Extra!

The last few weeks have been an interesting time at Cambridge United, with talks of a mystery benefactor injecting money into the club, a re-submission of the development plans for the Abbey Stadium and perhaps most notably the sale of leading scorer Martin Butler to relegation rivals Reading. Gary Harwood, a director at Cambridge United, discusses these points in detail as U's Net reporter Will Jones puts him … "On The Spot".

The decision on which club to chose was left to Martin Butler. Honestly, we would have preferred him to choose Preston, but we couldn't force him. We had to allow him to make his own mind up, and he did. I guess you will have to ask Martin why he chose Reading, but I could hazard a guess that the personal financial terms offered to him were better than those offered by Preston. Whether it be length of contract, signing on fee or more in bonuses, I can only guess, but I suspect Reading came up with a better personal package.

Q. The deal was supposedly 'done and dusted' with Reading before the Chesterfield and Bolton matches. Obviously for Martin Butler to play in those games - knowing they would be his last for the club - was quite a brave thing for him to do as he could have suffered injury. It would also appear to be a great risk for the club, but I understand there was some kind of insurance policy taken out to protect us if he suffered injury. Can you tell us a bit more about that?

The two offers that came in from Preston and Reading were before the Bolton game, as you rightly say. We had been talking as clubs just before the Chesterfield game but we did not take out insurance at that point. We finally decided we had an acceptable offer immediately after the Chesterfield game, and thus clearly well before the Bolton game. We took out insurance to protect us, so that should Martin have got an injury before the deal was completed we would be covered.

Q. So, the amount of money that you insured Martin Butler for was the amount of money Reading and Preston had offered?

Absolutely.

Q. As a football fan, is that the amount of money you would personally value him at?

As a football fan I would like to have thought the club would have got more than the eventual figure. There is a number of figures being banded around, so let me state that with all the add-on's that might come into effect, the final figure we will receive from Reading will be something approaching £1,000,000. The guaranteed amount is slightly above 75% of that figure. We are guaranteed, even if Martin Butler doesn't play another game of football in his life, £750,000 from Reading.

We are also guaranteed to get that money a lot faster than normal. Usually when you negotiate a transfer you receive some of the payment up front, and the balance over a period of 2-3 years. We have a large amount of the guaranteed money coming in up-front, and a smaller amount spread over the next 12 months. This was another attraction to us in the transfer, given that we made a £500,000 trading loss in this financial year.

Q. Therefore, do you consider the price Martin Butler was sold at as being a true reflection of his value by Cambridge United Football Club?

I am not sure how you value a footballer. It is a bit like valuing a house. You can say that your neighbour sold their house for £150,000 and my house is nearly the same, so is worth the same amount of money? In reality it is only worth what anyone is prepared to pay. Martin had been 'on the market' for several months and we received two identical offers and we accepted one of them. That is the true market value. Personally I am a disappointed as I would have liked the figure to be higher, but that just wasn't going to happen.

Q. Reg Smart has openly stated that 50% of the net transfer proceeds would be given to Roy McFarland to spend on improving the squad at Cambridge United. My understating of this is that once Walsall and Butler have taken their percentages of the deal, whatever is left is halved and put into a transfer kitty. Would that understanding be correct?

You are almost spot on. You take the amount of money that we get from Reading up-front, take off the money spent to acquire Martin Butler from Walsall in the first place and from that balance there is a percentage due to Walsall. From that subsequent balance there is a percentage due to Martin Butler and you are then left with the net, net, net (Gary is not stuttering by the way! - ED). You divide this figure in two and that gives you a sum that we will give to Roy to spend on the team. We will obviously, as all clubs do, tell Roy that we don't want it to be spent all at once, but to spend it over a period of time. I hope that answers the question.

Q. For the fans - possibly myself included - who might find it hard to grasp this in terms of exactly what it means, can you put it into plain English if you like, i.e. how much money will Roy be given to spend and over what period of time? Is that possible for you to do?

It is possible for me to do, but I would rather not do that. Let me explain why, and it certainly isn't because I want to keep secrets from the supporters. As soon as the club goes public on how much money Roy has to spend, no matter who Roy is interested in, the selling club will want the money that we have announced is available for Roy to spend.

There is an amount he has to spend, and he knows what it is. I would rather not let that be known, as it would, in my opinion and that of the board of directors, weaken our commercial position when it came to negotiating with clubs over a possible player transfer.

Q. Does the transfer kitty include the wages of any possible signing?

No, but if the person Roy wanted to sign would cost, in wages terms, substantially more than we were paying Martin Butler then we would expect the balance to come out of that figure. Providing he wasn't going to pay the new player any more than Martin Butler, then the answer is no.

Q. You have stated your belief that we have got the price Martin Butler was worth in market terms, which is fair enough. A lot of fans have suggested we have undersold him and have delved into the past to unearth various other transfer dealings such as that of Liam Daish and most notably Steve Claridge - suggesting in the process that we have a history of underselling our most talented players. How would you react to such allegations?

