Fulham Finances: Summing up

Concluding b+w geezer’s Fulham Finances series:

Fulham’s finances –  thoughts arising

My reports on Fulham’s accounts have tried to keep my own views out of it, partly because I was forming them as I went along. This last bit is different — a personal summing up.

Two familiar theories about Fulham’s finances are polar opposites. The first, a regular theme of Private Eye magazine, is that the Club is a bottomless pit into which Mr Al Fayed pours money he will never see again — a huge extravagance. The Eye has never cared for our Chairman and jeers at him annually for spending so much on Fulham, quoting gleefully from the Accounts.

The opposite theory implies that the likes of Private Eye are naive — an unusual accusation to make of that organ — and that FFC will eventually be a good business investment. It is hinted sagely that `creative accounting’ hides the true picture, and with all that Sky money, the Chairman must be onto a winner really. No evidence is ever given to support this guesswork for the following reason.

In the case of a premiership football club (any club) its chief cost and its main sources of income would be impossible to cloud in accounting mystery even if anyone wanted to. I refer to players’ wages, matchday attendances and, above all, income from broadcasting. Common knowledge among all clubs, and analysed annually by Deloitte, these three realities underpin why the Premiership hasn’t paid off yet for Fulham. No amount of `creativity’ could make the bottom line positive as things stand.

Accepting that Private Eye is cruel but true about the past, may the opposite view be a pointer to the future?

In Blackburn’s latest accounts, its Chairman writes:

“The new television deal kicks in from July 2007 and it potentially transforms our business. Turnover of £40m+ could increase to £50m+. This would enable us to better service our debt and invest in the team. It will depend, however, on our ability to maintain wages around the current level, in which case the percentage will fall from the somewhat unhealthy 75-80% to a more sensible 65%. Of course, this will depend in turn, on what the other nineteen clubs do.”

For Blackburn read Fulham and about half a dozen other clubs. Wages are the key — transfer fees too, but at least you can receive those as well as pay them out, where wages are pure irrecoverable cost. The extra £10 million will not prove significant on  its own if wages immediately consume 75-80% of it.

So where does hope lie to improve Fulham’s finances? No single thing that’s realistic, in my opinion, but a combination of the following:

- increased demand, leading to the ability to fill the ground without heavy discounts;
- this followed by an increase in capacity to 28,000-ish and selling that out at full prices too.
- finishing much higher in the league, like Blackburn last season.

Add the residue of the new Sky money and add also an improvement in commercial income to match (again) Blackburn’s level, and the mix of all of these things would make our annual income reach £60 million-plus instead of £40m.

Keep in this division and keep plugging away and all of that may happen.

My series ends here. It is archived at http://cravencottagenewsround.wordpress.com/tag/fulham-finances/

Fulham Finances: Assets

Continuing b+w geezer’s in depth look at Fulham’s finances:

Fulham’s Assets

Much of the money poured into Fulham has gone for ever. Marlet, Goma etc. have no value now. But some assets endure  – like Craven Cottage and the training ground. So how much are they worth and what might they be worth if circumstances changed?

In their latest accounts, Charlton value their stadium and training ground at just under £40m, of which £6.7m relates to the Freehold Land itself. The valuation was carried out by Chartered Surveyors “on the basis of existing use.”
Fulham’s Accounts to June 2006 value `Freehold Land’ at £9.21m and the `Stands, Fixtures, Fittings’ and so on at £21.6m, making a total of £30.7m. This seems proportional to the Charlton case – the Valley is larger and has permanent stands on all four sides, whereas the two ends of Craven Cottage have only a 15-year-ish shelf life. So Fulham’s figures tally on the basis of existing use.

But what if the use changed? What if homes were built on the land?

Fulham’s training ground is on Metropolitan Open Land within Kingston, whose Unitary Development Plan (“policies remaining effective throughout the borough”) is emphatic.  “Approval will not be given for development within the Metropolitan Open Land.”  This formal policy, combined with known local feelings and other case histories makes it unrealistic to foresee housing on Motspur Park.  No purchaser of FFC could factor this in as a prospect.

