Originally published May 2022.
On 7th May, our football club, Maidstone United, were crowned champions of National League South (NLS), English football’s sixth tier. Maidstone last achieved promotion to the National League (NL), English football’s fifth tier, considered widely these days to be equivalent to League 3 of the EFL (The Football League), in 2016. It was via a penalty shoot-out in the play-off final away against Ebbsfleet, a heavily owner-subsidised club, who were odds-on favourites to win. Our goalkeeper pulled off an instinctive save to win the match in front of my fellow co-owner Terry Casey. In a post-match interview, Terry mused that the save might cost us a million pounds.
Between 2016 and 2018, we survived two tough seasons in the National League, struggling to finance a competitive playing squad and then making some ill-advised managerial changes, before being relegated in 2019. However, although on the field our losses were frequent and sometimes heavy, off the field we managed to avoid losing Terry’s million. So, had promotion really been a poisoned chalice? What was it about playing at the next level up which could be so costly? If we didn’t have the deep pockets, good looks and social media following of Ryan Reynolds (owner of Wrexham FC), did we stand a chance of competing without ruining ourselves or our club financially in the process? Where might new revenues be found to match cost increases? I thought it was urgent to try and answer at least some of the questions.
Assuming no owner subsidies, the main financial questions following promotion from NLS to NL are as follows:
Can you increase match day revenues?
Yes. Let’s start with admission prices. This season our ground admission price has been £15. In the NL they ranged from £18 to £22 in most cases. So, we will align ourselves with other clubs in NL while being aware that not all our supporters can easily afford increased admission prices. However, we also have to deal with rising energy costs. Most fans know after 12 years of our stewardship that all revenues generated go to the club so if they have to pay more in admission at least they know it’s not financing any dividends. We will probably increase admission prices to something near the average for NL. This should allow us to fund an ‘average’ or ‘median’ playing budget. However, the real financial impact depends on the quality of the ‘football product’ being sold. if we lose our first five matches next season crowds will drop and so will income. This season’s promotion squad drew in an average of 2424 spectators per home league match. The last few home games averaged over 3000. However, in our NL relegation year of 2018/19 our average gate was only 2179. That’s what can happen to undermine revenue forecasts. The average annual playing budget of a National League South club this season (players and staff) was about £300K. Ours was well above this but still well below at least two of the NLS clubs, whose budgets were closer to £1M. In the National League next season, the average playing budget could be about £950K-£1M. Matching that will be quite a challenge.
So, do you get more money for going up?
Yes, but not much. The league handed out a meagre £25K to clubs in NLS this season, mainly the net contribution of Premier League solidarity payments, BT Sport and Vanarama sponsorships. Next season in NL we expect to receive about £80K. The extra £55K will be eaten up by extra travel costs due to being in a national competition. This means overnight stays in hotels and expensive trip to exotic destinations such as Gateshead, Oldham, Notts County, Halifax and (unless promoted) Wrexham.
What about increased bar revenues?
Well no. Current laws on alcohol consumption at football grounds prevent supporters at NL level from consuming alcohol within sight of the pitch. This removes two hours of drinking time. Last promotion season 2016-17 we estimated this hit our bar revenues to the tune of nearly £100K.
What about increasing bar and other prices?
Well, the value of our bar, events and pitch-hire offers are not significantly increased by promotion so there is no justification for significant price increases. These might even be counterproductive.
Could you not increase the size of your bars?
Ideally yes but we have little space around the stadium for new build and little capital to fund projects. If we had we would plan to build out the West and South Stands and add bar/restaurant facilities open to the public, more hospitality areas and double the size of our academy. For the moment this is pie in the sky.
What about costs? Where else might they go up?
In the NLS we rarely segregated matches. Our security costs are kept at a minimum and we lose no areas of the stadium to segregation barriers. In the NL all matches are likely to have to be segregated. This will mean extra security and policing costs and capacity is reduced from 4200 to 4000 in the stadium. Worse than that because of the lay-out of our stadium the segregated area allows for only 500-600 away fans to attend. Although this is sufficient for most matches there are some clubs (e.g. Grimsby or Oldham) who potentially would bring many more. This all adds up to lost revenue. Also, we must ‘improve’ some of our facilities in the stadium (see below TV gantry).
What about sponsorships and other commercial revenues?
Well, most clubs like ours have sponsorships in place for just about everything they can think of. The prospects of significantly increased revenues are few and far between. There will of course be some opportunities which we will explore. It’s about time we set up a big club lottery (again), but this will take time and investment.
Any TV revenues?
Sadly, not much. BT Sport do show matches but the payment to clubs is very low. Additionally, we are obliged to build a camera gantry along the half-way line this season to comply with new Ground A Grade requirements so we will actually lose money! Yes, being in NL gives us an extra chance of doing well in the FA Cup with possible TV money were we to reach the 3rd round and play Liverpool but no sensible business would budget for that happening.
So where does that leave you?
Er.…Awake at night! The overall impact of all the above is we need some £400-500K of additional revenues to compete with an ‘average’ budget in NL. Most of that increase will have to come from admission price increases and additional spectators, feasible if we continue to produce attractive, successful football on the pitch but uncertain. It is a real challenge.
I’m confident we’ll get there if everybody pulls together as a club. However, there are unknowns and risks, more than there ever were in the forecast models for my old real estate projects. It all goes to show that football, even at National League level, is like no other business.
