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Latest Cardiff City accounts

25 Jan 2013 16:24:00

Latest Cardiff City accounts

CCMB regular, Trust board member, financial expert and Cardiff City fan Keith Morgan gives his take on the newly released accounts.

I have now had a brief read through the May 2012 accounts which were available for download when I logged in this morning , and these are some of the key points.Despite an increase in income for the year to £20.2m (2011 £15.9m) , the annual loss for 2011/12 went up to £13.5m (2011 £12m).The increase in turnover was due to a £1m increase in gate receipts , £2.4m in extra advertising and sponsorship (inc. £1m in shirt sponsorship from one of VT`s Malaysian businesses) and nearly £1m extra from TV money etc.The extra £4m in income was more than overturned by big increases in expenditure , the main elements of which werea) nearly £2m of extra administrative expenses (a rise of over 30%!!) - I dont know why such a big increase as the accounts don`t have to reveal a breakdown of thisb)an exceptional item of £1.6m relating to compensation for the dismissal of Dave Jones and othersc) an increase in interest payable of £1.2m to £3.3m - all related to the interest on the VT loansd) an increase in cost of sales (mainly the wage bill) of a net £1m. The wage bill actually went up by £3.9m after the exceptional item in b) above , so some other costs in this category must have come down by £2.9m.As a result of the above losses , the balance sheet position got worse by £13m or so , and the asset and liability position was as follows at 31 May 2012The main asset in the balance sheet was the stadium at £48.4m. There is a note in the accounts suggesting it was going to be revalued in the current financial year to its "replacement cost" - I presume to give a value increase and help with the Financial Fair Play Rules.Players were shown at a total value of just £2.3m (so undervalued because of the way clubs value them for accounts purposes).There was cash at bank of £0.5m and some debts due to the club of £2.2m.On the liabilities side , there were debts recorded as due and payable before 31 May 2013 of £51.9m and debts recorded as payable after 31 May 2013 of £31.2m.So total recorded debts of £83.1m , but this actually overstates the reality of the position.Included in the £51.9m is £37.4m due to VT and associates. If he sticks to his promise to convert this to shares ,then all of this liability disappears. 

There is also about £3m relating to the fact that season ticket holders had already paid in advance for the following season - none of this repayable in cash - and £3.6m due to PMG (was £7.7m the year before) which is being paid off in instalments.Included in the £31.2m is £19.2m due to Langstone (£15m plus 4 years interest at £1m a year)and £9m re stadium naming rights , plus £2.9m due to Player Finance fund (was £3.4m the year before).

There has been much talk of settling the Langstone debt at or around the £10m or £12m mark (including SH suggesting he would accept the latter) , so the £19.2m seems greatly overstated. Also , none of the £9m re naming rights will be paid out of club assets as , to the extent they will ever be paid for , it will be paid by the buyer of those rights , not the club itself.Player Fund are only paid as and when the club sells a player , and no interest is accruing on the debt. I expect it to be paid off in the Summer , either from selling players we deem not good enough for the Premier or (god forbid) we sell because we don`t get promoted.So the headline level of £83m of total debts is not as worrying as first seems. At least £16m can be written off the Langstone debt if settled shortly and a further £37m of VT debt should be converted to shares. So the total debts would then come down to £30m from the headline figure.On a related note , there is provision to pay Langstone a further £5m if the club gets promoted before it has paid off the £15m plus accrued interest figure. So the club can settle the debt before promotion and avoid that further potential liability.In summary , the loss of £13.5m is worrying in that it shows that the club simply cannot run at Championship level without making a big loss , but the resultant balance sheet position is not as bad as it first appears.A second worry for me is the big increase in administrative expenses which we were assured would be better controlled and reduced when the new investors came on board.

Source: Cardiff City Online


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