I will make a brief comment now, but I will commit to making a full statement in a few days time regarding this matter. You are right, and there are a few fans that are suggesting that we regularly undersell our players. I have a note from one of those fans who claim we undersold Liam Daish, undersold Steve Claridge twice, undersold Jon Sheffield, Carlo Corazzin and John Filan. One of the reasons that we didn't go public over these transfers a number of years ago is that I believe there are certain things that should remain confidential between an employee and employer. Certainly with some of those players there were special circumstances regarding why they were sold at that time, and why they were sold for that amount of money. It would have been wrong to disclose those at the time of the transfers.

Let me give you an example regarding Liam Daish. He actually left this football club for substantially more than the widely reported £50,000 but obviously nothing like the money Birmingham City subsequently sold him on for. However, at the time Liam Daish was sold there were a number of factors the board had to consider. The first one was that Liam Daish had a very serious medical problem, and our professional medical advisers from the local hospital - who operate on people like Alan Shearer - were advising us that his football career could end at any moment in time. That is why we felt Liam Daish had to be sold quickly. Also at that time, and I don't want to be specific on this, our manager was concerned with the influence Liam Daish was having on the younger players in the team. Our manager actually asked us to move Liam Daish out of the football club as fast as we possibly could. I will explain more in a few days time, but there are a few examples.

I did also want to pick up on the Steve Claridge point. Some fans suggest we have undersold him twice. I am not going to talk about the first time and I want to reveal that in a few days time, but the second sale happened at a time when the club was extremely over-borrowed. In fact, the bank was threatening the club with receivers. I can remember the day as if it were yesterday, as we had called an emergency meeting and the bank were coming to that meeting to effectively ask us to deposit a amount of money immediately into the bank or they would appoint receivers. This may sound as though we engineered it, but the second sale of Steve Claridge was a remarkable stroke of luck. We completed the sale about 30 minutes before the bank walked into this club. We rescued the club from going into receivership, and that is a fact.

Whilst a few fans might think we constantly undersell our best players, there are reasons for all of the fees we have accepted. I will expand on that in a few days time.

Q. Last week's game against Bolton might have been most noted in the national press for the rugby tackle on Trevor Benjamin which went unpunished, but it was also very memorable for the 'yellow card' protest to the City Council regarding their deferral on a planning decision. What were your thoughts on that protest?

The demonstration before the Bolton game was something the Cambridge United Supporters Association initiated and organised. We were aware of it, but had decided not to pro-actively support it for various political reasons. Clearly it was a remarkable show of support for the re-development proposals not only from our fans, but the visiting fans as well. I was very pleased the fans did that. I think the message was sent loud and clear how Cambridge United fans feel about the proposed re-development.

Q. It has been widely reported in the local press that Cambridge United have altered their re-development plans for the Abbey Stadium, submitting a new application to the Cambridge City Council planning committee to consider. Could you explain to us exactly what has changed, and why you felt the changes were necessary?

At the last planning committee meeting in early January a decision was made to defer determining our application for a while. Whilst we, the club, were asked to answer a certain amount of questions those questions only got to us at the club about two weeks after the deferral. Most of those questions were not new, and has been asked and answered a several number of times before.

However, the club has spent the time between then and indeed this week going back over and re-answering those questions. Equally, if not more importantly, we have looked very closely at the amount of allotment land needed for the re-development. By careful fine-tuning we have been able to save an amount of metres on the size of land required. We have been able to do that without sacrificing the capacity of the ground, or the size of the commercial and revenue producing area. What that means is that instead of taking 18 allotment plots, we now require between 4-6 less.

Interestingly, of the 18 plots that we were looking to initially secure, only 6 were cultivated. We believe that the compromise we have been able to achieve on land terms will satisfy 66% of the allotment holders who own a cultivated plot. We may be able to satisfy 100% of the allotment holders holding a cultivated plot.

This week we have met with local planners, council members from the Liberal Democrat and Labour Party and we have been encouraged. Clearly how individual members of the planning committee vote on the day will not be revealed at this moment, but I am encouraged. At the last planning meeting the majority of the Labour councillors voted to proceed and approve the planning application rather than defer.

I don't know how the Liberal Democrats are going to vote, but when we met with them the other day I was encouraged at the way the meeting went. I listened to the leader of the Liberal Democrats party in Cambridge City on the radio, and he too seemed impressed with the way discussions with the club had progressed.

With a little bit of luck, a little bit of goodwill and with the compromise that club has been able to achieve we remain hopeful that we will receive approval at the next planning meeting. We had hoped for the 9th February, but because we have slightly changed our plans the council have to - by law - go through a consultation period. It will now go before the planning committee on the 8th March, and I would urge all fans to remember that we are not there yet and they still need to keep doing the good things they have done for the last few weeks right up to the 8th March .

Q. I would like to draw two points together, if I may. You have stated this week that Cambridge United were within touching distance of not being able to pay their employees' wages as they were close to their borrowing limits with the bank - thus explaining why it was necessary to sell Martin Butler. The new stadium plans are going to cost in excess of £4,000,000.  How then can a club who were within - as you said yourself - a very short space of time from finding themselves in incredibly serious financial difficulties regarding paying the wages of a few employees, consider funding a multi-million pound venture like this development over the next few years ?

