CHAIRMAN'S STATEMENT
Following the Great Escape at the end of the 2004/05 season, and having been positioned outside the relegation zone for most of season 2005/06, it was disappointing that the Club failed to build on the progress made over the past few years and found itself relegated to the Coca-Cola Championship, with only four points coming from the final thirteen games. This came as a big disappointment to all of us and we now face an extremely long and challenging season in our endeavour to regain Premier League status.
During the 2005 summer transfer window, the Club spent £9m on the acquisitions of four new players - Darren Carter, Diomansy Kamara, Nathan Ellington and Curtis Davies, whilst Steve Watson joined on a Bosman and Chris Kirkland on a season-long loan. During the January window, Nigel Quashie was added to the squad at a cost of £1.2m, which was largely financed by the emergency loan, and subsequent sale, of Geoff Horsfield to Sheffield United. Jan Kozak and Williams Martinez were also recruited on loan during this window. Players who left the Club over the course of last term included Rob Hulse, Darren Purse, Joe Murphy, Riccardo Scimeca, Darren Moore, Lloyd Dyer, and Robert Earnshaw.
When planning for this season, our main aims were to retain our best players, strengthen the squad and make the greatest possible effort to return to the Barclays Premiership. Despite considerable attention from other clubs, we ensured that the nucleus of the squad remained. The one exception was Tomasz Kuszczak, who joined Manchester United on a season loan. In the end, we felt that Tomasz's circumstances were unique and that we would be denying him a major career opportunity if we insisted on retaining him. However, we were only prepared to let Tomasz leave if it suited the Club and hence the deal was structured on that basis.
Over the course of the summer, we received expressions of interest for virtually every member of the squad. However, the only player to be sold was Junichi Inamoto to Galatasaray for 250,000 Euros because his first-team opportunities would have been limited in what would have been his final season. Kanu, who had a release clause in his contract triggered by relegation left the Club, together with Kevin Campbell and Andy Johnson, who were both out of contract.
Our plan was to start this season with a squad which was more about quality than quantity and it now numbers twenty two players. This summer, the investment in it, amounting to £1.2m on player registrations and a player wage bill of approximately £11m compared to £9m when we were last in the Coca-Cola Championship in 2003/04, has more than seen the reinvestment of the proceeds of the Robert Earnshaw sale to Norwich City. We recruited six new summer signings in John Hartson, Chris Perry, Pascal Zuberbuhler, Paul McShane, Luke Steele, Kevin Phillips, and re-signed Steve Watson. In addition, we gave new contracts to Curtis Davies, Diomansy Kamara, Jason Koumas, Paul Robinson and Ronnie Wallwork.
Our wage bill, without selling our top players, is clearly only sustainable whilst we benefit from the Premier League parachute payments during this and next season. In the short term, until 23rd November, we have the opportunity to bring in further players, if needed, using the emergency loan system which operates in the Football League. The next transfer window, which opens on 1st January, will also provide us with a chance to supplement the squad. However, this will only happen if players leave the Club to make funds available. As I have repeatedly stated, the bulk of our transfer business will continue to be conducted during the summer window.
On 18th September Bryan Robson left the Club by mutual consent.We would like to thank Bryan for his contribution throughout his time with us during which period we competed in the Premiership for two consecutive seasons and built our new Indoor Facility, further developed the Training Ground and moved to Academy Status, all of which Bryan fully supported.Nigel Pearson then acted as Caretaker Manager for four weeks during which time the Club remained unbeaten and we thank Nigel for his valuable contribution at that time and during the period he served the Club since joining with Bryan in November 2004.
On 18th October, Tony Mowbray was appointed First Team Manager.He joins us having played and having been Team Captain at Middlesbrough, Celtic and Ipswich Town, where latterly he became a Coach before moving to Hibernian as Manager for the past two and half years.We would like to wish him and his Assistant, Mark Venus every success as they endeavour to progress the Club over the next few years.
By the end of this season, our spending on transfers and player and coaching staff wages during the past five years will have exceeded £100million.Given the size of this, the Board has concluded that it needs to continue to de-risk such future expenditure and will therefore seek to appoint a Sporting & Technical Director to ensure that our limited resources are invested wisely.This individual will also, in due course, spend time overseeing the development of our Academy, Sports Science and other Football related departments.It is envisaged that the successful candidate will work alongside the Manager in an effort to provide the best possible platform for the Club to succeed.
The team is currently placed in fifth position in the Coca-Cola Championship and reached the third round of the Carling Cup before being defeated at home 0-2 by Arsenal.
Due to new rules which state that only Premier League clubs can compete in the Premier Reserve League, our reserve team is now competing in the Pontins Holiday League Division One (Central). The fact there are fewer fixtures in this competition has further justified our decision to run with a smaller squad which has been supplemented by seven young professionals. Craig Shakespeare has been promoted to the position of reserve team coach, whilst Michael Appleton has been appointed Academy U18 coach.
