This was meant to be the season when things turned a corner for Oxford United. After a season-in-transition in 07/08, which saw them end the campaign as one of the Conference’s form teams, this was meant to be the year they were back at the top challenging to regain the league status they lost in 2006.
Except it hasn’t quite turned as planned. Despite many pundits, including yours truly, tipping the Yellows to challenge for a play-off spot, Oxford currently site one place above the relegation zone, separated only by goal difference from perennial strugglers Altrincham.
Manager Darren Patterson is already facing calls from the terraces for his sacking, and failure to get something at home to Cambridge tonight, then away to bottom club Lewes, could see Jim Smith’s former right-hand man lose his job. But equally as pressing for Oxford fans is the ongoing financial problems that could lead to them entering administration.
From promotion hopefuls to candidates for administration
The current financial situation is quite possibly a precarious one. The words quite possibly are used because nobody other than the board quite know exactly what the true situation is – Chairman Nick Merry, Lenagan and the rest of the directors have simply gone quiet, meaning it’s very difficult to gauge exactly what the state of Oxford United is.
The debt is rumoured to be around £4m – if true, a staggering amount for non-league level. Halifax collapsed with debts of just half that, and it’s much higher than other recent financial non-league casualties. For the financial year 2006/07 the club posted a trading loss of £653k and there are warnings the loss for 07/08 will be even more, although these aren’t likely to be known for some time yet. In addition, the funding for youth development has now dried up, meaning the club must bear this burden as well.
On top of this, former chairman Firoz Kassam, who owns the stadium, has increased the rent to a sum believed to be around £400,000 a year, squeezing the club even further. While the exact nature of the balance sheet at Oxford is unclear, even somebody without a degree in accounting can work out that the losses at their current level are unsustainable. In short, if Oxford continue in this vein they are in serious trouble.
It could have been so different for the U’s if they’d managed to bounce straight back into the football league. In October 2006, Oxford looked like they would walk away with the title by the end of the season, it was Dagenham and Redbridge who’d comfortably won promotion and Oxford’s season lay in tatters after an Exeter City comeback at the Kassam in the playoff semi-final second leg. For a club that had largely budgeted for promotion, failure to go up was nothing short of disastrous.
Since then, it’s been a downward spiral for the one-time Milk Cup winners. Last season saw them flirt briefly with the relegation zone, and Smith moved upstairs to be replaced by Patterson. This season things have, if anything, gotten worse, reflected in the declining gates – down to 4,332 from over 6,000 when they were first relegated – and falling season ticket sales.
The modestly named Kassam Stadium
Oxford’s long-term financial problems go right back to the death of old owner Robert Maxwell. Following the media magnet’s demise, the club lurched from crisis to crisis and owner to owner but it’s one of their more recent chairmen who many fans see as responsible for their current predicament.
Businessman Firoz Kassam may no longer be in charge but his legacy lingers on, not least in the modestly-titled Kassam Stadium that Oxford United have called home since 2001. Indeed, it’s Kassam’s continued ownership of the stadium that, in part, has contributed to the U’s financial problems.
Kasam took over the club in 1999, at a time when the club was in debt, having difficulty finishing their new ground – and needed to move from their old Manor Ground site. Kassam solved both these problems by entering into a CVA and reducing Oxford’s £9m debt. He also built the £15m stadium, as well as a hotel and leisure complex on the surrounding land that cost him a bargain price of £1.3m.
Meanwhile, Kassam sold the old Manor Ground stadium to Firoka, a holding company registered in Jersey and owned by Kassam, for £6million. This money was used to pay off secured creditors while the Manor Ground and the surrounding land was sold, complete with planning permission, to the Nuffield Hospital Group for £12million. The profits on the sale went to Kassam.
Kassam has said many times that his money saved the club, and he took a significant financial risk in constructing Oxford’s new home. That may have been so, but Kassam continues to make money from the leisure complex, and most importantly, still owns the stadium – which means the cash from the catering and other in-stadium money-spinners goes to Kassam and not the club, denying Oxford income that many of their other rivals take for granted.
Kassam sold up to Nick Merry and Ian Lenagan just before the club were relegated to the Conference. Merry, who assumed the role of chairman, was a former U’s youth player who’d made his money in the US, while Lenagan was owner of rugby league club Harlequins. He’s since taken over his beloved Super League side Wigan Warriors.
The new owners rode a wave of goodwill when they first took over with supporters glad to see the back of Kassam, and their first act of appointing Oxford’s most successful manager, Jim Smith, was warmly appreciated. Since then, that goodwill has slowly been eroding.
Worse still, relations between the board and the supporters’ trust – OxVox – seemed to have deteriorated to the point where a recent meeting between club and trust was strained from the start after an enquiry from the trust about the state of the finances. OxVox has since called on Merry to make the current financial and stadium situation clear.
Merry, for his part, told the Non League Today paper, that “We met with OxVox only two weeks ago and we issue a press statement every month. I do not know what their problem is.”
If Merry and co. can secure the stadium, it will go a long way to securing the club’s future. If the board can’t persuade Kassam to pay up, the financial situation gets even more precarious. The Conference has tightened up its rules on clubs in administration to the extent of being far more stringent than those applying to League clubs.
Halifax Town, Boston United, and Nuneaton Borough have already suffered enforced demotions as a result of these rules, with two of them folding and reforming under a different name. It’s not out of the question the same fate could befall the U’s.
In their gloomiest moments, some U’s fans have even started talking about groundsharing with British Gas Business Premier neighbours Oxford City. If the financial difficulties continue, United may end up playing them or, worse still, fold and end up below City in the pyramid. Even in the darkest days in the immediate aftermath of Maxwell’s death the most pessimistic fan couldn’t have predicted just how far their team would fall.