Scott Duxbury: Part One
Filed: Monday, 29th June 2009
By: Graeme Howlett & Gordon Thrower
It's been a busy year for West Ham United CEO Scott Duxbury.
Since last summer he's worked with two chairmen, replaced a departing manager, battled constant rumours of financial ruin and impending fire sales whilst fighting various battles in the courts - including the bitter Carlos Tevez affair that ended with far-reaching consequences not just for West Ham United, but for football as a whole.
His reward for all that? A grilling from KUMB.com's Graeme Howlett and Gordon Thrower, who took the questions of KUMB members - on a diverse range of subjects - along to the Boleyn Ground for his consideration.
Our exclusive interview - which ran to almost two hours - is broken down into four parts; the first, touching on various subjects from the future of the Boleyn Ground to the club's marketing policy gets us under way ...
KUMB: Is there any news on the training ground? Where are we, what's happening and are we ready to go?
SD: Yes. Our option, which was structured as an option just for pure cash flow - there was no point in spending the £1.5million if we couldn't actually get in there and start to develop it. So we are exercising the option either today or tomorrow; I can't remember which it is, but we are definitely exercising it so we will own the land.
We're doing it in two phases unfortunately. Now we've actually been allowed to get on there we've discovered there's a big electrical cable running straight through the middle of it that we're going to have to move. Phase One is to immediately develop three pitches because Chadwell Heath in the winter is just a complete disaster and Gianfranco was getting really tired of it [because] as soon as the winter comes as we can't really train there. So Phase One is to get three pitches up and running so that in the winter they have three proper Premier League-standard training pitches.
KUMB: And that will be done by this winter?
SD: That will be November. Then Phase Two is the development of the building. Because of this electrical service pipe that goes through the pitches we're probably going to demolish the existing building. The original plan, because it's a good building, was to actually refurbish it because it doesn't do itself justice. We were going to put a new fascia on it, skin it and do it [that way] but we're probably going to knock it down now and just build a brand new purpose-built [building]. That's Phase Two and that will start in the new year. I can't say when that be ready but probably eight months to a year later.
KUMB: Is that something CB Holdings will be investing in?
SD: Obviously I've tried to secure as much money as I can from any owner including Straumur. They initially said they would be in a position to provide funding, at this present time they're not so my whole business plan is to do this through our own funding.
I may as well answer it as we're going to come to it - they're confident, I can't believe they would have entered into the purchase of West Ham and the whole restructuring they've done - they're confident that they will come out of moratorium. During this six-month period they are internally restructuring themselves and their plan is to come out of moratorium as a solvent, trading investment boutique bank of which one of their major assets is West Ham. At that point they envisage being able to invest in the football club to grow the asset over several years with view then to moving on.
So that's their plan, I'm not dependent upon it - if it happens, great. I'm exercising this option on the basis of my budget for the next three years irrespective of whether Straumur help or not.
KUMB: What's happening with this place - specifically the East Stand?
SD: Eggert [Magnusson] gave great statements about Champions League football and building a whole new stadium. I've sat down with Gianfranco [Zola] and our perspective is that we want to invest in the team and get Europa League football regularly and the new training ground. The new training ground is far more important than a new stadium.
So what I've done is put planning permission in for the East Stand, which we've got. I think we've got a five-year window, maybe longer where we can redevelop that stand with corporate premium seats. Our premium seats are 6%, Arsenal's are 12% so we do need to raise the level of premium seats and offer better hospitality than what we are.
But my plan is, let's strengthen the first team, let's get regular Europa League football and let's see what happens post-2012 with the Olympic Stadium. There's got to be commercial opportunities there with the new stadium, irrespective of what the politicians are saying.
If there isn't then we'll look to redevelop the East Stand. But to me, the most important thing is strengthening the first team, getting the new training ground and getting regular Europa League football. Once we've got that, then there's an absolute need to increase the stadium capacity.
I think the way it was planned before, we were putting the cart before the horse. Let's grow the football club to where we want it to be and where it will be - but to do that - training ground, first team, regular Europa League football and then we'll either develop the Boleyn Ground or look at opportunities for 2012.
