SHEFFIELD – UK; The Sheffield Steelers have hardly been out of the news this last few weeks and doubts have been raised about the security of the club and its season ticket holders. PHN caught up with owner Bob Phillips who told us of the club’s plight.
Pro Hockey News: Bob, virtually all the senior staff have resigned from the club, how do you see that situation?
Bob Phillips: Let’s go back 3 years or so I guess when we handed the reigns over to Mike ( O’Connor. Ex Steelers player and GM – now resigned) . Mike came on board at the start of our second year in 2006, following the same successful formula we used in Cardiff to the Sheffield Steelers. Seeing the potential we had in South Yorkshire compared to what we had in South Wales, it was simply a case of converting those empty spaces on the dasher boards and on the ice in to sponsors.
We were very successful in our first year; Mike picked up the baton and ran with it. One thing that we have discovered recently is that whilst the dasher boards have doubled and trebled in number, the income has not followed suit, and in fact has reduced significantly. This appears to be due predominantly a failure to recover some of the promised sponsorship payments and what has been given away in terms of benefits to certain sponsors.
Over the past 3 years things haven’t been brilliant, just about breaking even in the first two years we handed the reigns over to Mike, and last year there was a loss of £7000, but for some reason this year we seem to have carried over a lot of losses that weren’t showing in the accounts we saw for 2008/2009 as brought forward balances as it would seem there was a high level of debt showing for Yorkshire Sports, plus a further £100,000 we have since been made aware of which we have notified the liquidator of YS about.
The shock came when we came home for the playoffs this year and we were asking Mike how’s it was going and he said, “Not good!” I said OK, we will have a look after the playoffs. For whatever reason that never happened, I went back to the Middle East, came back a while later and brought in some financial people to look at the books.
I could see straight away that things weren’t right.
Mike and I discussed matters and I suggested that we should get some professional advice. We did that and it became clear the company could not meet its debts and we were advised the best and most appropriate course of action was to wind that company up; mainly because of the bad debt in sponsorship deals, which on the face of it looked great work on his part, but they simply weren’t paying up.
When I brought a team of financial people in to the company to try and understand what was happening within the company and why it was failing, we started looking at game sheets from last year and we learnt that in probably more than 60% of games there was a deficit in ticket income to even pay the rent. It is now clear that this is where our £20,000 deposit to the arena went that we should have had back at the end of the year, it was being eaten up to make the shortfall – plus money from Yorkshire Sports to make up further shortfalls.
That was a bit of a disaster to us as we were expecting to get that money back at the end of the year; bearing in mind that we had loaned Yorkshire Sport nearly £60,000 to get it through to the end of the season.
It is clear the company was in a mess. We have tidied up the business over the last 2 weeks, it is fit and ready to go, if an owner had come forward they could have walked in here and we could have shown them everything we have done recently to improve the business. We have all the season ticket holders on a database now, we have extensive marketing plans and tools either being put in place now or being made ready for the start of the season which include social networking, business networking and direct marketing, all to drive the fans back to the seats and attract new fans to the sport.
The problem with focusing on sponsors is that you spend all your days, nights and weeks looking after your sponsors, but ignore the people who are important to any sporting club and who themselves create the atmosphere, and that is the fans in the seats. That’s what has ultimately killed this business. We have lost that atmosphere, we need voice and we need noise that can raise the playing standard. The hockey we have endured over the last year or so was also a major factor and I accept I should have acted sooner as it was not acceptable, even winning trophies is not acceptable if the hockey is not entertaining. The last two guys have to be top end guys, I want people saying ‘WOW, what a great game that was, there were hits, there were checks, there were goals. OK, we lost but so what, what a great game of hockey’. We haven’t experienced that, we have left you miserable even when we have won! It’s terrible, and we have to change it. Whose fault is it? Ultimately, it’s my fault, I hire and fire the coach and I must shoulder that responsibility.
PHN: Do you accept any responsibility for how the company was being run?
Phillips: Yes to some extent, but it is very hard when the company is being run and managed by a separate Ltd company. I could not be seen as a shadow director calling the shots or managing the club in the background. That said, as owners my family and I are ultimately responsible for who manages the club so I think the buck has to stop with us. Maybe I shouldn’t have paid £100,000 a year for the management team I had for the company to be run in my absence, maybe I shouldn’t have gone to the Middle East. There is nothing I can do about those choices now, but I can take responsibility now and do everything in my power to move the club towards better times.
PHN: Was Mike O’Connor under any form of duress to be the sole director of the company?
Phillips: Absolutely none whatsoever, it was a totally voluntary thing. He was running the business, he was running the company. He was more than happy to do so, at no point at all did he ever state to me that he was not happy being the sole Director.
PHN: Where has the season ticket money gone for this year and have you ever used Sheffield Steelers money to fund other ventures?
Phillips: Five years ago when we bought this club, there was £148,000 left in the season ticket account, that was the trading account for South Yorkshire Ice Hockey Club Ltd. £50,000 of creditors in SYIHC very quickly came out of the woodwork that we decided to honour.
Then came claims from former players, former coaches and then we discovered contingent liabilities for historic non payment of benefit in kind from the previous three years and there were links with Chesterfield FC with shares of SYIHC. After trading for 8 weeks and trying to save that company I took advice from Solicitors and Insolvency Practitioners and I was advised to liquidate SYIHC and advised that we could move the remaining season ticket money out of the company because it did not belong to the company, but that it was for the season tickets for the following season.
