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The accounts for 22/23 are now published. The losses are substantial, but are in line or slightly better than what we could expect. The losses for the year ending 31 May 2023 were £20,3m. In a previous post (March 2023) I estimated the loss to be £19.5-22.5m, so it ended in the low end of this interval.
Over the three years running up to May 2023 we had total losses of ca £48m. The maximum loss from a FFP point of view is £39m over three seasons, but for FFP calculation, certain costs from the official accounts are exempt. These are costs for the academy, women football and depreciation of stadium and training facilities.
The club does not detail the cost for the exempt items, other than depreciation (£1.7m). A thumb rule in the Championship is to assume around £4-4,5m for those exempt items. If we use £4,5m, the FFP loss for 2020 to 2023 is 34.5m. Hence, we were well under the threshold of £39m.
However, the problem was never going to be 22/23. The problem was always going to be this season, when the 20/21 season fell out of the three year calculation. The sale of Eze made 20/21 a good year from a financial point of view. If we apply an annual exempt amount of £4,5m, the available headroom for FFP calculation in 23/24 is just £4m. That equals an official total loss of just £8.5m (when £4,5m are added back).
Hence, the club have had to cut its deficit from £20,3m in 22/23 to just £8,5m this season. This is a drastic cut of £11.8.
As we are aware of, we sold Dickie and Dieng for something close to £3m. Hence, outside of player transfers, salaries and other costs had to be cut by £8.8m (or alternatively, revenue increased).
We got rid of a lot of players by end of 22/23, but salaries of some of the new players, like Begovic and Cook, haven't been small. However, there are good reasons to think we have been slashing the player salary budget this season. We have also seen a few costly directors and coaches leave, which has also created savings. These include Ferdinand, Ramsey and Hoos (I suppose Nourry is a much less costly replacement). The costs of termination Ainsworth's contract go in the opposite direction.
The fact that we now own our own training facilities are good for FFP calculations. We paid a significant rent for Harlington, which we have now got rid of. The major cost for owning and running own training facilities are depreciation and interest. Depreciation are exempt, and interests are low, as most has been financed by interest free loans/equity from owners. Hence, the Heston investment couldn't come at a more welcome point in time.
The club sold naming rights to owners earlier this season, which has contributed well.
Amortisation of player contracts is much lower in 23/24 (less than £1m) compared to previous season (£3m). Amortisation of player contracts is a fancy word for write down of acquisition costs of players over the contract period.
All in all, we are probably fine with all the cost cutting we have undertaken this year, and I feel confident that the owners and management have made sure we sneak under the FFP threshold for 23/24. Next year will be easier, due to the low loss this year.
Here are some of my observations from the recent published financial statement of 22/23:
* Ruben is now owning 60%, Reilly 21% and the Mittals 19%.
* Revenues increased by ca £1m to £23,2m
* Gate receipt was £5,6m, TV rights £8,8m, sponsorships £2,2m, commercial revenue £2,6m, club shop sales £1,4m and other revenue £2,5m. Changes from previous season were tiny.
* We cut salaries in 22/23 by ca £2m compared to previous season. Salaries were £25,4m. This is ca 110% of revenue.
* Number of employees dropped slightly from 191 to 189. This probably includes all academy players.
* We spent £2m on player acquisitions (the "summer of Beale" - Paal, Clarke-Salter, Dixon-Bonner)
* Owners invested £12m in new facilities (Heston).
* The owners injected £26m in new cash to keep the club running and provide cash for investments in facilities.
* Total debt is £108m - everything included. Most is debt to owners, so no reason to worry. This will be converted to shares at one point. £13m was converted in 22/23.
* £8,7m is left to pay of the FFP fine (but all costs are already in the P&L accounts)
Over the three years running up to May 2023 we had total losses of ca £48m. The maximum loss from a FFP point of view is £39m over three seasons, but for FFP calculation, certain costs from the official accounts are exempt. These are costs for the academy, women football and depreciation of stadium and training facilities.
The club does not detail the cost for the exempt items, other than depreciation (£1.7m). A thumb rule in the Championship is to assume around £4-4,5m for those exempt items. If we use £4,5m, the FFP loss for 2020 to 2023 is 34.5m. Hence, we were well under the threshold of £39m.
However, the problem was never going to be 22/23. The problem was always going to be this season, when the 20/21 season fell out of the three year calculation. The sale of Eze made 20/21 a good year from a financial point of view. If we apply an annual exempt amount of £4,5m, the available headroom for FFP calculation in 23/24 is just £4m. That equals an official total loss of just £8.5m (when £4,5m are added back).
Hence, the club have had to cut its deficit from £20,3m in 22/23 to just £8,5m this season. This is a drastic cut of £11.8.
As we are aware of, we sold Dickie and Dieng for something close to £3m. Hence, outside of player transfers, salaries and other costs had to be cut by £8.8m (or alternatively, revenue increased).
We got rid of a lot of players by end of 22/23, but salaries of some of the new players, like Begovic and Cook, haven't been small. However, there are good reasons to think we have been slashing the player salary budget this season. We have also seen a few costly directors and coaches leave, which has also created savings. These include Ferdinand, Ramsey and Hoos (I suppose Nourry is a much less costly replacement). The costs of termination Ainsworth's contract go in the opposite direction.
The fact that we now own our own training facilities are good for FFP calculations. We paid a significant rent for Harlington, which we have now got rid of. The major cost for owning and running own training facilities are depreciation and interest. Depreciation are exempt, and interests are low, as most has been financed by interest free loans/equity from owners. Hence, the Heston investment couldn't come at a more welcome point in time.
The club sold naming rights to owners earlier this season, which has contributed well.
Amortisation of player contracts is much lower in 23/24 (less than £1m) compared to previous season (£3m). Amortisation of player contracts is a fancy word for write down of acquisition costs of players over the contract period.
All in all, we are probably fine with all the cost cutting we have undertaken this year, and I feel confident that the owners and management have made sure we sneak under the FFP threshold for 23/24. Next year will be easier, due to the low loss this year.
Here are some of my observations from the recent published financial statement of 22/23:
* Ruben is now owning 60%, Reilly 21% and the Mittals 19%.
* Revenues increased by ca £1m to £23,2m
* Gate receipt was £5,6m, TV rights £8,8m, sponsorships £2,2m, commercial revenue £2,6m, club shop sales £1,4m and other revenue £2,5m. Changes from previous season were tiny.
* We cut salaries in 22/23 by ca £2m compared to previous season. Salaries were £25,4m. This is ca 110% of revenue.
* Number of employees dropped slightly from 191 to 189. This probably includes all academy players.
* We spent £2m on player acquisitions (the "summer of Beale" - Paal, Clarke-Salter, Dixon-Bonner)
* Owners invested £12m in new facilities (Heston).
* The owners injected £26m in new cash to keep the club running and provide cash for investments in facilities.
* Total debt is £108m - everything included. Most is debt to owners, so no reason to worry. This will be converted to shares at one point. £13m was converted in 22/23.
* £8,7m is left to pay of the FFP fine (but all costs are already in the P&L accounts)
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