BFC Accounts up to 31 May 2019 submitted today

Will be available in 5 days.

Sorry for the anticlimax! Should make interesting reading though!

 

Will they be disclosed ?

 

I got an email too, got all excited, then saw the "5 days" comment.

 

Our reduced revenue in League One will mean we fall under the small company exemptions, so don’t expect to see a great deal of information on it.

 

The end of season player sales were after 31 May 2019, so the sums received for those players, and indeed, the sums spent on their replacements will not be reported until the accounts to 31 May 2020, which will be with Companies House by March 2021.

 

Spent all money on players, owners put nowt in. Let’s see if there are any surprises.

 

Fecking hell fire

*puts pitch fork away til next year.

 

The annual accounts to 31 May 2019 are now on file at Companies House for those who are interested. The club has actually published more information than it is legally required to do, so they are more interesting than I anticipated. The headline is that the club lost £3.4m in the year.

 

Main factor was the reduction in the football league distribution payment.

The operating loss of £4.8m was reduced by £1.4m from the profit on player sales. Overall loss for the year was £3.4m.

Overall turnover was down £6m, £5.5m in respect of the football league distribution and £0.5m in respect of reduced gate receipts. Some of this impact was reduced as employee costs were down by £2.5m although directors remuneration was up by £150k.

I’ll have a deeper look later today.

 

Should we be worried? Surprised by such a big loss.

 

Nah. It was covered by the club. No external debt.

 

I've just had a quick skim read of them via Companies House. The most useful thing is that the comparatives give a direct comparison of a season in League One vs a season in the Championship the year before, so we can get a reasonable view of the likely impact of relegation (or not) this season.

The turnover reducing by £6m, read in isolation, doesn't really tell you the scale of this on BFC. Essentially, it's a halving of turnover from £14.0m in 2017/18 to £7.8m in 2018/19. Most categories are fairly stable (matchday income dropped from £3.6m to £3.1m). The bulk of the difference is the Football League distribution monies, which went from £7.9m to £2.4m as a result of relegation.

We were loss-making overall, at an operating level, in both seasons, but the scale of the loss increased from £1.4m to £4.7m, before the impact of transfer activity. Profit-wise, player trading was similar in both years, with a £1.2m net profit in the Championship season and a £1.4m net profit last year. Overall, we lost £3.4m in League One, compared to £0.2m in the previous Championship season.

The wage analysis is interesting, as it shows the extent to which we reduced the wage bill going from the Championship to League One. It dropped from £10.6m to £8.1m (this is the cost of all employees, but players will be the vast majority of this).

So the immediate point to take away from the accounts, for me, is that the lost TV revenue of relegation took us to a point where total turnover no longer covers the wage bill, before any other costs are taken into account, in the absence of any transfer activity.

The above figures are all based on the book profits arising from the activity, so doesn't reflect cashflow. In particular, the way that player contracts are amortised means that you can't easily see the cash impact of transfers in and out (and transfer fees are typically paid in installments anyway). This information is shown separately. We had outgoing cashflows of £3.1m last year, compared to a surplus of £2.3m the year before. Cash balances fell from £5.6m to £2.6m, although within the debtors analysis we're owed £2.5m more in outstanding transfer fees than in the previous season, and we only owe around £125k more in outgoing transfer fees than we did the previous year, so the impact of transfer fees still to be received/paid is far more favourable.

Overall, I think it gives us a very good indication of the likely impact of staying up vs relegation, as I doubt the income streams will have changed too dramatically over two years.

 

I think most of us had factored in a relegation under Morais and were prepared to give the new owners a chance to stabilise things both on and off the pitch. I detect the mood music amongst fans this time around to be less forgiving of the owners and we can only speculate that pro-rata we see a larger reduction in matchday income if we are relegated at the end of this season especially if the disquiet results in significantly reduced season ticket sales as compared with two years ago.

 

Here's something in the accounts that states that potential contingent fees in respect of a player(s) has reduced massively. Neither figures were included in the accounts but it did make me wonder who these could be in respect of? If the reduction is because of a sell on it has to have happened before 31 May 2019 meaning Potts, Bradshaw and maybe Moncur. Any other thoughts...

 

I expect we'll see a bigger drop-off in attendance next year if we're relegated for the reasons you describe. The accounts state an average attendance drop from 13,695 to 12,527 in the seasons in question. I suspect we'd be closer to 10,000 next season in League One, unless we're competing for the title again.

Overall though, the matchday drop is still less of an issue than the loss of Football League distributions, which is a huge factor for a club our size. In the Championship, these were by far the biggest source of revenue (more than double the matchday income). In League One, the matchday revenues became the most significant source of income.

Using the averages, each supporter equates to approximately £250 per year in turnover (£248 in League One vs £264 in the Championship). So a quick ***-packet calculation tells us that for every 1,000 fans we lose from the average, it costs the club approximately £250,000. Put another way, the £5.5m in lost Football League distributions equates to the matchday income generated from an average attendance of 22,000 supporters, so essentially a full Oakwell for every game of the season is what relegation would cost us in income terms.

Bearing in mind that we're looking at historic data here, so these figures are constantly evolving, the incremental wage cost of Championship football was about £2.5m. Everything else is broadly similar, as most other costs will be fixed in nature. Purely from a perspective of income streams vs variable costs, Championship vs League One equated to £6.0m additional income (£5.5m from the League, £0.5m from matchday) at a cost of £2.5m additional salaries. Everything else is broadly equal. Given our other income streams we have no other way of funding that scale of shortfall other than via transfer activity.

 

Way I read it is that trying to operate under those circumstances...ie as a yoyo club between the Championship and league 1 would destroy the club financially because of the constant budget adjustments.

Others share that view?

If we consistently finished as playoff losers in league 1, our budget would be far more stable with the wage bill especially adjusting to suit that league and our turnover.

Obviously the ideal answer is championship survival year on year to enhance turnover.. but on our budget it is a big ask.

We seriously need our academy / U23's setup to start producing some outstanding talent IMO. Especially attacking players as when they eventually move on they attract a premium over defenders.

 

I saw this, and was intrigued by the change, but these are contingent liabilities, so presumably relate to outgoing payments relating to players we've purchased. The immediate thought was who did we buy that would have required us to shell out an additional £3.3m in conditional fees? Kieffer Moore is the obvious one that springs to mind.

 

I agree but to extinguish the contingent liability something happened over the year to 31 May 2019. Kieffer was still a Barnsley player and if there was a contingent liability the clause would have have to have had a time limit or a player who had left the club. I think, purely supposition, that the clause must have been in respect of a player leaving in that period.

I even thought it may be appearances based to justify the freezing out of certain players but this has only happened this season and couldn’t affect the 2019 accounts.

 

One possibility is that there were promotion based clauses on several players that became payable (hence they were extinguished by being paid). They'd be too uncertain to be recognised in the prior period when we'd just been relegated, but would have crystallised in time for these accounts. Potts and Bradshaw (less likely Moncur) may also have had them, as you say.