Celtic AGM Friday November 20th 2015 at 10.30am

He sure did. He was on just shy of £1m after it was added.

 

Whether we agree with the bonus or not, he has earned it. It's the parameters of the bonus that I'll take issue with because they are clearly not taking us forward as a club.

 

So has he deferred the payment then ? Has he done that previously ?

 

I stopped reading at page two (tapatalk app) with talk about lawwell.

For those thinking he is wonderful and that he is blameless as it's guys like desmond that tell him what to do, then you are really not catchin on.
Desmond and share holders are money men, they invested money and demand money back. They collectively have the power to hire and fire guys like lawwell and have influence further down the line if they wish to, but they do not run the club/business. They dont sit down year on year coming up with complex plans for how to run the business. Theae guys have hands in a lot of businesses, they physically couldn't be that involved.

What they will do (and this is keeping it simple) is hire someone, lawwell in this case, to do that business work for them, with the main objective to get their dividend return at the end of the year, lawwell is paid a basic (haha) salaray, topped up when /if he makes a profit and money for the guys like desmond.

It is lawwells job how he goes about making that profit for them. And for years that has been to make sure there is as little risk as possible. He will spend little over what we bring in, not willing to speculate to accumulate in regards the champions league. If failed there, he will sell a high value player or two to make up that short fall. If we got in, we would have made the club 30million this season, barely a sixth of that would have been used on player investment. Intead it would go to helo pay off any outstanding players purchase or lones, overdrafts, maintenance etc. To preserve the cash flow for years to come to make profit in future years 'easier'.

This is all to make sure the balance sheets are balanced.

It matters not a jot to desmond or lawwell in this case if the business brings in 50million or 80million. So long as the profit is met and the dividend paid out.


That is our problem, and hopefully with a new man in place of lawwell, they may take a different approach to meeting those end goals. Such as spending 10-12million before the qualifiers to being in a solid striker, solid defender and a playmaker. Maybe paying a decent wage to decent scouts and coaches to get the best out of this football club. To then make the 30million from the champions league and post the profits that way.
Maybe someone willing to take the flak for some failure and have the balls to say why that failure may have happened - by chasing a bigger success.

Desmond cares little who the man in charge is or how he does it, so long as the end of the year he gets his return. Fair play to him. But we as a club and fans could do with a better approach to it.

For one, Desmond may take that action if the worst happens and we post annual turnover of under 50million next year, which could happen.
And to think it should be over 80million instead.

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What dividend did DD take last year ?

 

Dividend, salary, profit share, interest, whatever it is he takes out. Itll be dictated by how well the books are balanced?

Im no accountant, hence why im not im that job. But a sensible man can figure out how the thing works, minus some bad wording on my part perhaps. So apologies if thats a bad choice of words for what gets taken out by dd, but im safely assuming the investers will all take something at the end of the year when the business makes a profit!?

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So, let me see if I understand you. You want to replace a Chief Executive with someone who may or may not be just as capable?

 

The reason I asked was because you kept saying about the dividends he was taking so I thought you knew.

From memory I read/heard a figure of £50k was floated about. What you then need to look at is the amount he invested , which I cant remember either now I want to say £10 million but that could be utter * and I don't have time to go and look it up.
So if we say 1 million, a very very low figure. When you compare that to the £50k that is approx. 5% being honest with you I could get him a better return on his money AND he wouldn't have the 'hassle' of so many on the internet claiming he could be doing more for Celtic etc and he would have immediate access to his money and not have to wait til he sold shares in the Club.
If the initial investment was higher then the return is even worse for him obviously.
Basically DD is a very good investor for us, as a Club to have, as the amount he is looking to get in return is peanuts.

 

"So, instead of having a non-EPL quality side on the park but an EPL-level Chief Executive at the helm, you'd rather we binned him and hired someone less capable because he'd want less wages"

Now that's a straw man if ever I saw one :smiley-laughing002:

There is no such thing as an 'EPL level Chief Executive', and being paid the same wage as someone doesn't mean you are on their level in terms of ability.

Lawwell recieves his circa £1m wage on an annual basis for managing a company with a market cap of approx £60m. The Swansea chairman, who similarly runs a company with a market cap of approx £60m, receives an annual salary of £200k. Excluding the retail and catering staff and, Lawwell is probably paid more in line with EPL wages than ANY employee of the club. How does our captains pay compare with the even the lowest paid EPL captain? How does our highest earner pay compare? How does Lawwells pay compare with the CEO of a similarly valued EPL club? It outstrips it many times over.


The argument of 'well who could do a better job?' simply dpesn't stand up to any scrutiny. It's the same line wheeled out in support of Deila. It's a purely hypothetical argument that has no context.

The truth is, he is EXTREMELY well remunirated in comparison to the playing staff in our team. We can debate all night about his performance (I think he does an okay job, he's a safe pair of hands without being spectaculor), however it's safe to say he's basically the best paid employee at the club if you look at comparitive player/staff salaries elsewhere. The fact the he is the only person in our entire business that is remunerated in line with EPL standards is a sad indicator of the current state of our operational model though imo.

 

Good post KoK.