I can't see, in the current financial climate there are any other scenarios ie. another piece of land comes up, such as Parcelforce, and we develop it. It just wouldn't make commercial sense.
KUMB: So have there been talks in the past - or are there any planned - with regards to Stratford?
SD: Lots of talks! Unfortunately it's a political environment that you're dealing with; one moment you're being encouraged ... To me we are the perfect legacy, what we do with football in the community, our football impact - not just in this community but throughout the world - it's the perfect Olympic legacy.
If we were to take occupation of the stadium and provide football in the community on a larger scale, what better legacy? But that's down to the politicians. But we'll be here, we'll be talking - we're not dependent on it, as I say we've got Plan B which is the East Stand.
Me personally, I would sooner stay. I think there's a great history to the football club; you look at Anfield and think they're going to move - it's soulless. To develop the East Stand would be my preference but I'm not going to be blind - if the Olympic stadium comes up and everybody's on board with it - and that includes the supporters - then we'll look at that. But for me, just to sit tight until 2012 is the prudent thing to do.
KUMB: Are there any plans over the next few years up to and including 2012 to improve some of the transport infrastructure? As I'm sure you're aware, at Upton Park the tubes have been a bit of a nightmare.
SD: Well this is where - if we were to stay and develop the stadium - we've had lots of discussion with Newham Council with regards to taking ownership of the road there [behind the East Stand] and moving it, developing the tube station. I think Newham have their own plans with regard to the market there so yes, those discussions are completely ongoing but again, I think we're going to benefit from the Olympics because the borough here, regardless of West Ham's needs have got to improve the transport and the infrastructure - because it's just not adequate.
But if we were to start developing the East Stand then yes, absolutely as part of that planning permission would be the improvement of the transport links.
KUMB: You've got the two main line platforms and nobody ever stops there. I did some ringing around but you get passed from pillar to post; TfL never got back to me, C2C gave a story that if you read between the lines said it wasn't going to be cost effective and nobody seemed particularly interested in it.
SD: It's awful. We're aware of it and we keep hitting the point home with Newham Council and they're aware of it but I think they encountered the same problems that you have. But it's something that has to change, it's just a matter of when everybody wants it to happen - but I think 2012 will push it over the line.
KUMB: This stand here which is no longer the Dr Martens stand, now the West Stand. It's been suggested that a more tangible title like 'Ron Greenwood' or 'John Lyall' might be in order. Has that been considered at all?
SD: With regards to John Lyall, I've been speaking to his family for several months. They really are keen on having the front gates named after him so we've agreed to that and we're just sorting out the appropriate ceremony and when we're going to announce that and have the full event. With regard to other namings of the stand, I want to do the Centenary… but yes, I'm going to consider all aspects - I want to get away from Centenary, Dr Martens and actually get our former greats recognised.
KUMB: I've always thought 'Centenary' was a bit ...
KUMB: Yeah, a 'nothing' sort of thing ... I understand why this was the Dr Martens stand obviously, for the financial implications and the sponsors ...
SD: But that wasn't the sole reason. There's also the Bobby Moore Stand and the suite inside it is being renamed [...] As you say, it's just making a better view of things and a better way of honouring them.
KUMB: If we can go back to the East Stand for a moment; you said we've got planning permission from the council for that - what does that entail exactly and what capacity would that give us?
SD: It's only outline but that then will allow us to increase the capacity to about 43-44,000 with corporate offerings and allow us then to increase our percentage of premium seats to round about 10% - which to me would be ideal. As I say, I personally don't want to go to a new stadium - I think if we can develop the transport links, get the tube station redeveloped and increase this capacity to 43,44,45,000 I think it's perfect.
KUMB: Most major football teams have a global following. What are West Ham doing to draw international fans to the club and to promote the brand (which is a horrible thing to say) globally?
SD: We have a three year business plan which was presented to the staff when I became CEO, which was initially a benchmarking exercise. We compared ourselves to similar-sized clubs in the Premier League and European clubs as well with similar turnovers and similar net profits in the various activities, partnerships, retail, merchandising. We set a three-year plan of increasing those revenues and passing our competitors - and the key to the partnership income is the brand of West Ham.
