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CHIEF EXEC: £1.2m of normal income lost in 20/21

The second segment of a five part interview

4 May 2021

Club News

CHIEF EXEC: £1.2m of normal income lost in 20/21

The second segment of a five part interview

4 May 2021

In the second part of the May update, chief executive Nigel Clibbens talks about the financial impact of coronavirus on club income in 20/21.

Club News

CHIEF EXEC: Financial results for 2019/20

3 May 2021

The significant profit in 19/20 and the cash in hand at the start of the year have proved crucial in managing the consequences of a huge loss of normal business income in 20/21 [see part 1]. 

It’s worth a quick recap on the financial impact we expected to face from coronavirus when planning for 20/21. Going back to June 2020, when much of what was ahead was very uncertain and unpredictable, our estimates made the scale of the challenge we faced in 2020/21 crystal clear.

I said: “Every month of Behind Closed Doors fixtures also risks £150,000 of lost income, so the period of BCD games is crucial.”

Click HERE to read that section in full.   

Remember, that came on top of the financial impact of coronavirus from the last three months of 2019/20.

In September 2020 I informed you that we had forecast to have no match or ticket income, and no fans at games until January 2021. This ultimately proved to be optimistic.

Our annual season ticket income is around £350,000 a year, and our walk-up match ticket income is around £550,000. That’s £900k per season. On top of that our commercial income is around £650,000 per year, with retail at £250,000. In total that gives us a ‘normal trading income’ of around £1.8m.”  

Click HERE to read that section in full.  

I went on to say: “… we face a £1.2m hole in our finances if we are locked out until March 2021. The numbers haven’t changed since June.”

Then in my last update in February 2021 [click HERE to read the relevant section of the update] and looking at the first six months, I commented: “The rate of loss means that an 18-month period with effectively no footfall will leave the club with an income deficit of around £1.5m, a figure which can appear both daunting and insurmountable.”

Club News

CUSG: April minutes and questions

30 April 2021

I have restated these estimates and comments again to build confidence in the financial management within the club, and to demonstrate that our estimates and forecasts prove to be reliable, even in these tough times. This is important as often there can be speculation and claims which underminesthe relationship between fans and the club.

Providing this factual detail regularly and on the record, as we have done throughout, is vital in my opinion. 

As I have said in previous updates, our approach going back all the way to March 2020, has been to ‘self-help’ in every way we could. Tough operational decisions have been made by 1921 Ltd directors early to reduce our costs, furlough staff and conserve cash wherever we could – this still has to continue.

Looking in detail at our business income and costs over nine months so far, to 31 March 2021, shows the following:

Ticket income at £75,000 (down by £675,000)

In a normal year our ticket income is circa £900,000 (2018/19: £934,000 – the last full season) in total, with £550,000 from walk-up match ticket income and £350,000 from Season ticket income. We are unusual in League Two in that our walk-up is much bigger than season ticket income.

In the first nine months of this financial year we would normally expect to earn around £750,000 of that £950,000. Given our season on the pitch to that point, we would have hoped to earn even more – a hidden impact.

We have had 9,000 fans attend in 2020/21 and only earned around £75,000. Ticket income is therefore down by around £675,000 in comparison to a normal year, due to coronavirus. 

If we look at walk-up and season tickets, this becomes even more obvious.

Walk-up match ticket income at £30,000 (down £425,000)

Our total walk-up income to the end of March was £30,000 from five games with fans, compared with £425,000 in 2019/20 and £475,000 in 2018/19 in the first three quarters. That’s a drop of around £425,000.

The walk-up match ticket income from the very limited non-season ticket holders at the four home games with 2,000 fans was £20,000. We earned £10,000 from the Southend game as all those who attended (1,000 fans) purchased match tickets.

Overall, those last four games were break-even financially. We are pleased they weren’t financially loss making, but that wasn’t the motivation. We wanted fans in to help the cheer the team on to wins and to hopefully be a stepping-stone to many more fans in future. Whether its coincidence or not, we earned 13 points from a possible 15 when our fans were in the stadium.

Season ticket income £45,000 (down £250,000)

Our season ticket income to 31 March was £45,000. This compares with £275,000 in 2019/20 and £300,000 in 2018/19, a drop of about £250,000. The £45,000 is from fans who generously bought tickets and have not been refunded. This financial help is superb and we are truly grateful to our supporters. After Southend, they were able to come to only four season ticket games and have been forced to watch the remaining 18 on ifollow. 

Other business income £400,000 (down £275,000)

This comprises commercial income, retail and other match day income. In a normal year, other business income is circa £900,000 in total. In the first three quarters of this financial year, we would expect to earn around £675,000.

So far we have only earned around £400,000 meaning our other business income is down by another £275,000 versus a normal year, again due to coronavirus. Our retail has held up well so far and most of the reduction to date is due to much lower commercial income (expected given the pressure business supporters are facing).

So, in total, with fans at only five home games, in restricted numbers, ‘lost gate income’ was £675,000 and other business income was down by another £275,000. A total shortfall of £950,000 of normal income in the nine-month period.  

This ‘lost’ normal income is in-line with the estimate for the first three quarters (seven playing months at £150,000 per playing month September to March) after adjusting from the £75,000 of ticket income actually earned.

This is on top of £345,000 of ‘lost’ income from March 2020 to June 2020. That makes approximately £1.3m of ‘lost’ normal income from March 2020 to March 2021.

As we remain under these coronavirus restrictions, this continues to increase at the rate of circa £150,000 per playing month.

We continue to be facing the same full year shortfall in normal income of £1.2m highlighted in September 2020, before the season started. With the £345,000 normal income lost in late 19/20, that will take the total ‘lost’ normal income due to coronavirus to around £1.6m by 30 June 2021.

The impact of the ‘lost’ normal income is, of course, before mitigations from things like cost savings and other exceptional replacement income (from iFollow, Government support measures, Premier League support, Football Fortune, and donations in lieu of refunds not claimed). 

In part three of this update we will discuss how we are dealing with the £1.2m of ‘lost’ normal income.

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