What, though, of the Cottage?

Well, FFC would need to be re-housed first — at whatever that cost — or else ruthlessly closed down. At that stage, the Council might or might not be ready to permit housing, but clearly there would be less goodwill in the air in the ruthless closedown scenario. The fate of FFC would also have a bearing on the degree of opposition any development proposal aroused. Based on history, however, a developer would expect a rough ride taking several years. They might stand a fair chance of winning at the end of a public enquiry and appeals process, but could not be fully confident of that.
I estimate that FFC might squeeze as much as £60 million out of a developer for the Craven Cottage site if there were eventually permission for housing – i.e. a little over twice its current asset value. And the developer might go on to achieve a £38 million profit if all went well. But it would be a very risky business and both those figures are at the high end of expectations, as I explain below in detail.

Subject to obtaining planning permission for 300 flats on Craven Cottage, Fulham River Projects agreed five years ago to pay an eventual £50m for the vacant site. As regards the profit that FRP claimed to expect to make eventually, evidence emerged in a High Court case soon afterwards: it was £30 million, or about 15%. The estimate had been made to a bank being asked to finance the project, so was more likely to be an over-estimate than an under-estimate.
On behalf of BTTC, I subsequently checked out the figures and reported that they seemed to add up. Let’s now try to update.

The FRP plan was for a 300-flat development in which 30% would be social housing.  Both figures are on the optimistic side, if anything, but I’ll stick with them, except that instead of Social Housing as such, I’ll assume payment to the Council in lieu. (This is just for simplicity of discussion — the overall profit margin should come out the same as if the social housing were actually built. That’s how payments in lieu work.)

Average home prices in the borough of H&F are £451k according to the latest Land Registry figures, compared with 280k in 2000. Since the FRP deal 5 years ago, they have risen almost 50%, but so have development costs in London. (According to specialist consultant EC Harris’ 2007 Economic Survey of the topic).

There are many much more expensive flats further east in the borough, nearer to another football club, at developments such as Imperial Wharf. But the most expensive flat currently advertised via RightMove and in our area is in the block next door, Alder Lodge. The asking price is £615,000 for a 3-bedroom flat with only partial river views. Five minutes’ walk north, just beyond the end of Stevenage Road, are two 2-bedroom flats for sale in another modern block. The one with a riverside balcony and really stupendous  views is priced at £480k; the other, which appears to lack them, at £399,950.

Those are current realities. However, for any redevelopment of Craven Cottage, there would be a significant premium on the above prices because a) the dwellings would be brand-new and b) FFC would have disappeared.

Applying generous lashings of that premium, I’ll therefore estimate that 40% of the flats would fully, directly overlook the river or Bishops Park and sell (according to size) at an average of £1 million, while 60% would have river views that could only be described as `partial,’ at best, and would sell (according to position and size) for an average of £0.7m.
That makes for total sales receipts of £246 million. Yes, of course these are estimates, but if you start imagining significantly more than that, it’s simply unrealistic for the area, even with FFC departed. At the time of writing, based on 376 properties, Londonpropertywatch.co.uk reports that 2-bed homes in SW6 average £499k and 3-bed ones £750k. Therefore it’s likely that I have erred on the optimistic side in my average of £820k per flat, as, with 300 to pack in, they surely won’t all be 3-bedroom.

Nevertheless, sticking with £246m as the developer’s gross receipts, it’s then deductions all the way….

£49m  A 20% payment to the Council  in lieu of social housing. (Note 1)
£75m  Development costs    (Note 2)
£21m  Finance costs  (Note 3)
£3m    Sales and marketing costs.

That leaves £98m for profit margin minus land costs.

Paying  £60m to FFC for the land would leave £38m profit, a margin of 15%, which is the same percentage as Fulham River Projects forecast in 2002.