So we've got a UK strategy and an international strategy. The international strategy for now, until we get regular Europa League football is just creating general awareness. That's why we went to the MLS AllStar game last year and why we're going to Beijing this year. It's not with view to getting direct, incremental revenue to create awareness. I think [Real] Madrid have got nearly 500,000 fans in Asia but 0.01% of them financially engage. So I'm aware we're not going to get that kind of financial engagement, but if we can create awareness by the first team being there.
And being creative we've got various meetings set up with various businesses within Beijing, talking about potential partnerships. Already the advertising is shown around the world so we're trying to get different brands to invest in the football club. But then as the team grows, as we get regular Europa League football which has a global audience we will then be in a position to exploit that because the brand will be out there, people are aware of what West Ham United is about and it's just exploiting that for the benefit of incremental revenue.
We've had some pretty big hitters as commercial directors at this football club and for a variety of reasons it hasn't really worked out. I think, from my take on it, is that we've tried to focus on this international brand and be Manchester United - let's get into Asia, let's get into India and get that direct revenue, and not focused on our local market.
We've got some real big West Ham United fans in huge corporations and local corporations - Canary Wharf - that may not be West Ham United fans but want to invest in football. So I've recruited staff now that understand the local market; they are West Ham United fans, they're from round here and they're really targeting the local area - the City, Canary Wharf - to get them to invest in the football club. So I think - and sorry it's a long answer - that I want to get it right locally first, make sure we're getting sponsorship and partnership and the brand position correct locally, then we'll take that internationally and communicate effectively.
To me we've played around with the brand and I've gone back to basics with this concept of The Project which is, we are an Academy football club. What's best about this football club is the young, homegrown players that are brought through, play attractive, stylish football - but now the next part is 'and win'. I think we've got the brand elements right, the staff understand what we're about, we're now selling that locally and then we'll be in a position to exploit it internationally.
Two years ago, if you asked any member of staff 'what are the principles of West Ham United?' you'd get a million and one different answers. If you ask the staff now they'll all be the same - a young, aspirational brand. Once we've got those brand values communicated locally and to our staff then we're in a position to exploit it globally. It's a slow process but it's a structured business plan that we have and we're moving in the right direction.
Sorry, I bored myself there!
KUMB: So, the three-year plan covers both local and international development.
SD: Yeah. The Holy Grail is every football club and its technical partner and shirt partner, obviously we can increase the level of consideration we get predominantly by Europa League football - we need that European offering to get those bigger deals. But the Holy Grail is this second tier of partners - Man United call them Platinum Partners. We can get significant partners investing - an official car partner, whatever - if we can get to a significant level then we can start to unlock some serious revenues.
But as I say, I think there's this tendency to go global instantly without getting your local market correct first and that's really where we're focusing on.
KUMB: Is this not something that has been done before, under previous regimes. A business plan?
SD: To my knowledge we've never had a business plan, which was surprising. It's just creating a structure; I think a business plan gives people clear objectives and key performance indicators. You need to benchmark; first of all you need to know who your competitors are and what you want to hit, then you set each department key performance indicators and then you can look back and see whether you've hit them or not. It's not rocket science but it does create a structure and a belief.
We have the same business plan for the football club as well. Gianfranco understands where our three-year targets are and what we're trying to achieve.
KUMB: It seems incredible that nothing like that was in place before.
SD: I think it's pretty endemic in football, to be honest. I think there's a few football clubs that simply take the Sky money, spend it on players, take the season ticket money - there's my shirt partner, there's my technical partner. Right; that's it, job done.
KUMB: It's how you'd run an old-fashioned club rather than a thriving modern-day business.
SD: Exactly, there's no other business like it. 80% of our turnover is guaranteed - and that can actually make you quite lazy. Sky money, partnership money, season ticket money - 80% of your income at the start of the season is guaranteed so as I say, for some people that can be a quite comforting and lazy. We want to be a little bit more dynamic than that.
