I have heard that Tesco’s recent figures have been poor. Sales and profits are down. So what will Tesco do next? Well, first there is the blood-letting stage. Those senior executives believed to have taken the wrong decisions will lose their jobs. Please do not worry about them though. They will receive a big payout as they leave the job, and in most cases they will soon find another highly paid position*. After that there will be some analysis of where they are going wrong. Following that there will be some action to try to regain their market share. I am not certain what that action will be, but I am sure they will not be increasing prices while keeping for the same, or even an inferior product.
While the overall figures for League-2 Football are not suffering after a quarter of the season has been played (the average for the division is exactly the same as last season*, while all the higher divisions have seen a drop), some clubs within League-2 have seen a significant drop. Mansfield are 19% down on last season, Newport County and Oxford United both find their custom down by over 14%, while Cheltenham Town are 15.7% down so far. However, none of Mansfield, Newport or Oxford also saw a significant drop in attendance last season. Indeed, both Mansfield and Newport had a big increase on the back of promotion into the division. Cheltenham’s attendances for 2013-14 were 8% down on the season before, and even though 2012-13 was considered a successful season, it also saw a 5% fall in crowds. So it appears that over 25% of Cheltenham’s support has ebbed away in a three year period.
So where is the blood-letting? In football, responsibility tends to lie with the managers. So much so that more than half the managers of professional football clubs are changed every season. Not all of these are sacked for failure. There is much poaching of successful managers by ambitious clubs with bigger budgets. It is therefore quite surprising that after Arsenal’s Arsene Wegner, the two longest serving managers are Exeter’s Paul Tisdale and Cheltenham’s Mark Yates. If they are good managers, why has no one poached them? If they are not good managers, why have they not been sacked?
But then, unlike Tesco, most League-2 football clubs (certainly true in Cheltenham’s case) are not profit making enterprises. I can understand why they may not wish to have to make a payout to sack their manager. It is less clear why a contract was renewed at the end of an unsuccessful season, which saw the club falling well short of the previous season’s level of achievement, and as already mentioned losing 8% of the customers en-route. This season’s even larger fall in attendance is partially a knock on from the season before. Despite results being vastly better, a high portion of the customer base pays for the full season in advance. Hence disillusioned support from 2013-4 (many of whom did not bother to go to matches at the end of the season) do not show up in the figures until the new season. I know that a large number of season ticket holders did not renew, even if the full scale of the problem has not been made public.
So, surely the club will not be increasing prices? The base claim is they are not doing so, with the general price remaining unchanged over the last few years. However, four years ago they came across the idea of Premium price matches, designating about six games a season where prices across the board were £1 more than the standard cost. At some stage since then, the Premium has been increased to £2. Generally the games chosen are those where the away team are expected to bring more support. The logic being that the away fans will turn up regardless of the £2 extra charge (and generally this is correct). The catch is that the home support also has to pay the Premium prices. The first game this season to be declared a Premium game was the match against Northampton. The extra charge did not deter visiting supporters, but the home crowd was around 400 down on the previous game. The total crowd has been given as 2447. Let’s assume that after we take off season tickets, junior robins and other complimentary tickets, 1500 paid the extra £2, so an increase in revenue of £3000, which once we deduct the VAT comes down to £2500. Now according to the club chairman, the average take per ticket is £11*, (this is after deducting VAT, which is why I deducted it above). In other words, those lost 400 fans cost the club £4400 and the overall for the day is down by £1900. Of course, there were other factors in play for the Northampton game, in particular, there was racing in Cheltenham which has a triple disincentive to the club, (increased traffic congestion, the closure of the racecourse park and ride, and the fact some people may wish to have “A Day at the Races”*). It was already planned that the game against Oxford United at the end of November was also to be a Premium game. Now, with a home draw against Swindon in the FA Cup we have added another at the higher price into the budget.
While Swindon is an attractive visitor, a close neighbour and a division higher than ourselves, the FA Cup has been attracting reduced attendances compared to League games for some years. This is considered to be down to two reasons – the fact the competition has been devalued by the top clubs not putting out their full first team, and the fact season ticket holders have to pay for admission in cup matches, so if a season ticket holder is going to miss one game, why not miss the one not already paid for?
Raising prices seems like a move borne out of desperation. It appears we have already conceded we will lose the match, so we must maximise the take from a single game. Revenues for the game are shared, and the extra £2 includes VAT, so for each paying customer we will only gain 83p. For each customer lost, we lose £5.50. I agree we are not likely to lose as many as one in six of those who would have come to the game, so we will take more at the higher price. I cannot estimate how much more we lose as those who do not turn up will not go into the bar, buy a programme, a raffle ticket or use the catering in the ground.
One can only guess too whether or not some of those coming to the FA Cup game will feel they do not need to come to five games over a seven Saturday period, and so decide to miss one or other of the later games in the month instead. If any do, then that is a loss of £11 per person at the Wycombe game, £12.67 for the Premium Oxford game.
I can almost guarantee that in order to improve their figures, Tesco will first of all wish to increase the footfall, the number of people entering the stores, even if this means lower prices and more advertising; in short a cutting of margins and less profit in the short term. By contrast, our football club is responding to lower attendances by trying to squeeze more money out of each individual still paying. They are doing this without presenting any improvement in what we will be on view. This is not a recipe I would expect to create success.
1) At some stage, Tesco may decide to cut costs by reducing shop and warehouse employment. Where I will not waste my sympathy on high paid executives with large pay outs, the lower paid employees will suffer more if they lose their jobs, and in no way can be held to blame.
2) Actually, crowds in League-2 are marginally down. The divisional average is the same (so far) as last season but the incoming clubs have slightly more support than the outgoing clubs, meaning there is an overall decrease of about 125 fans per game, just under 3%
3) I am taking our chairman at his word on this. I would love to see the breakdown
4) Copyright, the Marx Brothers, and later Queen.