agm report 2005 courtesy of...

A very procedural EGM passed off without significant event today, though a relatively warm round of applause for the board at the end was a surprise.

The club were given authority by the shareholders to invoke a dividend re-investment scheme by an overwhelming margin. This has been a central issue to the Supporters Trust, though I cannot muster much enthusiasm myself. At best it will provide a very small amount of working capital for the manager. Our board have not been keen in the past and I suspect that they have relented on this matter largely to give many small shareholders something they were asking for.

Reinvested dividends will take decades to significantly strengthen our balance sheet, which is likely to be over 30% weaker than it was in 2001 when the club last reverted to a share issue.

Many of the same challenges face the club today that existed back in 2001, including building a new training facility, the cost of which Peter Lawwell today estimated at around £6-7million.

The balance sheet remains vulnerable if we fail to reach the Champions League or latter stages of the UEFA Cup. With the unrelenting pressure on the club to strengthen the team I cannot see it being bolstered by retained profits, or the new training facility being built out of sales revenue. For these reasons I expect a further share issue, which must not be used for football wages or transfers as the last one was.

Following the last issue Celtic overspent on the playing staff, largely on wages. This was fuelled by success on the field and runaway fan expectation, and forced the club into a spiral of losses. Before any football matters are considered Celtic need to break the cycle of losses and make a profit from now on. If we do not start living within our means, soon a severe financial retrenchment will follow - just as it has at Ibrox.

Posted by Paul67

thebhoys67 said: Paul, You say that it would provide a small amount of working capital for WGS. Were any figures mentioned projected or actuals?

Paul67 said: Income from this depends on how many shareholders decide to forego their dividend. I expect betweenaround £1.5million this year (assuming DD & co do). Although the vote was clearly in favour there were several small shareholders who voted against. The guy sitting beside me did so and said that he didn't want his percentage of the club diluted. He had trainers on and a Daily Record with him, I know I am judging a book by the cover, but I didn't get the feeling he controlled a large shareholding. You can please some people some of the time...

Rossio said: Well done Celtic, for reassuring fans that you're not out to bleed us dry at least.

CitiBhoy said: The dividend re-investment scheme is I suppose a start. However there is a general lack of commercial nous around the place. Customer service is non existant - whether its in the shops - in the media offerings - in hospitality - in the treatment of non season ticket holders. In unanswered phones - emails and written communications. I reckon that last year I spent 16k on corporate hospitality at CP - yet when checking up for this season they didn't have me on their mailing list. Compare this too with Chelsea where my firm owns two season tickets, we got invited to a summer piss up (marketing effort) Offered improved seats at no extra cost...etc etc... If you can't squeeze extra seats into the stadium then the only way to get more revenue is to broaden the customer base or extract more cash from the existing customers who have it to go. But we don't seem to have the ability to do this. I despair at times about how the club is run at the operational level.

BlantyreKev said: Paul I realise you have the bigger picture in mind but I'm a wee bit surprised that you can't muster much enthusiasm. £1.5m is a still considerable sum, it's a move in the right direction and it's what, IMO, most of the fans wanted. For once I cannot see this as anything other than commendable and I'll take great interest in reading any contributor's posts that are in the 'against' column. Long term strategy and foresight are essential but sometimes you've to live for today.

BigTex said: Paul, much as I love this site and your well prepared and balanced analysis, I think you post today may well be extracting the proverbial Michael. We need to qualify for the CL, but a share issue cannot be used for players (wages or transfers). How are we gonny do it then on a long term basis?? 'Runaway Fan Expectation' - I'm sorry, but that is just patronising. My expectation last year - after winning the league by a massive margin and doing well in Europe for two years - was in no way 'runaway'. Defending the league against a very poor Rangers team should have been a given. In Europe, yes we had a tough draw, but we went out rather innocuously. 'Before any football matters are considered' - come on, we are Celtic supporters, we pay the club a damn load of money, it's their job to ensure we have success on the field.

Paul67 said: BigTex, I know, I know, what am I talking about? Fans expected Celtic to spend more money on football operations last season and the season before that than they did. Ask just about any you meet. We spent so much (albeit on wages) during this period that massive losses have ensued. I honestly, truthfully, believe someone needs to say Stop. Ignore the balance sheet and overspend on the team and, to use the vernacular, we are screwed! I am holding my power on whether the Carling deal is good or not. In essence it does not matter what we think we are worth, it only matters how much someone is prepared to pay for us. Questions to ask: Is the deal less than the likes of Ajax get? Probably not. Did we invite bids from sports advertisers? You would think that either Celtic or Rangers would have thought of this. What can we do if the bigger bid we get is £2.5m per year? Your call.

CitiBhoy said: BigTex - I agree with your analysis and sense of disappointment. However I don't think Paul67 was being Patronising, just cogniscent of the fact that there are risks associated with splurging cash on the playing side. TFOD out spent us for a decade and although enjoying domestic dominance they didn't get anywhere at all in Europe. If we do this again and get it wrong then we do not have a Murray-esque figure to bail us out. As far as I'm aware unlike DM DD is soley a shareholder - he hasn't entered into any personal gaurantees over loans and overdrafts. which would suggest he doesn't have the appetite to. I think there is an additional 7 to 10 million of revenue sitting around the business just waiting to be released. Neither the business nor the brand are being sweated. With regards to trusting the board Im afraid I disagree with Paul 67 on this - certain promises regarding use of funds over the years have been broken, and this will not be overlooked by the paying customers.

BlantyreKev said: I would suggest that the board did indeed release substantial funds for investment in players over MON's tenure and therefore didn't specifically break any promises. From my interpretation of the financials he used it in ever increasing contracts and bonuses to those already in the squad rather than on new faces. This is evidenced by the increasing wages in Profit and Loss and in additions to Intangibles on the Balance Sheet far in excess of the headline transfer fees of those few players we did actually add to the squad. For what it's worth, IMO it was an extortionate price to pay to achieve what was a settled and happy dressing room during his time.

skelly2 said: Valid point about what we want and what we can get. If that is the case here that none of the major brands want us, then we are forced to do the deal we have done. However, if this is the case, the board must take the blame for this, as this is solely down to lack of marketing exposure. We have gone to the USA two years running, as well as training there over the winter break in MON's first season. I believe that the first time we went over for the Champions World Tour, we RAN OUT of merchandise...ie strips, scarves etc. You can draw your ownconclusions from that then as to why big name companies don't want us...IMO it is because we have not shown them how much of a global brand we can actually be.

 

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