Tuesday 24 October 2017

Delaney's FAI and the THG tickets deal - Football body's debt stands at €40m after loans to build stadium

FAI chief executive John Delaney speaking at the launch of the Vantage Club. Photo: Pat Murphy/ SPORTSFILE
FAI chief executive John Delaney speaking at the launch of the Vantage Club. Photo: Pat Murphy/ SPORTSFILE
Daniel McDonnell

Daniel McDonnell

There will always be a place where Football Association of Ireland (FAI) chief executive John Delaney is likely to avoid questions about tickets.

Under his watch, the Annual General Meeting of the FAI has developed into a week-long travelling roadshow around the lucky county chosen to host the event.

The meeting which rounds off the festivities has become notable for the absence of any form of discussion beyond a staid series of reports from the top table.

This year's gathering in Tipperary finished up with what appeared to be an unexpected presentation to Delaney from the 'grassroots'.

For the second year in a row, a standing ovation for the chief executive followed.

For the third year on the trot, the delegates on the floor opted against using the public forum to raise queries about the annual reports.

It portrays an image of health at a time where the association has ongoing issues that should be of concern.

One week after the AGM, in response to the FAI's offer of a €5,000 grant to each League of Ireland club to help them develop a five-year business plan, a strongly worded statement from St Patrick's Athletic explained why they would be rejecting the money.

"Our game is in crisis," was the key line. They added that in the 10 years since the FAI had taken control of the domestic league, the Abbotstown power brokers had displayed "nothing approaching leadership".

The announcement of the €100,000 payout to the clubs was supposed to round off a week of good PR at the AGM but it has backfired spectacularly.

Ultimately, an offer that amounted to €20 per week over the period did not go down well when Mr Delaney's €360,000 wage is more than three times the size of the prize money that league champions Dundalk received from the FAI last year.

The FAI would argue that it has a lot of bases to cover beyond the Airtricity League, but the reality is that it is not in a position to spread the Euros wealth because it has more pressing issues.

That is because of the problem that tends to deliver the headlines from its AGM even in the absence of the opportunity to probe further on the minutiae. Bank debt is the simple heading.

It all goes back to the Aviva Stadium and the inability to sell the tickets to cover the FAI's contribution towards its construction.

Mr Delaney's supporters will argue that getting the old Lansdowne Road renovated in partnership with the IRFU was a significant achievement.

The venue has hosted the 2011 Europa League final and will host games in Euro 2020, and it is a home for Irish football.

The FAI was always going to have to borrow to fund its €74m contribution to the project, but the sale of 10-year premium level tickets in the 'Vantage Club' was supposed to cover the bulk of the cost.

At the launch in September 2008, Mr Delaney was bullish as it was announced that the FAI had hired a third party, the International Stadia Group (ISG), to sell the tickets on its behalf.

"We've decided to bring in the world leaders in terms of selling the stadium out," said the FAI CEO, who pointed to ISG's work on a similar project at the new Wembley.

The announcement that ISG would be pushing packages priced between €12,000-€32,000 raised some eyebrows, particularly given that the IRFU had sold all of its 10-year tickets for a flat rate of €15,000.

"In fairness to the IRFU, they've been in the 10-year market for a large number of years and they've gone about their business in the way they see is proper and all credit to them for that," said Mr Delaney.

"They've done their one very, very well, no question about that, and we're going to do our one very well as well."

It was an optimistic prediction.

The possibility of an economic downturn was raised; Lehman Brothers had filed for bankruptcy earlier that week and the FAI said it had 'health checked' its research to gauge the mood amid some worrying reports. Mr Delaney said that the prices remained affordable.

"There are 33,000 millionaires in this country," he declared, "And we have a database of 80,000 people we're chasing. We only need 3,000 to say yes because the average sale is three to four seats. We'll do it. We'll be fine."

Two years later, things weren't fine at all. As the FAI's relationship with ISG came to the end of its term, just over 4,000 of the 10,000 seats had been allocated to seat buyers.

That figure included cancelled orders that remained in the system, almost 1,000 seat holders from the old Lansdowne that had agreed 10-year deals worth €7,500 in 2004 and 2006, and close to 800 that had been recruited on a new direct debit scheme that was the alternative option pursued instead of cutting prices.

