Auditors show concern over Coventry City's finances
Fundamental uncertainty on some key issues
Auditors of Coventry City have raised concerns over the financial state of the club, but it is not all bad news.
The club lost a further £6.7 million in th year ending May 31st up from a loss of £3.1 million the previous year.
The failure of the club to file its accounts in time led to a transfer embargo, since lifted after the accounts were filed and accepted.
In its report, the auditors, BDO, said there was “fundamental uncertainty” over a series of key issues.
These key issues include rent for the Ricoh Arena, including the club's failure to pay rent to the landlords over the previous few months, wages and staff costs and falling revenue, especially after relegation.The report's author Julian Rye said, “These conditions ..... indicate the existence of a fundamental uncertainty which may cast significant doubt over the company’s ability to continue as a going concern.” The account show an increase in turnover over the previous year, but match day incomes fell. Failure to reduce staff costs saw pre-tax losses increase to £6.7 million. The auditors have concerns over the board's failure to cut staff costs, but since the report was written coach Steve Harrison and pysio Michael McBride have both left the club. Staffing levels increase last year from 94 to 108.
The auditors say the board of directors of the club are anticipating raising the necessary cash to allow manager Andy Thorn to compete in the transfer market, but caution, “the realisation of such cash flows is not yet certain”.
In what may be better news for the club, the auditors say they have written confirmation from a group of shareholders and other "significant funders" of their intention to support the club, but once again there was a note of caution, saying, there is no “contractual certainty” over this.
Turnover increased to £10.3 million from the £9.3 million of the previous year, but profits from the sale of player registration was only £72,209, down considerably on the £4.7 million of the year before, although this can hardly be a surprise as most of the better players had already left on free transfers or had been sold.
The club's board of directors have agreed to “reduce the cost base while improving revenue earnings capacity”, but with the increase in staffing levels, the staff cost rose last year from £10.3 million to £10.4 million.
Unsurprisingly match day income fell to £4.4 million from £3.9 million, but there was an increase in revenue from advertising, television and sponsorship, up to £6.3 million from the £4,9 million of the previous year.
The bottom line shows the net liabilities now stand at £54.9 million, compared to £46.2 million in 2010.
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