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Club News

An Update From The Chairman

18 May 2023

Club News

An Update From The Chairman

18 May 2023

As the summer approaches and the 2022/23 football season remains fresh in the mind, I wanted to take this opportunity to recap some aspects of the season and outline thoughts and aspirations for the season to come.

2022/23 Season

While we are disappointed with the final run of results during the season, and that consequently we didn’t make the Play-Offs, as the dust settles, I would like to think most fans will agree that there have been a number of positives this season. 

To have still been in with a chance of making the Play-Offs right up until the final two games of the season has to be viewed as progress. Not quite where we wish to be, but progress nonetheless. The Championship is one of the most competitive leagues in the world, where we are up against a number of teams with tens of millions to invest from Premier League parachute payments.  

Last season there were five of these and in the coming season there will be five once again. There are also a number of so-called bigger clubs below us with far higher budgets to appreciate how tough this league is.

I also feel it is worth pointing out that the manager, the coaching staff and the players achieved a top half finish despite suffering a number of key setbacks through player injury. Last season’s leading goalscorer Emil Riis missed the majority of the season, and Troy Parrott and Ali McCann were both out for a long period. Alan Browne, Ched Evans, Ben Whiteman, Greg Cunningham, Robbie Brady and Andrew Hughes were also missing for the final run of games. How might we have fared in the run-in with a fully fit squad available to us? But that’s the nature of this game. All the “what ifs”.

But how did the club perform off the field as well as on it? I want to share with you some preliminary highlights for the 2022/23 season (please note, the figures referred to have yet to be audited):

  1. Turnover for the season up to a record [operating] revenue of £14.8m.
  2. Increased revenue largely through commercial and stadium income (driven by improved season card sales).
  3. Annual pre-tax operating losses (pre depreciation and amortisation) reduced from £16m to £11.5m.
  4. Season card sales highest for over 60 years at c12,000.
  5. Average attendance at home games increased from 12,501 to 16,269. This is the highest average attendance at Deepdale for over 50 years.
  6. We changed our retail/club shop partner to fast-growing Castore brand.
  7. We changed our commercial/catering partner to industry leader Sodexo.
  8. Invested a six-figure sum in opening up a new fan bar – The Gentry Bar.
  9. Financial support from the owners for 2022/23 season anticipated to be c£11m.

These figures are hugely encouraging and are testament to the amazing fans and fanbase which PNE has.

I am aware that a few people are critical of (perceived) lower matchday commercial and stadium income than our close competitors. It is perhaps incumbent upon me to better explain. Because we at PNE work in joint ventures with our catering and our retail partners, we do not show the turnover from each of these income streams in our accounts. We focus upon the “net” income to us (the contribution to our overheads). 

Put simply, if we did report the revenue, the numbers shown from stadium and commercial income would increase by not less than £2m per annum. Revenue of c£14.8m would be not less than £16.8m. But this revenue increase makes no change to the profit. That is not to say we do not appreciate the importance of both the income and the matchday experience to the club and we strive to improve commercial and retail contribution every season.

We said at the beginning of this season that there was a great deal of work needed in order to get player numbers, squad quality and costs under control. I am pleased to say that we have largely achieved all this, getting the operating costs of the club to much more sustainable levels. Across the summer and the January transfer windows we brought in six new players and three new players respectively, all to help bolster the first team playing squad. Whilst we achieved this through a combination of signed players and loan players, each of these players costs significant money to contract. To counterbalance this we had a large number of players we either moved on or terminated contracts with.

In the Autumn 2022, Peter Ridsdale and I set out a number of promises to fan groups. We said that we were reviewing both our retail and our catering partnerships. As highlighted above, we announced earlier in the season we have switched to fast-growing brand Castore for our retail offering and replica kits for next season. The new kits will be bespoke to PNE and we look forward to launching them by the last week in June this year. More recently we announced we have brought on board Sodexo Live! as our new official venue partner. We believe both will help enhance the fan experience and importantly help drive better income for the club for the 2023/24 season onwards.

Additionally, we acknowledged fans wanted us to have a dedicated fan zone bar and wanted us to repair the Town End roof. It took longer than we would have wanted – but in April we opened The Gentry Bar. This has already received great feedback and it will continue to improve and evolve. Finally, a significant sum has been set aside to begin work on the Town End roof over the summer months so that it is ready for the coming season. This investment is in addition to the annual hundreds of thousands of pounds that we invest each season into the repairs and maintenance of the stadium.