£100,000 of that was missing; it should have been £248,000. The previous owner had used that money, as a lot of owners do, to pay off debts from the previous season. The previous ownership had made a promise to pay that money back to us in a loan deal agreed at the time of the sale which was detailed in the sale agreement. On the basis of that they would return the money that had been spent and we would pay them their £50,000 loan back that was showing in the accounts of SYIHC.
There is nothing unusual about this and for the last 5 years we have been pursued for that £50,000, the liquidator was put under a lot of pressure, I didn’t defend it as I wasn’t here. They won the case and it was decided that the remaining season ticket money should not have been taken out of SYIHC and asked for it to be put back, well obviously that was not possible and they therefore went through the process of obtaining a judgment against me personally and subsequently a charge on my family home which we have now settled.
The hardest thing to bear is that the warranties we have with a previous owner are close to £200,000 and we are now issuing proceedings against them to honour those warranties. Back five years ago we loaned the business £100,000 pounds to pay off those debts and allow the season ticket holders to get what they paid him for, otherwise those people would not have got their season tickets in year one.
With hindsight we should have left the money were it was, allowed it to disappear in to SYIHC and told those people that they had lost their money and their season ticket and that they would have to pay again or go after the previous owner for their money.
We did what we did to protect the season ticket holders and to make sure they had their tickets.
As to whether we have ever used money in the account for other ventures, we have used some money from Sheffield Steelers Ltd for a property venture that was planned to then be used as players’ houses and help reduce the amount spent on rental properties each season. We anticipated that the company would have used those property’s to rent out to our players last season, we didn’t do that for whatever reason and so we spent nearly £70,000 on rented properties last year while allowing some of our houses to sit empty. This year, if they are not sold by August they will be used for our players as was intended.
We created an overdraft facility in Sheffield Steelers of £60,000 which is personally guaranteed by my wife and I and we have used that facility for our own means. There is no problem with that, we have done everything proper, and we have been transparent about it. In addition to that of course, the company owed us £100,000 from day one when we had to top up the shortfall in season ticket money and we are entitled to have that paid back to us.
PHN: So is this related to the £50,000 that the previous owner has won?
Phillips: The last ownership hasn’t won any money from us and they never will. This was a claim from the liquidator; the liquidator was pursuing the season ticket money that was transferred from SYIHC when we took over and upon professional advice from that liquidator and my solicitor. The settlement payment we have recently made went to the solicitors acting for the liquidator who we understand were working on a contingency fee basis and I’ve no doubt the money was probably all used up in legal fees!
PHN: So is the season ticket money safe, and will season tickets be honoured?
Phillips: I have always told our season ticket holders that their season ticket is safe, and it is. There is no issue what-so-ever with their season tickets. If there is any shortfall in the account we have always made it up, that’s what we need to do this time and we will do it again. And that will be if I own the club or if I don’t, as that would be a condition of any sale. I can categorically state now that if I am owner of this club, or if a potential new owner comes forward, season tickets will be honoured.
PHN: How does the future look?
Phillips: We have guys that are very keen to come over here, good guys, I am not going to divulge who they are just now, Neil Abel knows who they are and we have been working today with Neil. We had a couple of the Brits (Jonathan Phillips and Ashley Tait) come in with their concerns, we have allayed those fears and told them that the new coach (Ben Simon) will contact them and he will decide what players can expect going forward.
We have sent off all the ITC applications for the guys we have already signed and we have talked today with an investor interested in putting a four figure sum in to the club, so we end today on a very high note. One problem that has been caused is the Border Control files are missing from the office and we now understand we have to reapply for sponsor change of circumstances that may cause us some delays but we are trying really hard to work through this.
PHN: What is the relationship currently like with the arena?
Phillips: It’s not great at the moment because the Elite League and the arena have been liaising, we went in to sign the agreement recently but they are putting it off for the moment, they are aware of a possible sale and don’t want to contract somebody who is not the owner of the club; I can understand that so we are putting it off for the moment.
PHN: The YES project seems dead in the water, what are the plans there?
Phillips: We have been talking very closely with MAGNA, with a view to putting a facility in there while we wait for the YES project to come up trumps. We understand that OAK holdings may be working with a new consortium, so that could ignite any time in to something a little bit larger.
Note: PHN contacted MAGNA for verification on the proposed move by the Sheffield Steelers and a spokesperson confirmed that they are involved in a very exciting project to bring the Steelers to the venue and that work on the project is progressing well.
PHN: How do you view the management that have resigned?
Phillips: I think they have made it a little bit personal. Mike O’Connor, stand up guy, great for the Sheffield Steelers, he was perfect. We just needed Mike to focus more on the people in the stands rather than the corporate sponsorship. Betty was already on a 3-day week and did great work in that time. Dave Simms is Mr Sheffield Steelers. To be fair to Mike, Betty and Dave if the controls and systems had been in place and they had followed those systems they would have been great. I anticipated that they would put these systems in place but ultimately I should have ensured this was being done. As I said, the buck stops here.
PHN: Do you think the Sheffield Steelers are arrogant?
Phillips: I would say some fans, sponsors and players have thought this and I think we have all been guilty of being a little arrogant in saying we are the Sheffield Steelers so come and watch us, and we have ignored driving the human factor which is what we need. We certainly intend to change that perspective!
PHN: What would you say to the fans?
Phillips: Forget the owners, forget the players, who often come and go, focus on your club, and support your club. This has been made in to a personal campaign, a personal slur and it had gone way to far, it needs to be brought back to reality and people need to focus on the hockey again.
Thank you.
Contact the author: neil.edwards@prohockeynews.com
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