Owners keep Proud Preston and Nostalgic Rovers on edge

Proud Preston North End and traditional Blackburn Rovers are the only two Lancashire clubs left in the EFL Championship for the 2023/24 season.

Ten miles may separate the clubs but the spicier derbies and needle matches involving two of the founder members of the league are with other rivals, Burnley, Blackpool and Wigan.

Burnley’s comfortable promotion back to the Premier League last season highlighted the gulf in resources that parachute payments provide, while Wigan’s unstable ownership made for a turbulent season that ended in relegation to League One before their rescue by Mike Danson.

Yet both clubs cherish their heritage with stands and statues named and erected in honour of great men who built the reputations of the clubs; Tom Finney, Alan Kelly and Bill Shankly at Preston’s Deepdale. Ronnie Clayton, Brian Douglas and Jack Walker at Ewood Park, home of the 1995 Premier League champions.

In so many ways Walker was the perfect owner for any football club. Sufficiently wealthy at the time, but deeply committed. 

As Charles Lambert’s 2001 unauthorised biography of the Jersey-based man of steel said, such was the price of entry to football club ownership that his wealth could give them a substantial leg up, just before the era of oligarchs and oil rich nation states investing in football.    

After this death in 2000, his family trust, spent a decade stuck between the rock of doing what Dad wanted (the best for Rovers), and the hard place of not withering away their long term wealth. After a couple of false starts and the usual dalliances with time wasters, they sold the club to Indian conglomerate Venky’s in 2010.

Relegation from the Premier League followed in 2013 and Rovers have been stuck in the competitive and crowded Championship ever since, even dipping down into League One for a season in 2016/2017.

Though blamed for the demise, through a mixture of bad advice and poor appointments, Venky’s have continued to prop the club up financially. No sensible business analyst can quite understand the business logic of them doing so; reductions in tariffs for importing chicken into the EU and the UK? or a hope that the asset can be flipped at some point in the future should they reach the Premier League again? 

Each season the annual accounts show ever greater losses that flirt with the Financial Fair Play regulations. 

As a business it lost £20m in the year to 31 March 2022, taking the overall losses by the chicken and pharma group to £184m since they bought the club in 2010.

In doing so they’ve deployed all manner of financial hustles like separating the training ground at Brockhall, just outside Blackburn, and renting it from a subsidiary of the owners for £273, 827. There are high profile sponsorship promotions at the stadium and on the shirts for a brand that no-one in the UK can buy. But still the money comes in through further share issues worth £17m a year, and additional borrowings of £8m, which funded the club through a season where they finished 8th, going one better in the next season, but just missing out on the play offs.

The club sponsor is a local vaping company.

Further pressures have come in the form of Indian tax regulations which have reduced the budget of manager Jon Dahl Tomasson in the current transfer window.

Chief executive Steve Waggott told a Fans Forum in July: “The VHPL Group had been put under some (Indian) government restrictions with regards to their overseas investments which they are obviously endeavouring to resolve as soon as possible. This has, in turn, put pressure on the club’s budget since the end of last season but the owners had still allowed the club to bring in three new players at the start of this transfer window to replace key players who had recently left the club.”

He added: “Going forward the club will be looking at cost savings wherever possible across the club with any further signings being carefully managed as cost control is required on all expenditure levels to ensure that the club remains compliant with FFP/Profit and Sustainability rules.

“Jon Dahl Thomasson had been kept informed of the situation and whilst he wanted to keep progressing the quality of the squad he understood the current situation. He obviously had two years remaining on his contract with us.”

Player wages still represent the largest outgoing, running at £146 for every £100 made in income, but high earners like Ben Brereton-Diaz, Bradley Dack and Daniel Ayala have moved on.

In Preston a similar situation persists. North End also had their own version of Jack Walker in the shape of offshore tax haven dwelling entrepreneur and racehorse owner Trevor Hemmings, who died in 2021. 

Had he turned the tap on in the 1990s, there may have been a statue erected to the former owner of Scottish and Newcastle Breweries, Coloroll and the Northern Trust property group.

The club is owned by Deepdale PNE Holdings Limited a wholly owned subsidiary of Grovemoor Limited, which, in turn, is a wholly owned subsiduary of Wordon Limited. Both Grovemoor Limited and Wordon Limited are incorporated in the Isle of Man, the ultimate beneficial owner of Wordon Limited was Trevor Hemmings. The website states that his estate is going through a probate process and as yet there has been no transfer of ownership.

That family backing has stabilised the club, but not quite enough to compete with relegated Premier League clubs surviving on parachute payments.

His son Craig Hemmings, chairman, provided a stark update for supporters last season which admitted that offers had been made to buy North End, but didn’t pass their test of passing into safe and sensible hands, but also scotching rumours that the family were told by their late father to get rid.

“I would however like to dispel the myth that Mr Hemmings left instructions to reduce, fade out or stop funding the Club. I first attended games at Deepdale with my father in the early 1970s. My brothers and sister and I are regulars at every home game and I attend the majority of away games. We hope to do so for many years to come whether as owners or just fans.”

Craig Hemmings explained that the family invests £12m a season just to keep the show on the road for ambitious manager Ryan Lowe.

“The way that central media monies are paid creates massive challenges for those of us in the Championship trying to compete. It costs about £24 million pounds each year to keep us going. Towards this we receive approximately £2.3m from season tickets and a further £7.3m in total from the EFL and Premier League. After other income streams, that leaves my family with an annual shortfall of around £12m which we have to put into the club each season.

“At any moment in time there are between three and nine clubs that have ‘Parachute’ Payments having been in the Premier League. As well as receiving not less than £105m for being in the Premier League in any one season, the relegated Clubs then receive up to a further £95m paid over three years. It is against this backdrop that we are trying to put a team together to compete and of course there are quite a number of Championship Clubs whose income far exceeds ours that are similarly trying to beat us to promotion.”

As for the sale of the club, he said: “Earlier this year (2022) we held discussions with a party that claimed that they had the ability to buy and invest to take the club forward… Luckily we were able to determine soon enough that in this case it would not have worked.”

For both clubs, the Premier League dream would settle the short term issue of the financial money pit almost overnight, but both have owners who aren’t prepared to bet the farm on doing so.