I'm not anti-Lawwell but there is no way he should be paid what he's paid, that's not even taking into account his obscene bonus.

 

He has deferred payment on a few occasions im sure in the past.

 

You know fine well part of Lawwells remuneration will be share options or share incentive scheme's over and above his basic pay. Therefore part of his pay will be dividends.

That leads to how is one incentivised. Does performance on the park really hit the share price massively or does profitability and balance sheet performance impact the share price? I would say profitability does the most.

I don't think football clubs operate in the same way as other listed companies where anything can cause the share price to fluctuate massively for example even the rumour of a major CEO resigning and the share price can plummet. If Deila were to get sacked tomorrow it just wouldn't have that same effect. For a football club for investors its mainly the financial performance.

This is where my issue lies, it seems recently the focus has shifted from performance on the pitch to almost 90% balance sheet and profitability in order to become self-sustainable.

The issue here is by becoming self-sustainable we are just cutting our costs drastically and offsetting losses through the sale of assets. Its not rocket science. Every business needs investment and almost everyone goes into some form of debt in order to expand. In fact as you well know its good to be in some form of debt, debt at the moment is cheap.

I think we have become far too fixated on financial performance because of the recently deceased and have forgotten about the product on the pitch.

 

Do you work in finance btw? My head gets pickled thinking about it all. :smiley-laughing002:

 

I wouldn't mind seeing him replaced by somebody who could keep us financially sound off the park, and still keep us growing on it. Who that might be, I can't tell you. However, I find it hard to believe there isn't someone out there who could succeed at this, and perhaps justify a substantial bonus. Correct me if I'm wrong, but wasn't it yourself that only yesterday were talking about our failures on the park through lack of investment. Or words to that effect.

 

This is the problem...everyone thinks we could put more into the team and still remain nice and safe.

What if DD and the CEO already has the club sailing on the edge and a increase in spending would push us dangerously into higher debt.

And no im not talking about the huns super style debt but even the debt MON left us with took us years to clear.

 

Aye Tax, 2 years into my 3 year training for CA. It's funny how you eventually start to enjoy it...

My life is on a path to ruin!

 

Do you believe that Lawwell couldn't move us that way if we made his bonus reliant on us doing just that?

 

I asked as you said he had. Yes he has not taken his full entitlement however as far as I am aware he is not able to take a million or two when he pleases to make up for it now as he declined it.

Not sure if this was also meant for me as well EB ? I think it was given the start.
I don't know how his salary package is made up but it probably is a mixture of all of the above. When I was talking about dividends (above) and return it was in regards to DD and his original investment not about Lawwell.

Yes in general the share price of football clubs will be less volatile than listed companies. However if the figures don't look good then no matter the on field success then that will affect the price more. As you rightly say the drive to being self sufficient has impacted on on-field success however its a price I'm personally prepared to accept in return for the increased guarantee that Celtic will always BE.
Now people can disagree with that and say 'speculate to accumulate' etc however for me I would prefer to err on the side of caution (it doesn't make me a bad person).

The dividends that are taken out of Celtic are, for what has been invested, nothing special as far as I can see. I don't think we ,as fans, can complain much there, although certain people do but usually when questioned on it they aren't very sure either then. And you usually find out its all these rumours and 'statements' that get spouted that causes a lot of the problems when it comes to Pete/Board/DD/amount spent etc. A little knowledge is a dangerous thing springs to mind.

Yes debt is cheap just now however like all debt it has to be repaid and serviced, as you know, and that costs money as well. So while debt can be a useful tool, at times, I wouldn't go out of my way to accumulate it either. Or more specifically in football I should say.
On a personal note I am glad that accountants are now being taught this though, now all we need to do is get you all to accept that pensions are a good idea as well but that's a different issue mate :smiley-laughing002:

I cant remember who said this or when but it always sticks in my mind when conversations about investing in football clubs starts and its this -
The best way to make a small fortune by investing in a football club, is to have started by investing a large fortune in a football club -.

 

I agree entirely that owning a football club isn't something that should be used as an investment vehicle. Given Desmond's wealth, he would have access to literally millions of better investment opportunities.

However, that raises an obvious question - if it's not about money for Desmond, then why? And more importantly, if it's not about money for Desmond, does it really matter that we adhere SO strictly to a breakeven at all costs policy? You work with a number of wealthy clients TimTime, and I'm sure you'll know about the importance they place on at least appearing to be self-made. Status, far more than money is exactly what these people crave, and that is exactly what we are to Desmond - an expensive status symbol, something he can talk to his golfing mates about, and something that makes him more interesting and public than just another billionaire. It would honestly surprise me if Desmond gave much of a thought to us breaking even anually, or paying out in the form of dividends. It is chump change to him at best. If we're here as a status symbol, which I believe we are, it must grate him when we're in our current condition on the footballing side of things much more than it satisfies him to simply see us in the black while we continually lose our prized assets.

 

We have a few pension seminars coming up! By the time I retire I'll be dead soon after. I'll never get to enjoy it...

That's for another day though. I still think the mix between finances and product on the pitch needs to be recalibrated a bit. I just think Celtic need to be careful about tunnel vision and fixating on finances.