The investigation discovered that a number of customers in the latter category had opted against continuing with their payments.

One piece of business which did guarantee revenue for the FAI was an arrangement with Marcus Evans's The Hospitality Group (THG) - the company at the centre of investigations into OCI affairs - which effectively gave them control of 635 seats in the corporate hospitality in the South Stand.

THG incurred the risk if it was unable to sell its 'Gold' and 'Silver' packages which were advertised on a game-by-game basis.

When recent events in Brazil placed THG in the headlines, the FAI stressed that it no longer worked with the company.

The relationship suited the FAI when they pushed the premium deal and the association denied reports that it had rejected a €75m offer from a third-party company - believed to be ISG - to bear all the risk from the 'Vantage Club'.

That speculation was intensified by on-the-record comments from then FAI president David Blood, who addressed that subject matter by stating that the FAI "did feel confident enough that we could sell our stake. But the downturn in the economy has affected everybody. At the time we made these decisions, we thought about them. We didn't just say 'no'. It was well thought out I feel."

When the failure of the 'Vantage Club' venture is discussed today, the impact of the recession is invariably mentioned. "Nobody saw it coming to the extent that it did," said Mr Delaney in 2010, setting the tone for future years. This hinted at a belief that the confident predictions at the marquee opening would have come to pass were it not for the climate. At this juncture, it is worth breaking down that the packages were priced at between €1,200 and €3,200 per year.

In 2014, Ireland's only competitive game in Dublin was against Gibraltar. This year, the only meaningful encounter is the visit of Georgia to Ballsbridge next month, although the pre-Euro 2016 friendly with Holland did generate interest.

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Granted, 2015 threw up a host of significant matches with Poland, Scotland, Germany and a play-off with Bosnia, yet interested spectators were able to purchase premium level tickets for just one match if they so desired.

The cheaper rugby package guaranteed a consistent level of entertainment each year with the familiarity of the Six Nations and the likelihood that the other major rugby nations from the southern hemisphere would visit relatively often. Football offers no such certainty.

Celtic Tiger Ireland is synonymous with rash spending, but millionaires didn't get rich by splashing out €3,000 for a match with Gibraltar and some friendlies when it quickly became apparent that tickets for the good games were widely available closer to the time.

Ironically enough, the fact that THG were offering single match hospitality packages also highlighted that fact. From the outset, ISG reps advised the FAI that discounted deals were necessary. But, by the time that realisation had set in, the punters that might have afforded the lower prices at the start couldn't justify doing so. These were expensive errors.

On day one, Mr Delaney had flagged 2016 as the point where the shrewd plan would really kick into gear.

"It (Vantage Club) makes us easily afford our capital commitment to the project," he stated. "Then from 2016 onwards, we get to see the real dividends from the way we've done our business model around the stadium. And I think the real net worth arises in 2020 when we resell these because that becomes a toll bridge and really a pension for the FAI at that stage."

There was a positive financial update from the 2016 AGM with the announcement of a debt write-down as part of a new arrangement with Bank of Ireland, which has reduced debt by €10m to leave the total of its loans standing at €40m. The interest rate is lower compared with the previous terms with the US based Corporate Capital Trust.

The original plans for 2016 painted a rosier picture. Mr Delaney's "real dividends" have amounted to making the best of a difficult situation.

Workers have received a 3pc pay increase in response to their search for the restoration of a 10pc pay cut they suffered in 2012 due to financial strains.

Other cutbacks included staff redundancies which affected some regional development officers and the cessation of a programme where the FAI part-funded club promotion officers that were appointed to strengthen the link between League of Ireland sides and their communities.

Talk of being debt-free by 2020 is now couched in language of hope rather than expectation and, while a centralised TV deal with Uefa has provided a degree of security for the road ahead, the reality is that a successful senior side is of paramount importance.

When the public voted with their feet, the FAI had to explore new season ticket and pricing strategies to attract them back.

The exciting end to Euro 2016 qualification created a buzz. Martin O'Neill starts a World Cup mission in Serbia on Monday week with three away dates in four months set to have a major impact on the outlook for 2017.

It always seems to come back to tickets. Mr Delaney and the FAI hierarchy remain saddled by a large debt because they pursued a deeply flawed strategy. Irish football continues to live with the price of the mistakes.

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