Variables:

Pack in more than the 300 flats that FRP envisaged?  Unlikely. The site is only 2.44 hectares  and so 300 dwellings is 123 per hectare which is over 40% more than the H&F borough average.
A requirement for less than 30% social housing  (or for payment in lieu thereof)? Very unlikely. A higher requirement would be more on the cards. The Greater London Authority’s `Affordable Housing in London Spatial Development Strategy’ document talks only of 35% and 50% requirements.

So…..this completes my series of reports based on the latest FFC accounts. It remains only to write a comment piece with some overall points arising in my personal opinion. I shall post that quite shortly..

NOTES.
1) Affordable Housing in London Spatial Development Strategy Technical Report One July 2001. Page 41.
2) As above: Fig. 8.1, page 33. (Market values compared with development cost and TCI)
3) Assumes it takes 3 years to sew up planning permission, following objections and appeal, and then 2 years fully to execute the development. Only £10m is payable for the land at the outset. Finance for the remaining £50m, plus development costs, is taken to apply from Year 4.

Fulham Finances: debt (part 2 of 2)

Continuing b+w geezer’s wonderful series:

Net Debt (Part two – the rate of increase)

It’s here that I reach the limits of my powers as a non-accountant. I’ll explain the position to the best of my amateur abilities, and leave it to you to ponder. Then in my final episode next week, I’ll try to draw these threads together, inclusive of some consideration of the club’s assets. (The likes of Radzinski may have no worth any more, but Craven Cottage does. How much?)

Net debt, then……At 30 June 2006 it stood at £167.3 million, compared to £95.7 million at 30 June 2002, meaning a rise of £71.6 million in four years. How come?

Operating losses over the period, inclusive of player trading, totalled £61.5m, and added to those normal operations there was much work on the stadium. Viewed in this light, the £71.6m appears to make sense and it certainly accords with standard accounting practices — about which more in a moment.

Here, however, the amateur and professional outlooks diverge. While professional accounting explains why our debt increased by almost £18m annually over the four-years, a different kind of analysis comes up with only half that. So here’s the, alternative, non-professional way of looking at it……….

Our total income over the period was £154.8m, mainly comprising the three income streams from football I discussed in my fourth installment plus £6.7m from other sources.

From that income one needs to deduct: Staff costs (£131.3m), net expenditure on transfers (£4.65m) and other external charges (£40.8m). The same goes for leasing charges and auditing expenses which aren’t included in the foregoing and which over the four years total £3.55m.

This way you reach a total of £175.7m which it seems clear was spent on normal operations of the club, inclusive of buying, selling and remunerating players. In which case an excess over income of £20.9m over the four years.

If you then add the total stated as having been spent over the period on `purchase of tangible fixed assets,’ the total overspend increases to £35.1 million. And that’s the total that an amateur like me can readily understand — an average overspend approaching £9 million per year, inclusive of investment in Craven Cottage.

However, the increase in Net debt is not the £35.0 million arrived at in the manner just described, but £71.6m. How so? Most of the explanation lies in the way that `Operating Losses’ are accounted — not merely at Fulham, but at the other clubs too.

The situation can best be illustrated with regard to player trading. And to confirm that it’s not just Fulham, let’s take the Blackburn case first.

During the most recent two years accounted, Blackburn actually received £0.8 million more from selling players than it spent on buying them. And yet Blackburn’s accounts for the period show a total of £13.1 million as the Operating Expenses of `player trading,’ and these in turn contribute to an Operating Loss for the Club.

On the same basis at Fulham (for whom I have four years’ figures instead of just two), the accounts show a net spend on players of £4.6 million, and yet the Operating Expenses of Player Trading totalling £36.3 million. A similar tale could be told at Bolton and Charlton.

What are all these (and doubtless all other clubs) doing?

They are following the Financial Reporting Standards (FRSs) issued by the Accounting Standards Board. In particular: FRS 10 – Goodwill and Intangible Assets. As Bolton put it, “In accordance with FRS 10 ……. fees payable on the transfer of players’ registration are capitalised at cost and written off over the length of the players’ contracts.”

