Chairman Ken Hodcroft used his weekend Programme notes to give fans more info on Jack Baldwin's deadline day move to Peterborough United.
This article was first published in the Matchday Programme for our game with Newport County on Saturday 15th February 2014.
Today we welcome the Directors of Newport County AFC along with their players, managers and fans who have made the long (and probably wet) journey north. Parts of Wales, the South and the South West of England have been severely affected by rain and storms in the last few weeks and we hope the journey home for them is a safe one.
Travelling south last Friday our team coach travellers witnessed flooded fields and heavy rain and the Dagenham & Redbridge game looked doubtful to remain on. However, the pitch was playable and the team took full advantage, played well and returned with three points. Their display was, arguably, not as good as at AFC Wimbledon yet we returned with “null” points that evening and a long journey home to look “forward” too. Newport, we hope, will have such a winless journey home tonight!
As you all know, Sam Collins was due to play in the two games after Wimbledon in place of Jack Baldwin who would have been suspended. That role has become more permanent as Jack was sold to Peterborough United – we await Jack’s debut for Peterborough after his suspension and wish him well. Sam, the professional that he is, knows the job in hand.
Of course, the funds from such a sale will help the Club reduce its losses – but the media talk of a £750,000 “package” needs some clarifying. The fee was £500,000. The Club, player, player’s agent and Peterborough’s Barry Fry agreed to keep the fee undisclosed but Peterborough’s owner decided to get some brownie points with their fans and tweeted the fee to them and the world.
The media, not having all the details, stated the Club had a sudden payment of £500,000 with add-ons giving a fee up to £750,000. Every time the press have written a HUFC story for the past two weeks they mention “Baldwin signing a four–and–a-half year deal that will get the Club up to £750,000.” So in theory the Club’s financial shortage is over, the Club has plenty of money to spend on new players in the next transfer window and the Salary Capping rules are no longer applicable due to the deposit of £500,000 income (or is it of £750,000?) into the bank. You, the fans, will think that – as will other clubs - who may have a player that Colin is interested in (and who will put their price up accordingly!). Likewise any “free” loan players to help HUFC due to Salary Capping restrictions will probably be “off the table.” Hence, clubs like to do deals for “undisclosed” amounts in order to keep the information in-house for a variety of reasons.
However, back to this immediate ‘windfall’ of whatever the final fee is. The Club has to pay £100,000 VAT immediately on the £500,000 but the Club is not getting £500,000 immediately. All the Club is getting this season is £100,000 for the player and £100,000 to pay the VAT. However for VAT and Salary Capping purposes, the £500,000 is classed as being received ‘now’ and paid in full to the Club. So next season the Salary Capping rules will be just the same for the Club, i.e. the Club will reach its limit very quickly due to limited income and will still struggle to sign loans and players where cash has to be paid (so as mentioned in previous Programme notes the Club is, as always, looking for major sponsors to contribute).
So where did the other £400,000 go? Well, it’s payable in instalments between August 2014 and June 2015. So lump-sum cash to do any deals is not available and even when a tranche of money is received between those dates it cannot be spent on players as the Salary Capping rules will not recognise such a payment as income for season 2014/15.
So please media, and fans - when the transfer window opens in August and next January do not start asking where did the £500,000 go? The majority of that money will be used to ensure the Club, with its annual losses, can continue to function in 2014/15 with a reduced loss.
No doubt everyone will now ask about the other £250,000 the media proclaim “could” come the Club’s way?
Well, it is true the Agreement with Peterborough does have some add-ons. Largely, these depend on the success of both Peterborough and Jack in the forthcoming years, both in terms of their league performance and his First Team appearances. The Club has also negotiated a sell-on percentage should Jack be lucky enough (and we hope he is) to be sold on, but any payment will be after they deduct what they will have already paid HUFC (i.e. net of at least £500,000).
So where the media get the £750,000 from and become so excited that the Club now has £500,000 immediately in the bank is a not correct, and such continued reporting of speculation does not help the Club.
So there it is, a “confidential undisclosed deal” disclosed in these notes showing very little benefit to the Club in terms of the ability to strengthen the squad after this season. Nice to have the income, but not quite as the media portrays it.
But why did HUFC agree such prolonged terms? Well, the simple answer is that the Club had no choice and neither did Peterborough. They had their own Salary Capping restrictions and cash flow issues and it is the “norm” in most high value deals (the definition of “high value” depends on which league you are in of course) to spread out payments. In addition, it was still a good deal for the Club given its financial circumstances and it’s the first concrete high value interest in a Hartlepool player the Club has had for many years – despite the media saying last summer that the Club has had a lot of interest shown in this player and that player. To be honest, the Club received no phone calls with offers for any players last summer and, apart from Jack, nor have we since. We did think it was a good deal for Jack to go to Peterborough and it will help his career. However, as part of the deal we did insist that Peterborough honour the offer to us to give him a four-and-a-half-year deal.
P.S. If you’re interested in seeing some good young players of the future a visit to Billingham Town’s ground is worth it as was reflected in an excellent win for our Reserves last week. Also, the news that Bradley Walker has been selected to be on standby for the upcoming England Under-18 friendly against Croatia in the first week of March is more good news for our young lads to aspire too. Well done to all.