Following on from the January report, chief executive Nigel Clibbens has provided an off-field operational and financial update as we head towards the end of the club’s financial year.
This covers areas discussed in the recent CUSG meeting - click HERE to read those minutes - and adds further detail to the club update briefing given to fan groups last week.
Fan initiatives
More memorabilia has been collected and donated by fans. As CUSG funds allow, it will be put on display in the stadium.
Sunset Suite vinyl window wrap designs have been approved by CUSG and are on order awaiting delivery in early June. It will be repainted thereafter. This will be renamed ‘The Glass Bar’ in honour of Jimmy Glass.
Painting priority has moved from fan areas to football areas in the short-term.
Playing shirt amnesty to hand back old shirts for reuse is continuing. Donations are being handed to local charities. Please keep the donations coming. Ideas for other charity recipients are most welcome. Donation points are in the Blues Store and east stand upstairs ticket office/reception.
Click HERE for more information on the shirt amnesty scheme.
The Legends game on Sunday 24 April 2022 was a huge success. We were delighted to host it. The only club event costs were stewarding. These were underwritten by Story Homes as sponsor. Bar profits were donated by the club. A final reconciliation of income and cost is being completed and an announcement will be made as to what the game generated. Thanks to all who made it possible.
Owner forums as per EFL Regulation 127 are being scheduled. The first is on Tuesday 24 May 2022 at 7pm and the second will be held after the fixtures and pre-season commences.
Catering
Post-season review has taken place. Catering operations are delivering profit. First year will be more profitable than the previously contracted-out model.
We expect to achieve in excess of the £20k profit in year 1 (more than the previous guarantee), which is an encouraging start.
New initiatives like the Fan Zone and the Pizza Bar were major successes. There were a lot of learning points. Catering APP use for pre-purchased food and drink in bars and kiosks grew slowly.
22/23 season catering operations are being planned. Peter Johnston, who leads the catering day-to-day, attended the fan CUSG meeting on 16 May to discuss matters including:
- Beer brand offering - with new brands to be in place next year.
- Extra selling capacity in Pioneer and WRE.
- Foxy’s, C&B, and hospitality offering.
Development of the Fan Zone has been self-funded via profits from the catering operation. A new outside ‘container bar’ is being evaluated for 22/23 to increase capacity. New food concession ideas are welcome. We hope to increase the size of the Fan Zone as demand grows. This will impact west stand car parking.
We want to improve and develop to address fan needs and issues. This requires fans to help us and make their voices heard and give feedback. A new catering survey will be issued in June. If fans have any catering suggestions, get in touch HERE.
Attendances
Average gate for the season was 4,970, with 4,559 home fans and 411 away.
The support of fans at home was higher than recent years, despite the way the season went. This increase in support was before Paul Simpson’s arrival and despite home results. Fans stood by the club in real adversity. This was humbling for everyone and made a real difference. Support increased markedly after the arrival of Paul Simpson.
Average gates were up +21% on 19/20 (the last season with fans, but only 19 games). They were also up +5% on 18/19 the last season unaffected by Covid. 4459 is the best home fan average for 5 years (excluding 20/21 with covid limits) an the third best in the last 10 years.
Excluding ticket promo games and one-off big attendances the home average was 4,235 in 21/22 vs 4,017 in 18/19 a like-for-like +5% increase.
Excluding the two ticket promo games and one-off big attendances, the average home fans for the 6 games under Paul Simpson was 4977 compared with 3,917 for the 14 home league games before his arrival. An increase of 1,000 per game (+27% increase) after he joined. Interestingly even at 3,917 before PS arrival, this was still +3% up on 19/20.
Season tickets are on sale and 1,721 have been sold so far. It is always difficult to compare like for like with different dates of sale, length of sales periods, etc - however, this is an extremely encouraging figure. With half-season tickets, last year’s total was 1,845.
The age for unaccompanied children has been increased to 14 in response to behaviour and safeguarding issues and risks.
For more information on our season tickets, click HERE.
Commercial
A successful, sell-out, club awards night was held on 8 May at the Halston.
Commercial income remains challenging, especially new business and larger corporate deals. Hospitality bookings improved in the year.
A new commercial team is being formed following retirement of Jenny Anderson and Anne-Marie Gardner. New staff are being recruited.
The Business Club is to be relaunched for 22/23, after stopping due to Covid.
22/23 hospitality and sponsorship packages are being worked on to be launched after the fixtures are released on 23 June.
Bimson Haulage will be taking pride of place as our official shirt sponsor for the 2022/23 campaign.
To read the announcement article, click HERE.
Further commercial deals for 22/23 will be announced in the coming weeks.
iFollow
iFollow numbers for the final games were:
- Rochdale (A) 811
- Bristol Rovers (H) 316
- Newport (H) 556
- Rochdale (H) 542
- Port Vale (H) 494
- Mansfield (H) 284
IFollow subscriber numbers remained good and have generated £75k more income than prior years.