Or as Blackburn put it: “In the opinion of the directors the value of the playing staff at 30 June 2006 amounted to approximately £35.5m. In accordance with FRS 10 the cost of players’ registrations, together with associated costs, are capitalised as intangible assets and amortised evenly over the period of their contract.” Hence £6.2 million for the most recent year — during which Blackburn only paid out £0.6m more in transfers than they received.

Looked at one way, this approach is perfectly reasonable and also accords with common sense. For example, in Fulham’s case Radzinski and Claus Jensen cost a combined £3 million (approx), and this was amortised over the three years of their contracts at £1m/year, after which they were free transfers with no financial value. It actually transpired like that, in real life and not just theory!

Does one call this `creative accounting’? It’s certainly what the accountants at all clubs are expected, and indeed required to do. In that sense, no. But it still diverges from an approach that applies a different kind of common-sense – an approach that attempts to stick to money that we can all appreciate really did change hands during the period: no theories required.

In Blackburn Rovers’ case it makes the difference between breakeven trading and substantial loss; in Fulham’s case between a substantial loss and a higher one.

Should you want to read FRS 10 for yourself, it’s at: www.frc.org.uk/asb/technical/standards/pub0109.html.

Fulham Finances: debt (part 1 of 2)

The latest in the series of b+w geezer’s Fulham Finances series:

Looked at one way, debt hangs over Fulham to a greater extent than at most other clubs, while looked at another way, it doesn’t. That makes it a particularly difficult issue to get one’s head around. From my point of view, it needs two bites at the cherry — this week I’ll discuss the current situation and next week how it’s been arrived at.

Net debt at 30 June 2006 was £167.3m, an increase of £23.2m from a year earlier and of £49.3m from two years earlier — that rate of increase being the topic for next time.

As of June 2006, £100.3m of the £167.3m was owed to the Chairman in person, but that still left the rest hanging over the club as commercial loans. Those loans had cost over £3m in interest payments over the past 12 months and would presumably continue to do so. Most was due to Harrods, who paid all the wages and various other things at Fulham while agreeing to be patient about being repaid.

That was the case at the end of June 06. However, the accounts were only published in April 07, and they therefore offer a kind of postcript called `Post Balance Sheet events.’ That is always the case, it’s just that the postscript is particularly eventful this time — and not just because it includes the departure of Chris Coleman.

In July 06 and January 07, Harrods were repaid a total of £69.7m which had accumulated as trading and payroll loans, “utilising proceeds of an equivalent increase in the debt due to Fulham Leisure Holdings Limited, the parent undertaking.” In other words, the Chairman’s private funds repaid his main public company. The ease/difficulty of that process for him was discussed in a Private Eye article to which I shall refer next week. What’s for sure is that it has greatly increased the proportion of Fulham’s debt that is `soft.’

The situation as of April 07 — the latest known — shows some £19m of interest-bearing bank loans including one for 9m taken out in December 06. All other debt is to the Chairman: the £100.3m already there in June 06, plus the £69.7m he’d had to find by January 2007. And maybe some more since, but that can’t be ascertained yet.

This kind of debt is commonly referred to as `soft’ for two reasons. The first is that it is free of interest payments. For lending you £170m, banks would surely want a good £10m a year.

The second reason relates to the prospects of asking for it back. In the case of at least £55.5m of the money, the Chairman doesn’t even have the theoretical right to ever demand it back — it’s unsecured. For all or some of the rest, he does have the theoretical right, but continues to promise not to exercise it if it will make the club insolvent. See `The small print’ below here.

So…. at April 2007, Fulham had `hard debt’, bearing interest, equivalent to approximately half its annual income. This debt was secured against assets worth considerably more that that. All the rest is or isn’t real debt by the normal meaning of the word, entirely dependent on how you choose to think of it.

Next week I’ll try to get a fix on the rate of increase of debt in recent years, which at first sight is roughly double what one might have expected to be reported — how come? After that I’ll have a go concerning the assets side of the equation, i.e. the potential compensations of having thrown money at Fulham. And that’ll be that.

THE SMALL PRINT

The Chairman’s promise not to ruin Fulham is reiterated in the Directors’ Report for the year ended 30 June 2006.