We know that we do not get every decision right (both on and off the field) but I hope that we have demonstrated that we are listening to fans and trying to improve. Equally, I hope that fans do understand and appreciate that there are projects and developments we would all like to be fast tracked but we have a budget, a budget that is first and foremost focused on the first team squad. As custodians, the long-term financial sustainability and success of the club is paramount to us. 

2023/24 Season

What does all this mean for the season ahead? Working closely with Ryan Lowe, the coaching staff and the club’s recruitment advisors, we have been reviewing and highlighting potential targets for the summer transfer window as we look to strengthen and enhance our playing squad. 

It has been widely reported in local media and via social media that we have a number of players out of contract this summer. For any squad to evolve and improve you will need a churn of players every season. Speculation to who is coming in and who is going out is something that some fans become fixated on. I am certain we will be linked with many names, and we will receive criticism when we don’t immediately announce a slew of signings. Please be aware not every player we get linked with will be true. We believe there is no sense to us fuelling rumours or responding to speculation every day - despite some people thirsting for news. When we have any specific updates or news we will announce through the proper channels. 

We do not underestimate that there is a great deal to be done to strengthen the squad for the 2023/24 season. Nor do we underestimate the amount of work required to contract those players we wish to retain and replace those we do not. The end goal is to have a substantially improved squad. Time will tell if we succeed.

Player budgets for the season have been discussed in detail with the manager (and his coaching team). As I have outlined on numerous occasions, we do not have the luxury of the riches of the parachute payments. Also, like every club in the Championship, we are constrained by Financial Fair Play rules (FFP), which means we must keep our (three year accumulated) losses to under £39m. 

That is a huge number, but we are aware of many clubs in the Championship that are very close to or have already breached this loss figure. We saw, last season, a number of clubs face points deductions due to financial uncertainties. We anticipate more clubs risk sanctions this coming season. We at PNE are not immune to this threat – we too are constrained by large annual losses. Our accumulated losses mean there is little headroom beyond what we have budgeted.

To put things succinctly – for those fans wanting us to spend more on player recruitment than we have budgeted for 2023/24, we cannot. We would potentially break FFP rules and risk a points deduction.

A football club is many things. It is a passion, it is a way of life, it is a beating heart in a local community. As Bill Shankly once said, “Some people think football is a matter of life and death. I don’t like that attitude. I can assure them it is much more serious than that.” But it is also a business, and a business cannot survive and is not sustainable if it keeps losing money and – as in the case of too many clubs in the Championship – more and more money each season. 

Over the past season PNE has worked hard to redress this and to focus on a sustainable financial model. We are on the right track, but we still have work to do. The incredible support we have had from the fans, the increased season card sales and the record-breaking matchday crowds have all played a huge part in improving the club’s finances and we are extremely grateful to each and every fan for their support.

We know it has been a rollercoaster at Deepdale and the home results haven’t always been as we would have wished – but the team deserves your continued support. We sincerely hope that the season card early bird offer is tempting enough to help us build on the amazing support you gave the lads last season.

The relative success of Luton, Coventry, Millwall and us this season shows that well-run clubs with a focus on good coaching, hard graft and a network for finding raw talent means you can compete in this league – despite the lack of a financially level playing field. We aim to give Ryan Lowe all the support possible to get the right players in over this summer transfer window. But, as highlighted above, this must always be within the parameters of the budget we have. 

The facts are that the majority of Championship clubs are not sustainable – their costs far outweigh their income. It is therefore incumbent on us to aim to make our club more and more sustainable each season. This can only be achieved, by a club the size of PNE, through a combination of key strategies:

  1. Improving the season card contribution. We achieved an improvement last season by driving c12k season ticket sales. This in turn drove matchday attendance and spends.
  2. Improving the matchday experience (through better catering and retail). By listening to fans’ concerns and through better fan engagement we have gone a long way to making improvements here. 
  3. Occasional player sales. This is potentially the area with the most significant impact on annual income. We had some successes pre-Covid in this strategy and it is our intention to re-focus our recruitment and further develop this model. 
  4. Development of young upcoming football talent through our own Academy to bolster our playing squad. I have explained previously why we remain a Cat 3 (rather than a Cat 2) level Academy. However, the work being done by our Academy team and the successes we are having are testament to the strategic plans we have in place. The c£5m investment required to build the indoor playing facility is just not feasible (without local authority/EFL/grants help) at this time. We are in dialogue with both the local authority and funding/grant bodies.
  5. An improvement to the distribution of Premier League monies. For several seasons now we have been strongly supporting the EFL in their negotiations for a fairer distribution model. With Government encouragement we hope that we are nearly there. This will be a “game-changer” throughout the EFL and we urge all parties to get this deal done as soon as practicable for the betterment of the whole football pyramid.