KUMB: On the marketing/PR side, why was our relationship with Phil Hall Associates stopped then restarted recently? How did that come about?
SD: All external PR consultants basically piggy-back on the owner. Phil Hall was originally brought in under Paul Aldridge to provide external PR because at that point our media relations, our fan relations were just dreadful - we just didn't communicate. He was brought in to try and devise a strategy. Then Eggert Magnusson took over and his PR advisor was Mike Lee.
Then Straumur took over and Straumur's PR was Phil Hall. I work well with Phil so I have no problems with that at all.
KUMB: Someone else a lot of our readers are keen to know about is Kia Joorabchian. Does he still have an official role? What does he do for the club?
SD: There was obviously a legal dispute that was quite bitter in the press so we were keen to end that. Part of the settlement was that there'd be a consultancy agreement where he would advise on transfers. That agreement has ended now; his involvement with the club is no more.
KUMB: A number of our readers have asked about the Megastores and replica kits. Obviously the decision was taken to bring it in-house - under Eggert Magnusson I think?
KUMB: On the one hand that must be good business for the club - all revenues go to the club rather than JJB or whoever. But the problem that has created is that you can't walk into a shop on the high street and pick up a West Ham shirt - and that means a lot of floating supporters don't have the opportunity. Is that something that's going to continue, or could that policy be changed in the future?
SD: That decision has its pros and cons. The pro behind that decision was that when we had normal arrangements where it was supplied to every sports shop [Mike] Ashley, in particular and Sports Direct on the day we would launch the kit, he would just discount it to half price and so simply through our own club outlets didn't have the ability to sell shirts at any meaningful level, and we were simply just funding the pockets of Ashley - and Newcastle, pretty much.
So the rationale behind it was to make sure that we weren't hostage to fortune to people like Ashley and we could sell it at the true retail price. The con to that is we don't get our brand out there to the wider market and then obviously we do lose sales. But the sales argument hasn't really manifested itself because the online sales have just gone through the roof,so it's quite clear that the West Ham fans who aren't local are going through the online store.
It's been such a success that there is no plan to change it - what there is a plan to do is to expand our retail outlets. We'd like to get a new bricks and mortar store in Romford and we'd like to look at potential concession agreements - at one point we were in discussion with Debenhams. In the current economical climate that's all stopped, but we will look at potential concessionary deals with big high street stores.
KUMB: So a similar arrangement to that which we used to have with stores in Basildon and Southend?
SD: Yes, but it'll be taken a little further out that that.
The biggest negative in any club retail is the JJBs and Sports Directs that just destroy you - and this stops that.
KUMB: So what outlets have we got at the moment? Lakeside ...
SD: Just Lakeside and the Stadium store. And online. We're looking at Stratford as well.
KUMB: A general question that's come up a lot: is there any chance that supporters might have a say in choosing or designing kits in the future? Everyone likes to have a moan at the new kits but one thing they would like is to be presented with a few options and see which ones are popular.
SD: I think it's an excellent idea. At the end of the day they're the consumers that are going to purchase the kit and like any decent company, you should take their views absolutely on board.
We have the fans forums and one or two focus groups but I think that would be a brilliant idea. If we create a focus group… KUMB might have a representative each year and we'll get a focus group of four or five fans who can meet the kit designer and our head of retail - absolutely, it's a great idea.
KUMB: But we'd have to stop short of posting an online poll - I'm thinking of Southampton and Portsmouth where the Portsmouth fans hijacked it and chose the most hideous kit ...
SD: So a representative of KUMB.com, a season ticket holder ... five people, I think that'd be a great idea.
KUMB: The other question on kits is that we've got the SBOBET sponsor, but a lot of people have said that they wouldn't mind paying extra to have the Bobby Moore logo on an adult shirt. Is that something that might be a possibility?
SD: No, they've got to go on all the replica adults. But you've seen around the stadium we've given it [the BMF] huge presence - we've got it on the media backdrops when we could have had a paying partner on there, for example.
KUMB: How long is the SBOBET deal?
SD: One more season.