Financial times

By: Tim | January 20th, 2009

Nigel Doughty is charging interest on the money he loans to the club For a while now I’ve been meaning to write something about the clubs finances. I wanted to find out what we can expect to happen, if anything at all, during a recession, but I am also interested in the growing concern that our chairman, Nigel Doughty, is loading the club with debt.

The main stumbling block in finding anything concrete is the fact that the club is a private company, Nottingham Forest Limited, and therefore we are not legally obliged to make our accounts public. A posting on the official website just before Christmas gives us a few figures though, and it makes for interesting reading.

At May 31st 2008 the club was in debt to the tune of £43.8 million. Of this figure, £3.6 million is owed to Nottingham City Council, and £40.2 million is owed to the Chairman in loans. According to David Conn’s recent financial analysis of the Premier League, this means we are in more debt than clubs such as Blackburn, Bolton, Portsmouth and West Ham, and we are roughly on a par with Sunderland and Spurs.

Of course, when you compare our total figure to the likes of the big four it is pale in comparison, but one thing that concerns me is the fact that Nigel Doughty is charging interest on the money he loans to the club. For a man who never tires of reminding us that he is a ‘life-long fan of the club’, this seems pretty cheeky. As Conn points out, Chelsea are in a huge amount of debt to Roman Abramovich, but that is interest free, and I’m pretty sure he didn’t grow up on the streets of Russia, dreaming that he would own Chelsea one day. I guess it’s naïve to think that a venture capitalist would be in it purely for his love of the game and/or club.

There is some good news, though, because the terms of the Chairman’s loans are that interest accrues at a variable rate based on banks’ own lending rates. Correct me if I’m wrong but in the current climate, with interest rates being continually slashed, that means we are paying less and less to Doughty in interest (although that is just a guess, there is no way of knowing the actual amount of interest).

Also, there are considerable financial bonuses from being back in the Championship. Season ticket sales have increased from 10,800 in 2007/08 to 12,600 this season, and revenue from corporate hospitality will also increase. The club expect to make more from shirt sales this season, too, purely because we have launched a new home shirt (understandably it’s more popular than the away shirt). Income from TV will also increase, as the Football League distributes money to clubs based on their league status.

Bizarrely, then, Forest are in a stronger position this season than in 07/08, despite all of the ‘credit crunch’ talk in the media. Football isn’t likely to feel that much of an effect due to the recession, although that could change depending on how many job losses there are and how long it goes on for. Recession or not, the fact is that we are in debt to our own Chairman, and that debt is increasing every season due to the interest he is charging us.

I partly wanted to write this blog to spark some debate amongst Forest fans, or any other fans for that matter. On one side there is the ‘free Forest’ campaign, who argue that Doughty is treating the club like a bank, loading the club with debt that is accruing interest, and ‘asset stripping’ (selling players) to get some of his money back in the meantime.

On the other hand he has invested a lot of his personal wealth, allegedly ‘saving’ the club financially back in 2001, and Forest have spent over £4 million on players this season, more than most other Championship sides. The jury is out.