Profit & Loss Reserves
We have had an amazing four years since the Couhigs got our vote in 2019 and I am excited to see so many of our great players sign up for next year, however we are spending a lot more than we are earning.
Profit & Loss Reserves stood at -6.8M in June 2022. If our turnover and spend remains the same over this season and next season the Profit & Loss Reserves will be standing at around -12M by the end of next season.
For me this is very concerning and the club is not being run sustainably which was one of Robs USP’s when the vote went his way back in 2019.
Unless Rob and his family are willing to cover these debts we are heading towards a huge black hole and potentially a much larger one than we had with Steve Hayes.
Its the same old problem, do we continue to overspend to chase the dream of Championship football or do we try and be sustainable and look forward to League 2 football?
Comments
I can't even start to understand company finance but I follow Keiran Maguire on Twitter and apparently the average WEEKLY loss for Championship clubs in the most recent financial year was £476,000. https://twitter.com/KieranMaguire/status/1649079326950694914
In which crazy clown world is this kind of thing acceptable never mind normal?
I'm caught in two minds:
The only sustainably-run club in the league is Accrington Stanley - and they're about to be relegated. The rest of the league willingly cheat. So what's the point in trying to be sustainable?
vs.
There's a strong likelihood that we go out of business if we continue spending like this.
He’s a good read as is Swiss Ramble who also reports on football finances.
Those losses are crazy and would be double per week of what our weekly turnover would be if we made it in to the Championship next season. That equates to our turnover at 12.5M for the year and average losses of all the teams in the Championship for season 21/22 at 25M for the season. Nuts!
We can very likely leave Championship clubs and owners to worry about Championship finances next season and more than likely long into the future.
In Lg1 P+L accounts on balance sheets are largely irrelevant. The only thing that matters and causes business to go bust is cash, loans to third parties (loans to owners are irrelevant) and future commitments.
If we have enough cash (whether generated by business activities or injected by owners) to pay any third party creditors (of which it would appear we have little) and player contracts, we'll be OK.
I must admit in the back of my mind I am slightly worried about it. Don't get me wrong I've been as delighted as everyone else this last couple of weeks getting all the contracts renewed, it's brilliant. But ultimately, in years to come, I'd rather have a team here for my (hopefully) grandkids to follow.
Wasn’t there some mention of outside investment recently? Meaning things aren’t quite that simple.
Not aware of any third party debt investment but happy to be corrected.
There was a small overdraft in the most recent accounts but it is unlikely the bank facility would be overly large.
Third party equity investment is not an issue from a survivability perspective.
Does the club have enough cash to even pay back the loan from the Trust?
Until, like Steve Hayes the wind changes.
The problem, as I remember, at the end of the Steve Hayes regime was not spending during his reign but player contracts that remained in place needing funding by the new owners who were not in a position to put in money to cover those contracts and the ongoing gap between revenue and costs the next season.
Not for the first time you are wrong Mr Devs. When Sharky Hayes through his toys out of the pram, when his money making scheme on the back of the Stade de Shark was foiled.
It was stated that Mr Hayes, was withdrawing his propping up the wage bill with his loan notes, when the season ended in May. That's despite his regime dishing out contacts that had a year or years to expire.
It left the trust desperately scrabbling around to find dosh.
The problem with Steve Hayes is that he wanted us to be playing our home games at the Steve Hayes Stadium, located on Steve Hayes Avenue, with accommodations available at the nearby Steve Hayes Hilton.
That's exactly what I said!!