“The Group’s main source of finance, for operating losses, working capital and capital expenditure (including player transfers), in excess of funds generated internally, is interest-free loans from its parent company. The Group has received assurances from the directors of the parent company that no payment demand will be made which would…..cause the Group to become technically insolvent. The parent company has also provided comfort that as further funds are needed to meet creditors as they fall due, these will be made available. In this respect, the Group also relies on assurances from Mr M Al Fayed.”

The other costs of running Fulham

The fifth in a series of articles on Fulham’s Finances by b+w geezer:

In previous installments of this summer series I’ve discussed various figures for the years 2004-5 and 2005-6:

Income from football…….. £37.1m; £37.1m.
Total staff costs:………… .£33.9; £30.1m.
Net spend on transfers…….. £2.3m; £9.6m.

If that were the full picture, the club would be roughly breaking even. Unfortunately it isn’t, as there are many other expenses apart from staff and transfers.

Most of those are totalled under a heading called `Other external charges.’ Details aren’t given, but they’ll include the consumables, utility costs, travel costs, and costs of services required to operate for 12 months, on and off the pitch. And materials too – sales of replica shirts come under income, to take just one example, but the club had to pay for the shirts in the first place.

I think, but here I remind you I am not an accountant, that `other external charges’ include also the interest payable on loans. Net interest payments for 2005-6 totalled £3.2m, as they did the year before. More about that next time.

Altogether, `Other external charges’ came to £11.7m during 2005-6. Going back in time, the figure was: 10.0m, 9.2m, 9.9m. The equivalent Charlton figures were 11.0m preceded by 8.3m, while Birmingham City’s were 7.1m preceded by 6.3m. Neither of those clubs had significant interest payments to make.

So here is how it pans out for the past two seasons at Fulham in £ millions.

Income from football minus (staff costs + transfer costs net of receipts + other external charges).

2004-05…..37.1 minus (33.9 + 2.3 + 10.0) = minus 9.1m.

2005-06…..37.1 minus (30.1 + 9.6 + 11.7) = minus 14.3m.

Total for the two seasons = minus 23.4 million.

There was the compensation of the interest payments from Fulham to Harrods, certainly. But otherwise we are mainly talking money leaving MAF’s pocket and then being consumed.

Small print: All goods and service transactions with Harrods and other Fayed businesses — for things like food for the restaurants — are summarised in Auditors’ Note 23 of the 2005-6 Accounts. They total less than half a million pounds.

Income from football

The fourth in a series of articles on Fulham’s Finances by b+w geezer:

In combination, `Matchday’ and `Commercial’ cover gate receipts, executive boxes, sponsorships, merchandising, advertising, etc. However, clubs may differ slightly in what they apportion to each category.

The Broadcasting aspect is determined by an equal payment to all clubs, plus finishing position (with each placing worth nearly £0.5m) plus the number of matches shown live. For 2005-6, the top club had 24 live games shown and the lowest nine. Blackburn ranked 11th in those stakes with 11 shown.

The following shows the most recent figures for Fulham, Charlton, Blackburn and Bolton. Amounts are in millions of pounds, while average league crowd figures are in thousands.

		FULH CHAR BLAC BOLT 

Broadcasting 	23.2 22.4 25.7 26.6 

Matchday 	 7.5 12.6  7.1  9.8 

Commercial 	 6.4  6.9 10.7 10.1 

Total 		37.1 41.9 43.4 46.5 

Crowds 		20.6 26.2 21.0 25.4 

Position 	12th 13th  6th  8th

Now here is the picture for Fulham over time as reflected in the last four sets of annual accounts. The relationship between crowd size and matchday income may surprise. I would be interested in theories and comments arising.

		05/06 04/05 03/04 02/03 

Broadcasting 	 23.2  23.5  27.2  21.9 

Matchday 	  7.5   8.2   7.6   7.2 

Commercial 	  6.4   5.4   5.0   5.0 

Total 		 37.1  37.1  39.8  34.0 

Crowds 		 20.6  19.8  16.3  16.7 

Position 	 12th  13th   9th  14th

This is the fourth in a summer series of articles, approximately weekly, about Fulham’s finances in context. In due course they will become archived online.

Fulham’s staff costs in context

The third in a series of articles on Fulham’s Finances by b+w geezer:

First some total staff costs for the financial year of prem season 2005-6, to the nearest million pounds:

Chelsea 114,

ManU 85,

Arsenal 83,

Liverpool 69

Newcastle 52,

Charlton 34,

Blackburn 33,

Fulham 30,

Bolton 29,

Birmingham 27,

Wigan 21

In every case, 11-12% of this relates to social security plus any pension contributions and payments to directors. At Fulham the breakdown was:

Wages and salaries: 26.8m,

social security: 3.2m

0.12m towards pensions.

All figures are for the staff as a whole with no information about who got what. Staff totals are, however, given. At Fulham there were 61 paid players, including the Ladies Squad, and 119 non-playing staff, making a total of 180, which was 21 down from the year before.

Full-time staffing at three similar clubs to Fulham was:
Charlton: 229,

Blackburn 223,

Bolton 191.

Fulham also used 435 casual and part-time staff, mainly on match-days. Charlton used 533.

A track of Fulham’s total staff costs over time goes like this in £m

2001-2: 30.8
2002-3: 36.4
2003-4: 30.9
2004-5: 33.9
2005-6: 30.1

By comparison, Bolton’s 2001-2 figure was sub-19m, while Charlton’s was 21.5m and Blackburn’s 29.7m.

Small print: Bolton’s staff numbers exclude the on-site hotel, which is included in the parent company, Burnden Leisure. Burnden also paid the directors’ `emoluments’ of 0.69m, but I’ve included these in the Bolton FC total to make a proper comparison with everyone else. Emoluments for Fulham directors came to 0.55m (0.24m for the highest paid; 0.31m for the rest). For Blackburn: 0.29m and Charlton 0.13m.

All the detailed figures are taken from the relevant accounts recently lodged at Companies House. See especially Auditor’s Note 8 in the Bolton accounts and Note 4 in those of Fulham, Charlton and Blackburn. Figures for the five bigger spending clubs are as reported by Deloitte.

This was the third in a summer series (approximately weekly) about Fulham’s Finances in context. They will become archived online in due course.

Chris Coleman’s transfer spend in context

The second in a series of articles on Fulham’s Finances by b+w geezer:

Chris Coleman spent £11.9 million on transfers net of receipts during his second and third full seasons in charge – slightly more than Curbishley at Charlton.

During the same period, Blackburn and Bolton broke even on transfers – made very slight profits even.

All this is evident from the latest Annual Accounts for each club. These show the position for the year to 30 June 2006, with the equivalent figures from the previous year stated for comparison.

Fulham paid £10.45 million and received £0.85m from July 05 to June 06. So transfers cost £9.6 million overall. Those figures exclude signing-on fees, which are instead included in wages. But they do include transfer fee levies, agents’ fees and any other associated costs.

It does all add up without jiggery-pokery, but if you want to go through it for yourself, then see How £9.6 million is arrived at below.

In the previous set of accounts, Fulham’s net spend on transfers had been only £2.3 million. (6.6m paid, 4.3m received). If we therefore add 2.3m to 9.6m and divide by two we arrive at around £6 million as an average annual net spend in transfers for 2004-6.

By comparison, over the same two seasons, Charlton had an average net spend of £4.4m on player transfers, while Bolton had £0.3m average profit on transfers and Blackburn £0.4m profit. See `The small print’ below this post]

As will be explained in future articles, our £11.9 million overspend was money that could not be found out of operational income — all of which had already gone on other things unfortunately. Which meant….

(To be continued. This was the second in a series about the latest financial facts of Fulham in the context of rivals).

HOW £9.6 MILLION IS ARRIVED AT

The audited accounts for the year to 30 June 2006 state that the full cost of transfers came to £10.45 million while £0.85 million was received, hence a net cost of £9.6m.

The 0.85m bit is immediately plausible since the only players attracting fees during the period were Elvis Hammond and Darren Pratley. (Others were bought and sold in July/August 06)

But what of expenditure? Elrich and Droby arrived prior to the accounting period. As for the rest….

The two fees made public were Helguson, 1.1m and Bullard 2.5m. (Jimmy was registered on 16 May 06). As for the fees for Nic Jensen, Warner, Niemi and Brown, one has to estimate, but it’s hard to see how there would have been change out of 5.0m, raising the total to 8.6m.

The 5% transfer fee levy then raises the cost to £9m.

That would leave £1.45m or about 17% of the base transfer fees for the agents’ cuts. The previous season, in the Football League, agents took a fifty percent cut on transfers according to Deloitte. No-one’s suggesting the Prem would stand for that, but 10-20% (as estimated here) is plausible. Bullard’s agent above all would have expected a goodly reward for steering such a desirable property to us, at a bargain price, before any other club had a chance to muscle in. And while Elliott and Christenval arrived without any transfer payment as such, it wouldn’t surprise if the latter anyway had an agent.

The auditors have documents to go by for each transfer, but even if they didn’t you couldn’t make the gross amount much less than £10.45m without being unrealistic. [Well could you?] And remember that this doesn’t include signing-on fees to the player.

All this was just for a single year (the most recent for which figures are published) and it was a greater loss than previously. The average net spend on transfers for each of the two financial years 2004-6 was `only’ approximately £6 million. Charlton’s was £4.4m over that same period, while Blackburn and Bolton each made small transfer profits. (In case you were wondering, the former had similar and the latter had lower staff costs – more about that next time.)

THE SMALL PRINT

Information has been sourced from the latest annual accounts, to 30 June (or in Bolton’s case 2 July) 2006, as were recently lodged with Companies House. These can be downloaded by anyone for £1 each from http://wck2.companieshouse.gov.uk/046b70ddecf833a93761334d9da24f43/wcframe?name=acc

The figures for annual profit or loss on player transfers can be found as follows:-

Fulham Football Leisure Ltd – Auditors’ Note 19 (page 26 on screen or 24 in print)

Blackburn Rovers Football and Athletic PLC – Auditors’ note 6 (page 21 on screen or 19 in print)

Bolton Wanderers Football & Athletic Company Limited – First item under `Operating Profit/(Loss)’, page 9 on screen or 7 in print.

Charlton Athletic plc – Auditors’ Note 22. (Page 31 on screen or 29 in print).

Bolton and Blackburn varied little between the two seasons.

Charlton’s two seasons differed considerably, but in the reverse order to Fulham’s. During 2004-5 they spent a net £9.1m on player transfers, but in 2005-6 they made a £0.4m profit. Hence £4.4m loss averaged over the two years.

Fulham Football Leisure Ltd

First in a series of articles on Fulham’s Finances by b+w geezer:

Over the summer, I intend to regale you with bits and pieces from the latest accounts of Fulham Football Leisure Limited. Not too much at a time, but bite-size chunks.

For a very gentle starter, here is part of the Directors’ report.

“The Groups’s main commercial risk is that associated with potential failure to retain membership of the FA Premier League…..In the event of relegation from the FAPL, the Group’s revenues would fall in the next two years to a level which would not finance ongoing contractual commitments, and the Group would therefore have to place more reliance on funds provided by the parent company [a.k.a. the Chairman] and take action to significantly reduce operating costs. Such action could prevent the maintenance of a playing squad capable of gaining promotion back to the FAPL. Therefore the Group’s main aim is to prevent this risk becoming a reality.” [my italics]

So the directors are keen for us not to be relegated and are aware this a key issue. Doubtless it was necessary to read this messageboard before the penny dropped — but it has. Whether they realise the extent of the expenditure required can not be ascertained.

Next week some time, considerably more to get your teeth into, with the headline financials in context. That’ll probably take a couple of episodes. Then on to the more tricksy bits, where the genuine financial professionals (which I’m not; but some on here are) will be solicited for their help.

You have been warned!