Are we approaching crunch time? by Wandering

Financially 2015/16 was an extremely challenging year for the Trust. A period when the ground was being redeveloped and there were no permanent bar facilities on site, but once again the Club punched above their playing weight as it lifted the Southern League Cup for the first time in sixty years. Even a safe mid-table finish failed to persuade Steve Jenkins to stay with the Martyrs and the Board reacted quickly to appoint Gavin Williams as manager in the summer months.

Broadly, I think you could say that last year’s accounts were strong in some places and weak in others – an overall loss was posted for the second time in three years as a result of the investment in the infrastructure, but this was fortunately absorbed by the existing surplus profit in the Reserves that were carried forward. This possibly reinforced the cautious approach of maintaining a consistent, sustainable strategy which provided the foundation for last seasons play-off challenge in only our second season back at Step 3.

The loss was not helped by the leasehold amortisation and depreciation following the upgrade of the facilities. The club is in a transitionary phase financially but this loss appears to be just about manageable, but it is a big risk for similar trading of this nature to continue.

The Balance sheet saw significant fluctuations due to the movement of cash flow to pay for the development work. In effect, the net book value of the tangible fixed assets increased substantially as a result of the addition of the new facilities, with depreciation of 4% charged for land and buildings and 10% charged for plant and machinery.

Increase in the recruitment and costs of non-playing staff, contributed to a 26% rise in the overall wage bill. The ratio of wages against turnover (which as we know is a key measure for football clubs) was a disappointing 53%, an increase of 18% in the last three years. Hopefully, the model by which the club operates is to spend on staff/player wages up to (but not beyond) our available income. 

However, fundamental business management practice suggests that Owners will now expect the Board to oversee an annual radical spending review to reduce operational costs to bring this ratio (wages against turnover) down by at least 8% in the next accounting period. A drive to more efficient cost management will be influenced by the FA’s licensing rules which could be expanded beyond purely concentrating on VAT commitments and any debts to HMRC, or club’s could face the sanction of the withdrawal of their playing license.

The turnover figure wasn’t helped by the decrease in gate receipts (down by 7% on 14/15 when we won the South and West title), an 88% increase in traveling expenses (further distances traveled in Premier Division), and a considerable rise in both advertising and insurance costs for the new building. This was offset by the increase in overall revenue for the year, up by 8% – the big rise here was in sponsorship income (up 12%), donations (up 100%) and the hire of the new facilities at the club which were only open for 5 months of this particular accounting period.

Underlying running costs went up by 38%, which is probably an area where the club need to be spending less and should be scrutinised closely in the annual spending review. 

It was always going to be a difficult set of results for a year when so much was achieved to improve the infrastructure of the club for the long term. But I suspect that there are few clubs at our level that had access to the level of grant that we were awarded, which does put into perspective what the Club has been able to achieve.

The next major challenge is to put in place a budget plan to raise the funding that will be required to replace the 3G playing surface, which will be scheduled for the next few years.  It is now crystal clear that no capital funds have actually been reserved so any funding for that work in the future will either have to come from prudent savings to be made over the next few years, increased income levels, commercial sponsorship/naming rights, through an appeal to our supporters or as a last resort borrowing the money while interest rates are still comparatively low.

While I suspect that such an appeal to supporters wouldn’t work in the current climate at the club, it seems equally certain that trying the same trick to fund a roof for the Theatre End is an altogether bigger challenge and unlikely to be feasible for a number of years. To some extent we are on a treadmill of constant improvement and fundraising.

The Board now has to decide if the key strategic objectives include –
·         Increased investment in the Academy to produce ‘home-grown’ players
·         attracting additional business investors
·         significantly increasing ownership numbers
·         strengthening community objectives
·         further ground improvements (possibly through the use of Crowd-funding)

Hopefully, a relative conservative stance will lead to future investment in the playing squad to be competitive in achieving the objectives specified in the Clubs fledgling Business Plan.



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