Cardiff City Forum



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Club losses

Tue Feb 15, 2011 12:37 pm

This is in response to a request from posters Marc , Damned Yank and Lawnmower (so don`t blame me :D ) where they queried a claim that the club was losing about £18m this season.
I said initially that I agreed with Tim (Lawnmower) that it was nothing like that amount and would explain why.This is my 3rd attempt to do so , the first 2 ending up in the Bermuda Triangle that this board sometimes becomes (it loses messages that the system says have been successfully posted for some reason).

What started this discussion off was a poster equating the £18m the Malaysian investors have put in to date with trading losses - but these are 2 different things - a large percentage of the money injected has either paid off other debts or been put in as new shares , not used to cover ongoing losses.

As far as the losses go , the lowpoint was the year to 31 May 2009 (the latest set of accounts to be audited) which showed an horrendous loss of £14.7m before any profits from selling players.(selling profits of £6.6m reduced the overall loss down to £8.1m). But the subsequent periods would have been much better for the following reasons:-

1) Total income in 2008/9 was only £10.4m.This was over £2m down on the previous year when we had the financial benefit of the F.A.Cup final. In 2009/10 total income would have gone up by at least £6m because of greatly increased attendances in the new stadium at higher average ticket prices (no cheaper terrace tickets and higher prices in Premier Club), the one-off benefit (about £1m) from the up front Premier Club payments received , and an increase in money received from the League (up from £1.2m to £3m for all Championship clubs).

2) A £1m net increase in the wage bill from the £13.5m in 2008/9 to allow for the various "mates" taken on by Ridsdale in jobs of dubious benefit to the club.

3) A profit of £6m from the sale of Ninian Park (in the books at £1.4m , but club`s share of sale proceeds £7.4m).

4) income from the sub-let to Cardiff Blues (worth a net £500k a season)

5) income from the 10 year catering contract worth at least £4m over 10 years , which is more than the profit from catering we used to earn at Ninian Park.

Based on the above , the £14.7m loss would have come down to £3.2m in the year to 31 May 2010 , before any player transfer profits which would have further reduced (or possibly eliminated?) the net loss made.

In the current financial year (started June 2010), the club would not have benefited from the Ninian Park profit or the one-off deposits from the Premier Club , but attendance have been higher again so I estimate that total income will be at least £16m again. If we continue to stay at or near the top of the table for the rest of the season , this might even rise to as high as £18m.

Even with total income staying at £16m rather than rising , with the wage bill remaining the same (according to Gethin Jenkins a few weeks ago), the loss before player transfer profits would only go back up again to about £9m. And I think there was probably at least £1m to come off that in interest savings from paying back debts (including £7m to Barclays when Ninian Park was sold) , taking the losses down again to £8m.

Another big "profit" in the current year (it was approved at an EGM right at the end of May 2010 , so it is possible it was reflected in the 2010 accounts rather than the current year ones) has been the conversion of some debts due to PMG , Steve Borley and Michael Isaacs into shares. The minimum benefit from this has been £2m and , if the club fully takes up its options to convert more debt into shares , the benefit could be another £3.2m.

So the loss for 2010/11 should be no higher than £6m and could be as low as £3m (both figures before transfer profits).

Of course , a further very major improvement to the recorded profit figure would be a settlement of the Langston debt for anything below the £26.4m at which it was shown in the 2009 accounts.

For those of you who have fallen asleep during this post , please send your contributions as a thank you for overcoming insomnia to the 3 posters mentioned above ;)

Keith

Re: Club losses

Tue Feb 15, 2011 1:10 pm

Thanks Keith, I can just about follow that.

However, regardless of what Gethin Jenkins claims, surely this years wage bill must have gone up cosiderably, no way could it have stayed the same as last year.

Re: Club losses

Tue Feb 15, 2011 1:16 pm

POOLERBLUE wrote:Thanks Keith, I can just about follow that.

However, regardless of what Gethin Jenkins claims, surely this years wage bill must have gone up cosiderably, no way could it have stayed the same as last year.



Don`t think so.

We got rid of far more players than we brought in and some of them (Enckleman , Ledley etc) were on pretty big wages.Even those that weren`t very good , if they were brought in by Ridsdale then they would have been on over the top wages.

And Jenkins intimated that Bellamy`s wages were being picked up by a director (VT?) rather than the club.

Keith

Re: Club losses

Tue Feb 15, 2011 1:39 pm

Fair Post Keith,

Just one query off me tho, the catering £4m over 10 years. Do you agree with me that this is undersold? Forget what we sold at NP, that cant be compared, because attendance numbers have increased and facilities are better thus encouraging more sales.

Re: Club losses

Tue Feb 15, 2011 1:42 pm

since62 wrote:
POOLERBLUE wrote:Thanks Keith, I can just about follow that.

However, regardless of what Gethin Jenkins claims, surely this years wage bill must have gone up cosiderably, no way could it have stayed the same as last year.



Don`t think so.

We got rid of far more players than we brought in and some of them (Enckleman , Ledley etc) were on pretty big wages.Even those that weren`t very good , if they were brought in by Ridsdale then they would have been on over the top wages.

And Jenkins intimated that Bellamy`s wages were being picked up by a director (VT?) rather than the club.

Keith

rumour has it that we are not paying bellamy a penny and if we go up we will have to pay man city all of bellamys wages back during the year :ayatollah:

Re: Club losses

Tue Feb 15, 2011 2:45 pm

BEEP AHM wrote:Fair Post Keith,

Just one query off me tho, the catering £4m over 10 years. Do you agree with me that this is undersold? Forget what we sold at NP, that cant be compared, because attendance numbers have increased and facilities are better thus encouraging more sales.


May well have been undersold , but Compass had the club over a barrell at the the time.They were despearetly short of money to complete the fit-out of the stadium , so an offer of £4m up front was too good to turn down.

In theory , the club gets a further commisssion on stadium catering sales but , in practice , the sales thresholds are so high that this won`t generate much income.

Re: Club losses

Tue Feb 15, 2011 2:53 pm

Thanks since 62.
Very informative post, as usual.
Clearly set out as well.
Finances are certainly moving quickly in the right direction.And,will be in an even better state if this Langston thing is settled and (when) we get to the Prem.

Re: Club losses

Tue Feb 15, 2011 5:56 pm

Cheers Keith. :ayatollah: :ayatollah:

Very Informative and Interesting, Is the payment of £500k from the Cardiff Blues an "All Inclusive" payment? :ayatollah: :ayatollah: