mailbag, please add it to the comments on this post – and thank you in advance.
And onto this week’s topics…
Will it always be sunny in Wrexham?
This week’s first question comes from Chris, who writes: Hi Nick, in terms of finances, how do you see a project like Wrexham in terms of how far the owners can take it before they have to look at external investment? Is the Championship a realistic initial aim?
Nick Harris: Hi Chris. The best guide we have so far are the accounts filed to Companies House for the year ending June 30, 2022, covering the 2021-22 season, when Wrexham finished second in the National League, behind Stockport, and failed to get promoted because they lost to Grimsby in the play-off semi-finals.
Turnover (income) for that season was up fourfold on the previous season, to £5.972m from £1.478m; but the club still lost just over £2.9m in the year, pointing to outgoings approaching £9m. According to the accounts, “football costs” (we can assume mostly wages) were £3.94m.
The accounts showed that in addition to the £2m spent to buy the club, Ryan Reynolds and Rob McElhenney had at that stage injected more than £5m in additional funds. Of that, £3.67m was to cover the repurchase of the freehold of the club’s Racecourse Ground, while another £1.2million was invested in the form of shares.
The accounts for the promotion season 2022-23 should be public by early to mid-March. We can be virtually certain the wage bill for last year will have grown, and it may well set a record for any non-league club in one year.
What is less clear is how much of Wrexham’s sponsorship money, not least from TikTok and Expedia, who both signed two-year contracts in 2021, were in the 2021-22 accounts. Ditto for the cash from Disney+ for Welcome to Wrexham, the reality television series documenting the club’s adventures under their Hollywood owners.
If these revenues appear in this year’s accounts for the first time, they will give the 2022-23 numbers a healthy bump, but wages and other costs will also have grown and you’d expect another multi-million pound loss for the promotion season.
That in itself isn’t a problem: Reynolds is a rich man, reportedly worth more than £300m thanks to being both a bankable Hollywood A-lister and also a serially successful entrepreneur. He hasn’t put a foot wrong so far in PR and community terms. And he and McElhenney can keep leveraging the club as a media brand to increase revenue further.
I reckon they’ll be good for the money as they go up from League Two (whenever that is, possibly even this season). But life gets tougher after that, and more expensive. If they buy shrewdly and get into the Championship quickly, they will likely be losing more each year – because the standard of footballer required to achieve that goal will mean wages rise faster than revenues.
But again, the owners are good for those relatively minor losses.
Should Wrexham make the Championship, they will face a major decision. Do they start spending the really big bucks on transfer fees and wages, and risk hemorrhaging cash in every season that they don’t go up? The Championship is already full of actual billionaire owners doing that.
Or do they seek that external partner – or group of partners – who might be willing to join to ride?
I highly recommend a book about Wrexham’s rise by journalist and Wrexham fan (and friend and former colleague of mine) Ian Herbert. Tinseltown: Hollywood and the Beautiful Game – a Match Made in Wrexham details Wrexham’s progress from the takeover to last season’s promotion back to the Football League. It has tons of fascinating detail.
The Wrexham story is not all about the money. But it’s a lot about the money, and PR, and leveraging fame.
Agent of chaos: why the Venkys might not be the real bad guys in Blackburn
Alex writes: As a Blackburn fan, it's fair to say the discontent with the owners is growing again. You covered the Venkys quite a bit previously but is there much which didn't make the public domain? And how do you see their ownership being resolved i.e. are they likely to sell or would it be administration or some other means that sees them leave the club?
Several other Blackburn fans asked similar questions, including Alan Sheppard: Came here [to last week’s mailbag request page] with a similar question. Especially with the new rules about moving money out of India that seem to have caused cash flow problems at the club.
NH: Thanks both. To start, there is a vast archive on Sporting Intelligence of Blackburn material from 2010 and 2011.
I went to India for a week to meet the Rao family and look at how rich they really were (really rich) and find out what their motives were. I spent a lot of time with them and in contact with them through 2011 especially.
Alex asks about information not in the public domain but I wrote about pretty much all the dodgy stuff as it happened, and by dodgy stuff I don’t mean by the Rao family, but principally by the agent Jerome Anderson, who orchestrated the deal to sell them the club in the first place without making it clear either to Blackburn’s board at the time, or to the Rao family, that he was acting for both of them without telling the other, for a commission at both ends.
His aim was to persuade Blackburn to then let his company run the club on their behalf, and import players from all sorts of strange places to give them a world stage in the Premier League (with him as their agent) and then sell them on for profit (for him). Anderson did indeed get such a management contract, allowing him to fire and hire managers and buy players, among other things.
the matriarch of the Venky’s clan, Mrs Rao, was naive and massively badly advised, but wasn’t corrupt and had good intentions for the club
He fired Sam Allardyce, hired Steve Kean (a client of his management stable) and started recruiting players, often with massive agent’s fees for associates of his.
As far as I could judge, the matriarch of the Venky’s clan, Mrs Rao, was naive and massively badly advised, but wasn’t corrupt and had good intentions for the club. The Rao family remain owners and have spent hundreds of millions of pounds on Blackburn since 2011 because, I feel, they do not want to fail. They still think they can get the club back to the Premier League one day.
At this point, it’s unlikely that they will receive an offer for the club that would recover a substantial amount of the money they have spent – but if they did, I think they would probably sell. More likely, they will do whatever they realistically can to keep the club out of administration – a scenario in which they would lose control completely.
As for currency export issues, these have been happening since late 2011. Remember when there were fears that not having enough money in the club’s bank account at the Blackburn branch might lead to wages not being paid? That was due to currency export issues. One of the moves they made to get out of that one was selling Chris Samba to Anzhi in Russia in early 2012.
I will try to look again at the whole situation soon – and if I find anything concrete to report, I’ll write about it here.
Guardian good, Mail bad? It’s not quite that simple
Mawerinho writes: Hey, Nick. How do you reconcile working for the sports desk on a paper if you find their political views or agenda ‘difficult’? (Doing some supposition here, but always intrigued me as a general thing for sports journos). Cheers, all the best.
NH: Thanks Mawerinho. I can only speak for myself, but I have always focussed on whether what I’m doing in my job is the right thing – and I speak out when I feel that what is happening around me isn’t right.
Any sports editor I’ve ever worked for will tell you what a massive pain in the arse I can be: constantly complaining that the way some sections of the media behave is a contributory factor to why so many people don’t trust the media.
Beyond that, political agendas tend to play out in the news pages, and comment sections and editorials. Not always, but mostly, they do not carry over to the sports desk, or the ‘toy department’ as it has been called ever since I began my newspaper career in 1996, and probably long before that.
Two other points on this. Perceptions of any specific newspaper are often generalised to the point of being flawed. As in, for the sake of argument, Mail bad, Guardian good. There are lots of liberal lefties working for the Mail, and lots of people with views you probably wouldn’t agree with at The Guardian.
When I was head-hunted to join The Mail on Sunday in 2010, I initially said no. Then I was asked again and went to meet the sports editor. There was a department comprised of good people who wanted to do serious reporting and great writing. The paper itself was still a broadly centrist, middle-market Sunday tabloid. Its most recent star football columnist was somebody now considered one of the woke-est men in Britain: Gary Lineker. As recently as 2016, The Mail on Sunday, under editor Geordie Grieg, campaigned strongly for ‘No’ in the Brexit referendum. True, I promise. Things are not always as they might seem. I’m no longer a staff writer for any newspaper, btw.
Thanks to all of you who sent in questions – I’ll post more of my answers tomorrow. And if you have something you would like me to write about in next week’s mailbag, please add your questions to the comments below this piece.