Further to our recent statement following the club's AGM, outlined below is a summary of our club’s finances over the twelve months since the supporters trust was given the opportunity to acquire control of the club.
Our advisers from Supporters Direct were first allowed access to limited financial information last July (2015). This initial review revealed some idea of how much money the club had lost over the preceding three years and how dependent it was on its main benefactor for financial support.
The scale of losses (almost £2m over 3 years) and the benefactor's investment (£1.7m in equity and loans) only became clear later and made it abundantly clear as to the importance of the trust becoming involved.
It was a source of frustration to the trust that the state of the club’s financial records meant its advisers were only able to review what was made available or indeed existed.
When our advisers were finally able to conduct a comprehensive review of the records it revealed almost £300k of unsustainable debt as at 30 June 2015, comprising bank overdraft (£80k), arrears of tax (£30k), arrears to major creditors (£80k) and advance commercial income for 2015/16 banked before the year end (£100k).
It also became clear that the club’s forecasts for the current season had been unrealistically optimistic and, without decisive action, the club was facing an unsustainable level of debt by the end of the financial year.
As the new board was coming to terms with the scale of the club’s financial difficulties, it was also facing a critical decision regarding the future of the manager and his support team following the club’s poor start to the league campaign.
Under the contracts inherited any decision to dismiss the management team would have triggered significant upfront severance payments – which would merely aggravate an already dire financial situation, although through engagement a slightly less costly settlement was eventually negotiated.
In view of all of these circumstances there was a genuine risk that the club would not have survived but for the trust’s intervention.
Having been confronted with the scale of the challenge it faced, the trust drew up a number of initiatives to ensure the club remained viable. These were relayed at the trust open meeting held on 27 November 2015 and ranged from agreeing payment plans for historical debt and challenging creditors, where appropriate, to introducing new control measures and sign off for future expenditure, along with the launch of our benefits and rewards scheme. These formed the basis of our submission to the Football League and subsequent approval for the ownership change.
The schedule below summarises the main cash flows in the twelve months to 30 June 2016.
|Sources of funds|
|Transfer fee income||700|
|Less: Uses of funds|
|Repayment of prior year debt, etc, as above||(290)|
|Current year operating loss (estimated)||(300)|
|Loan repayments (mainly former directors)||(50)|
|Closing bank balance||253|
In conclusion, the money raised by the trust from supporters, sale of Poole and Collins along with the FA Cup money ensured we were able to get through to the end of the 15/16 season.
The Washington windfall money has allowed a change in the financial planning assumptions. The club no longer has to look to discount season tickets or use commercial money to sustain the club through the close season where there is limited revenue.
In short, the club is in a very sound financial position for the forthcoming season and with the season ticket and commercial revenue broadly comparable with what it received for the sale of Washington.
In due course the club’s accounts for the period just ended will be published and will confirm the vastly improved state of the club’s finances compared to twelve months previously.
Tweets by @NewportCounty