All of us involved in the club love nothing more than to see one of our own come through our Academy. We have had another strong year across the youth teams, with a number of exciting prospects coming through. Once again, a number of our Academy players made their debuts with the first team this season. Several of our Academy players have been enjoying loan spells across lower divisions – all of which will improve their chances of becoming part of the first team squad on a regular basis. We have a coaching philosophy for nurturing and improving playing talent, and we have demonstrated a clear route through to first team football for those players with most promise.

We believe it is right that identifying all new players is left to the experts. We have a strong scouting network, specialist analytics support and a first-class coaching team. Ryan Lowe, his coaching staff and their advisors analyse the squad, the areas that need strengthening and they identify players who fit our need. It is only then that we (the senior operating team and the board) become involved in trying to secure the players identified. 

It is not always possible to get every player we are asked to recruit. There are a long list of factors and unknowns that can stall or derail any recruitment. It happens at every single club in every league throughout the world. Rest assured though; we have been on with our recruitment process since the closure of the last transfer window. We prefer to get our transfer business done early, but some players we identify might not be available until later in the window (loan players for example).

The loan market has proven a great opportunity for us. Having access to players in a relatively low-cost way that might ordinarily cost us millions to sign is, in our view, sound business. Our strong relationships with all the top Premier League sides puts us in a great position to benefit from the loan market. Therefore, we will continue to scout the loan market to recruit raw up and coming talent to both help them develop and to enhance our team. 

It is difficult to wave them goodbye at the end of their spell with us. Some have become fan favourites and they’re a part of the Preston DNA. Of course, we would like a number of them to return each season, but ultimately this decision is not with us. As fans we should relish their time with us, seeing these young players pull on the PNE jersey and, at the end of their time with us, wish them great success elsewhere in their careers and be proud of the part we have played.

In April we launched our 2023/24 season card campaign, and the early feedback is very encouraging. Last season’s support from the fans was incredible, something we sincerely hope we can replicate. A full and rocking Deepdale is a sight to behold and an intimidating experience for the away teams. Home, is indeed, where the heart is.

We are back in Campoamor, Spain for our pre-season training camp, which was a big success – not just for the players but also for those fans that made the journey for the pre-season friendly. We are working hard finalising some effective and varied pre-season friendlies. Details will be announced in due course.

Our aspiration for next season is to achieve top six and ultimately, one hopes, promotion to the Premier League. There are 23 other clubs with the same ambition. There are five clubs with the advantage of parachute payments. We are focused on building a squad to improve on last season and to compete at the top end of the Championship. Are we punching above our weight? Yes, we are, and long may it continue, and we should be proud of this fact.

It is a privilege to be Chairman of PNE. I attend all the home and the vast majority of away games. I hurt, like every other fan, when we lose, and I am delighted when we win – even more so if it means bragging rights with a local rival. I too get angry if I don’t see 100% from players on the pitch. I feel a sense of pride when I see them put in the extra hard yards. I get the same adrenalin rush as fans when I see a last-ditch block, crunching tackle or slide rule pass for our strikers. 

I am off my feet cheering when we score and I’m head in my hands when we miss “a sitter”. All those emotions run through my veins – like every other fan. But when the game is over I and all the senior team have to put that emotion to one side. We have to shut out the knee-jerk social media barrage of “Sack everyone…!” when we lose or “Give everyone a contract extension…!” when we win. To borrow from Rudyard Kipling, “We need to keep our heads when all about us are losing theirs and blaming it on us.”

I can promise you we will try our best to improve in what we do. Try to improve our communications with fans and continue to make PNE a better club within the community and a better, sustainable club, for today’s and for future fans. 

I’d like to finish off my Club Update with one final special comment on our away fans. They have been truly remarkable and incredible in their dedication to supporting the team come rain or shine, spending their hard-earned money travelling near or far across the country. These fans have played a very strong part in our good away form this season. They regularly out-sing home crowds for an entire game, no matter what the score. We at the club are grateful to all of you. 

May I wish everyone a safe and enjoyable summer and I hope to see even more of you at Deepdale next season.

Craig Hemmings

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