All of our plans are underpinned by your support. Season ticket sales are currently 14,000, a similar level to 2001/02, the season when we first won promotion to the Premiership. The decrease from last season is a common problem in football but exacerbated by our relegation and the early start to the Championship season on 5th August. The average season ticket price for a seat per game, including concessions but excluding VAT, is £13 compared to £18 when we were in the Premiership. This is a decrease of nearly thirty per cent. When added to a thirty per cent decline in season ticket sales, the effect on our revenues at this level is significant. However, I would like to emphasise how much the club appreciates the loyalty of our core support, in whichever division we are competing.As we make every effort to try to gain promotion, our supporters help in transforming the stadium into 'Fortress Hawthorns' will prove absolutely vital.
Last season, we introduced the "Hawthorns Express", a coach service designed to transport both new and existing supporters to and from home games from outlying areas at a cost of just £5, which includes a matchday programme. Despite only limited demand, we shall persevere with this venture, albeit on a streamlined basis.Once again, we plan to run free coaches to an away fixture and this season we have selected the away game at Norwich City on Easter Monday.
Following our successful application for Academy status, which was largely down to the excellent work of our Academy manager, Dan Ashworth, and his staff, we competed for the first time in the Premier Academy League last season, enjoying relative success. A fundamental factor in us achieving Academy status was the building of our new indoor training facility on the Tom Silk site. Instead of simply meeting the minimum requirements, the Club has invested approximately £1.7m in building a state of the art facility housing a full-size pitch. Furthermore, the adjacent car park has been resurfaced and floodlit and will incorporate a new Community Sports Hall, which is being constructed under the sponsorship of Barclays; this will be officially opened in the New Year.
This summer, the Club conducted major refurbishment work to enhance The Hawthorns' appearance. This included the entire stadium being repainted externally, the installation of new translucent roofing on the Smethwick End, and the refurbishment of certain corporate areas. Looking to the future, the building of a new West Stand remains on our agenda. However, as we have previously stated, we are mindful of creating capacity which may remain unused as The Hawthorns is currently not being sold out.We have also invested over £1m on major improvements to the training ground, to cater for the development of our new Academy and enhance the working environment for the senior squad.
Group turnover for the twelve months ended 30th June 2006 was £35.5m compared to £22.4m for the seven-month period in 2005.The equivalent annual turnover for 2005 was £36.5m. The decline in revenue was due to a lower Premier League finishing position, two fewer televised matches and lower retail sales. The Club recorded an operating loss of £5m following a write-down in player values amounting to £9.4m after relegation. This is similar to the treatment adopted following relegation in 2003 when a charge of £6.6m was recorded.
The loss on ordinary activities before taxation was £2.7m following profit on disposal of player registrations of £2.4m. Due to this trading loss, the Club will recover £1.4m in corporation tax relating to the previous year. For the first time since 2002, the Club closed the year with a net debt position of £1.6m against net funds of £5.8m in 2005, reflecting the investment it had made during the last year in both the first-team squad and infrastructure.
As a result, and in line with previous policy, having regard to our net debt position and lower league status, the Board of Directors do not recommend the payment of a final dividend.
The Sandwell Academy successfully opened on Wednesday 6th September which, together with our investment in the locality, has made a vast improvement to the area to the west of The Hawthorns. We wish, Head Teacher, Simon Topper, his staff and pupils all the best for the future and we are delighted to play our part as a sponsor in the school's development.
Our Community Programme, under the guidance of Fraser Foster, continues to go from strength to strength. Key initiatives over the past year include the 'One Albion Disability Project' and the ACES Programme which has again resulted in a significant increase in GCSE exam results across Sandwell secondary schools.The Club is pleased to use football and our brand to motivate and enthuse youngsters.
Last year's four nominated charities enjoyed a successful year with the Club and we are pleased to support the following four charities this year: Ideal For All (Helping disabled people, their carers and families in the Sandwell area with activities, holidays, outings etc), St Giles Hospice (Providing high quality medical and nursing care for local people with cancer and other serious illnesses, as well as support for their families and helpers), The Project Rhino Charitable Trust (Providing schools, clinics and clean water in areas adjacent to National Parks in the Rift Valley, Kenya) and the Mayor of Sandwell's Charity Appeal (Supporting National Osteoporosis Society and Guide Dogs for the Blind).
The Club has added to its ever-growing and much admired memorabilia collection this year. We enjoy a close working relationship with the Former Players' Association and we shall continue to support its activities.
As we strive to improve our performances both on and off the field, our long term goal remains that of establishing the Club in the Premier League. However, outside the top flight we are mindful, as always, of controlling our costs, a major part of which relates to our employees. Although headcount did not increase last year, it remains continually under review.
As always, my thanks go to my Board colleagues and all members of our staff both playing and non-playing for their support and efforts during a difficult year.
J R Peace
Chairman
