Bristol City announce club record loss of £14.4m
Bristol City will today announce a club-record net loss of £14,406,061 for the financial year ended May 31, 2012.
Such a result next year would leave City struggling to comply with complex UEFA Financial Fair Play regulations which prevent clubs from spending more money than they earn.
These new rules come into force at the beginning of 2014-15 season with the stated aim of preventing clubs from over-spending on wages and transfer fees and accruing debts.
The new rules mean spending must not exceed revenue gained from TV rights, gate receipts, competition prize money and sponsorship. Given the £14.4m loss, City would be short of satisfying UEFA's rules by £9.5m, according to a club source within Ashton Gate.
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In effect, this means the club cannot afford to lose more than £5m in the financial year that ends on May 31, 2013, if they are to fully comply with the regulations.
The club insists that the loss of big wage earners together with cost-cutting measures brought into play in the past six months will ensure they go at least some way to achieving this.
Today's loss compares to a deficit of £11,454,525 for the previous year and takes the Championship club's total debt to £41 million, of which £35 million is owed to majority shareholder Steve Lansdown.
Turnover dropped slightly from £11.9m to £11.8m, but wages rose from £15.9m to £18.6m as the cost of sustaining Championship football continued to spiral.
New stadium development costs came to £148,696, while other operating charges, including the maintenance and upkeep of Ashton Gate and the club's Failand training ground, policing, stewarding and licensing agreements amounted to £5,936,634.
Although Bristol City Holdings Ltd will continue to trade as a going concern, it is clear the football club is more than ever dependent upon the continued support of millionaire owner Lansdown.
Robins chairman Keith Dawe described the latest figures as "disappointing" and said they reflected "a difficult year" for the club.
He said: "The loss of £14.4m illustrates how much work is required to reduce costs and grow our income in order to comply with the new Financial Fair Play regulations, brought in by the Football League.
"It also shows how fixed-term contracts for players mean there is no easy or quick solution, but an improvement in recruitment and selection criteria can certainly aid us going forward.
"Manager Derek McInnes has a firm focus on results on the pitch, but is equally aware of the financial demands of FFP on the club, and this rounded understanding and determination can only help us in our ultimate aims."
City's board of directors have a long-term strategy in place to enable the club to comply with Financial Fair Play by the start of the 2014-15 season, when penalties will first be levied against clubs that fail to meet the new requirements.
Dawe declined to go into detail, but it is clear the club has already taken action to bring down staff costs.
Certainly, McInnes has far less latitude in terms of player wages than any of his recent predecessors. Last year proved especially expensive as City paid off manager Keith Millen, his assistant Steve Wigley and coaches Alan Walsh and Stuart Naylor. They also had to pay St Johnstone compensation following the appointment of McInnes and assistant boss Tony Docherty in October last year.
Midfielder Lee Johnson and defender Nicky Hunt both had their contracts terminated and paid up in January.
A further 11 players were released at the end of the season, including David James, Damion Stewart and Kalifa Cisse, three of the highest earners.
In a bid to further reduce costs, the club undertook a reorganisation of Ashton Gate Ltd, making 13 staff redundant.
Although Lansdown will continue to fund new signings and underwrite the debts, it is clear McInnes will not have access to the kind of money spent by former managers Gary Johnson and Steve Coppell.
Dawe said: "We continue to develop strongly the academy and Community Trust. We see these areas of the club as major stepping stones towards our future. We will be working hard to ensure more fresh young talent is recruited into our academy, and that talent must then be given the opportunity to make its mark in the first team over time.
"With the new Elite Player Performance Plan youth development scheme now in place, we've committed a lot of finance into increasing staffing and improving our facilities to achieve Category 2 status – which would put our academy up there with some of the best in the country.
"We must not forget our roots either; Bristol City is a community club and we will look to support the work of the Community Trust wherever possible, as they go out to spread our inspirational message to 50,000 youngsters each year. I would like to thank our staff for all their hard work throughout the last 12 months. It has been a difficult time, with the need for the company to carry out redundancies across the business, and this has seen a lot of hard-working and dedicated members of the team leaving or transferring to different departments.
"The ongoing developments of the new stadium continue to cause us much frustration and cost, however, with the management of the project now in the hands of the owners, this allows us to focus on our core business and push to get results without distractions.
"The main challenge facing the board will be to reduce our losses, achieve FFP, while remaining competitive. With good planning and ownership, I am confident this can be achieved."
Revenue from gate receipts was slightly down.
Matchday revenue amounted to £1,360,953, compared to £1,377,704 in 2011, while there was a drop in season ticket revenue from £2,429,402 to £2,003,273 last season. Broadcasting revenue rose from £127,864 in 2011 to £220,000 in 2012. Staff wages rose during the same period from £14,166,613 to £16,563,114.