That is an interesting question, and whilst they might sound similar they are two very different financial and commercial issues. The stadium and re-development will cost in the order of £4,000,000. That is not a final figure, as until the plans have been approved we are not going to spend too much money on quantity surveyors. We are confident that the figure will not be significantly above that, and it might work out a bit below.

The Football Trust has £2,000,000 available for each club in the football league. Under special circumstances that figure can be increased by a further 50%. There is between 2-3 million pounds available from the Football Trust. We have had conversations with them already, and the £2,000,000 is not in doubt. We will clearly be putting forward a case that we do have some special circumstances and hopefully they will look upon that case sympathetically. However, we clearly won't get the £4,000,000 required, so that will leave a shortfall of between one and two million pounds.

There is commercial potential built into the redeveloped stadium, and there are certain areas we will manage ourselves, so therefore we will have to carry the investment and reap the longer-term revenue. There are other areas that we will franchise out, and thus receive significant franchise fees up front, and receive a percentage of the on-going revenue after that. It will be a fine balance between these two.

In addition to that we will be looking at other things such as sponsorship and companies having stands named after them or, and this might be a pipe dream, a big company coming in and naming the ground after them. If you look at sponsorship fees over a 5-10 year deal then you are looking at large sums of money. However, even if you add all this together there is still likely to be a shortfall. I don't know exactly how much that will be, but it could be as much as £250,000 - £500,000. What we will do if this happens is talk to our bankers about funding that shortfall.

Q. Why would they be prepared to find you at this point, when they weren't prepared to fund you earlier this month?

We would have a bigger business that was generating bigger profits, so therefore we could finance that extra borrowing. If we asked them today for extra money they would look to us and ask how we would finance the repayments, because we have no real ways of raising money.

Q. So you are confident that we will raise the money ... but are you worried there is a possibility we won't?

In life there is always a possibility that things don't work out as you plan. We haven't gone into the re-development proposals lightly, and indeed we have had over 15 years to think about how to fund a re-location or re-development. We have looked at our business plans very carefully, and we are very confident that we will get there. All the business plans show this is viable, and until we get these plans approved and go out and try to raise this shortfall I can't put my hand on my heart and say we are 100% there, but certainly 95%.

Q. On a final topic, last week at the AGM it was revealed there is a mystery individual who is considering pumping a large amount of cash into the football club. Has there been any further developments in this that might interest the supporters?

There has been a development, yes. I have been in talks with the individual since last week and the individual concerned is still very keen to invest money into Cambridge United. In fact he is keen to invest money into the club for us to specifically then spend on trying to increase our attendance at games, and is also interested in acquiring a substantial percentage of the un-issued share capital of the company. Discussions are going on between this individual, myself and other members of the board. They haven't, as yet, reached a conclusion.

I am encouraged by the discussions, but clearly because the sums of money involved are so big it would make this individual the largest individual shareholder at the club, and thus would almost give him control of the club, we have to be careful that we check everything out properly. And likewise, if he is going to invest that amount of money in then he has to do the reverse regarding us.

I have had some communications with him in the last few days, and we will be discussing the situation formally at the next board meeting. We would hope that we could reach some kind of agreement in the next month or two.

Q. You mention that a proportion of the money the individual is proposing to invest in the club must be spent on attracting new supporters to the football club.  What therefore would you see as the role of the rest of the invested capital ... as I suspect many supporters would hope it could be spent on the team?

I am glad you have asked that question. I am debating this with the individual now. As I mentioned some of the money he wants to invest in this club he wants to be spent specifically on marketing over a period of time. That has to be used for that activity, and nothing else.

The second amount of money would be though available following a purchase of shares from the company. What I would like, and this relates back to something we were talking about earlier, is to earmark that share investment as effectively part of the funds that would go towards our re-development. Given that I mention the gap could be anything between £250,000 and £500,000, if we were able to agree this with the individual then that amount of money would go a long way towards closing that gap.

I also believe that at the time we definitely start this development then I think as a company we should start thinking about a larger share base, because we will be a slightly different business when the development is complete. This may not be the answer the fans want to hear, as you say, as I suspect many would like to see it immediately spent on the team. This isn't a Jack Walker or Madejski situation though, as the amount of money we are talking about is less than a million, but enough to go a long way indeed to making our re-development finding look 100% certain, as opposed to the 95% I mentioned earlier.

As a supporter of Cambridge United I would like to personally thank Gary for taking the time to answer these questions in such a honest, detailed and frank manner. I can only speak for myself but this degree of openness and willingness to explain and discuss internal matters at the club is something I greatly respect and admire when coming from a director of Cambridge United.  Long may this open, friendly and approachable attitude continue at the club I, and thousands of others, love with a passion.

Will Jones

If you have any comments about this feature, either for Will or myself or for Gary Harwood, please use this e-mail address: feedback@cambridgeunited.com