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HappyhammerAndy

A probable reason why alot of clubs will perish in the summer.

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Hello chaps,

We all know that football clubs will not feel the full weight of the recession anywhere near as bad this season as next.

Up till now I''ve been thinking, Hey! it''s the football season, I don''t want to be concerned about a dozen or so clubs going bust.  I just wanna go and watch my club play, it won''t bother us! Obviously, in your position it''s a bit different and you have other priorities on your mind first.

However, as the end of the season is in sight clubs will be focusing on contracts that they signed with sponsors and the like for this season which were signed at rates that existed LAST year before our Gordon tried to save the world.  

Any club in the unfortunate position of having to renew at the end of this season will find an enormous increase in the rates charged, assuming that they can find somebody? How many clubs do you reckon will be in this position and, how will they be able to bridge the gap in revenues lost? 

Do any sponsorships etc end at the end of this season at Carrow Road?  If they do, what impact could that have? At West Ham, our shirt sponsor pulled out but we were fortunate in finding one who guaranteed us 18 months sponsorship at a lesser figure. How on earth are such clubs going to exist?

Andy.

 

 

       

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Our shirt sponsor, Aviva, is in place for the next two seasons after this - I''d suggest that if they go bust there will be a whole lot more to worry about than finding some squares of yellow fabric to cover up the name [;)]You''re right though, although I expect clubs with expiring deals have been looking to tie someone else in for a while now the summer is going to be interesting. I''ll be looking out to see how transfer fees hold up (or don''t) compared to previous recent seasons.

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I''m not so sure the figures involved for shirt sponsorship are as big as we often assume- unless you are Man U, Liverpool or another global brand there isn''t much pull- exposure to the same 20-30000 people every other week and a 5 minute local TV spot.Not to mention the deterioration of your brand to rival supporters. If you tot up the cost of say- 35 minutes anglia TV advertising a week shirt sponsorship must have to compete with that? Most companies who sponsor shirts are in the market for far higher TV advertising and will be unlikely to pull out of deals unless there is a REAL advertising squeeze internally... and lets face it, in recession it is training and development that gets pulled first then a trimming of the workforce long before sales/business development and advertising budgets as these are the areas that keep revenue coming in.West Ham''s shirt sponser went bust- no option but to pull out and the reduced price of the successor would have areflected that most of the seasons consumer merchandise sales would have been completed early in the season and that window of advertising space (kids in the park and tubby chests in shopping centres and pubs) was no longer applicable. That may not be the biggest market draw for sponsors but it''s loss is a hell of a negotiation tool to have up your sleeve.

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According to Lord Mawhinney clubs need to worry about sponsorship and season ticket renewals so in theory we are sound as a pound. 

Unfortunately given that we are looking to find some investment we have slightly bigger concerns as the above two may be fine but are apparently not enough to keep us afloat let alone help us to grow.

As a West Ham fan your club has done more than many in helping our business model but you would be doing us a massive favour if you sold Ashton or Green in the summer for a tidy sum....

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[quote user="LQ"]Our shirt sponsor, Aviva, is in place for the next two seasons after this - I''d suggest that if they go bust there will be a whole lot more to worry about than finding some squares of yellow fabric to cover up the name [;)]

You''re right though, although I expect clubs with expiring deals have been looking to tie someone else in for a while now the summer is going to be interesting. I''ll be looking out to see how transfer fees hold up (or don''t) compared to previous recent seasons.

[/quote]

I wasn''t aware that Aviva sponsored Arsenal? [:)]

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[quote user="LQ"]Yawn...

[|-)]
[/quote]

Sorry? Don''t you still have a soft spot for the Ar$e?.....Or have you popped it?

 

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Off the top of my head, surely the incredibly low interest rates could help heavily indebted clubs if they have deals expiring or can negotiate new ones.  Wonder how this might affect NCFC? [:^)]

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Mr Carrrow,

In my experience in the corporate finance field it is normal to hedge against interest rate volatility by purchasing an interest rate swap when the debt is structured. Of course, refinancing is possible, but this has a transaction cost and liquidity is poor in the market at present, particulalry for football clubs. However, there is likley to be some benefit on the non-structured and non-shareholder debt (i.e. bank overdrafts) although rates have come down nowhere near as much as base rates.

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You make no mention of the Hammer''s precarious financial situation, Andy. I thought your club was supposed to be in trouble, or so the national press would have us believe anyway.

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