The piracy of iFollow increased and we can see fans discussing and sharing illegal stream information on social media fan sites (especially facebook). This practice is openly going on and those doing it are clearly seen and identifiable. Please don’t do it as it deprives us of income to reinvest in the club.
EFL
The regulatory regime continues to toughen and all clubs are facing increased scrutiny - for example, on a match day (as seen with recent pitch disorder), safeguarding, equality, diversity and inclusion, security (anti-terrorist issues covering Prevent and Protect), climate, finance, mental health and well-being, fan engagement and safety. This list is long and growing.
EFL Conference is in early June in Chester where we expect to hear more on the EFL’s plans to tackle these issues, and what that means for clubs.
We are awaiting results of the EFL Diversity Standard Code of Practice submission. Safeguarding is a key area of focus for the club, especially in the academy and on a match day.
L2 clubs have voted to tighten SCMP rules for 22/23. The spending limits are unchanged but some minor areas have been amended. More radical reform is being considered connected to UEFA rule changes. CUFC supported the changes. They are not significant and will have no material impact on CUFC in 22/23.
Sir Kier Starmer visited CUFC to discuss the Fan Led Review. The club and CUOSC detailed the importance of moving quickly and not allowing FLR implementation to be delayed. The need is clear for a fairer distribution of income across the pyramid, accompanied by cost control. Intervention to speed the process of implementation is critical.
Stadium
In terms of safety, the full electrical rewire of the west stand upstairs area is continuing with Murphy’s Bar complete, and finally Legends and McConnell’s. Replacement LED lighting on west side is continuing to be installed throughout as the old lighting is life expired.
We continue to spend heavily on unavoidable essential stadium repairs, safety works and critical renewals. Future power costs are likely to increase. Much of this work is invisible, but nevertheless essential, and adds up every month. Car park potholes have been dealt with in early May.
Painting of west stand continues with Legends, McVities and McConnells now completed. New flooring for west stand office areas and McConnells is to be installed. Sunset painting to follow after requirements of the football department have been satisfied.
Detailed annual safety inspections have started and rectification is being undertaken, including safety barriers, fire safety, structures, CCTV, electricals for example. This is a major project each spring. The annual audit by the Safety Advisory Group will take place at the end of May. A full structural survey is planned for 22/23.
Stadium pitch and training pitch renovations started on Friday 6 May. Media will be doing a fly on the wall time-lapse video explaining the work.
Matches
As I have said before, football is a highly compliance-driven business off-the-field, and that means our operations are constantly being reviewed and inspected.
Pleasingly, incidences of fan disorder on match days fell away in the final few games. Fan incidents were reported versus Stevenage and away at Bradford.
Club has supported the EFL campaign to improve fan behaviour under the headline “FFS… For Football’s Sake” - we understand emotions run high, but we appeal to fans not to overstep.
A number of fans have contacted us asking us to take action against those chanting at Bradford during the remembrance.
We have seen dangerous and worrying incidents as fans have come onto pitches at the end of big games recently, with people assaulting Billy Sharp, and others. As we have seen ourselves, and I have referred to, fan behaviour has shown signs of declining. This needs to stop. Clubs and the football authorities will have to respond. It is a minority of people, but things need to get back to normal.
Finances - year ending 30 June 2022
Trading
In the nine months ended 31 March 2022 overall net profit year-to-date of £0.5m driven by:
- Better than budget match ticket income (especially since PS arrival).
- Strong iFollow sales for domestically streamed games.
- Second and final instalment of Premier League support funding received (making £333k received in the year).
- Player transfer income so far £600k in 21/22.
- Significant unbudgeted exceptional costs from football department and DoF staff changes during the year. These are estimated to be nearly £200k by the year end.
- Rising debt interest costs (no cash impact at present).
We have earned £280k from season tickets (which is expected to become circa £350k for the full year). This is unchanged from the last ‘normal’ season unaffected by Covid at estimate made in December. We are back to normal in that regard.
Match ticket income is £580k after nine months. This is £80k better than budgeted and shows the fans continued to back the team - as also shown by the gate numbers. This is before the impact of the final games. The final full year expectation is now circa £700k (£100k better than budget). An end of season review of ticketing IT systems is under way.
Retail continues to be deliver good sales and margin (both better than budget). We have recruited new shop staff to replace those leaving the club. A new retail manager has been appointed to start shortly. New retail shop assistant also appointed.
22/23 kit design was approved in 2021 and is in manufacture, and has been despatched from the factory in Italy. The kit launch is planned for mid-June, subject to the final delivery date being confirmed. This is subject to getting through customs which is far longer and more complicated after Brexit. The new season and new staff will bring new retail initiatives.
Business costs and overheads are increasing. Stadium costs are up again due to power costs and spending on repairs and renewals. There is growing pressure on staff pay due to rising cost inflation and minimum wage requirements of our off-field staff.
Football player spending was planned to increase 20% this season after budget increases made in June last year. The final outturn is expected to be the highest for some years. Given the season on the pitch, this makes the value for money achieved the worst for a number of years. Agent spending has continued to rise.
Football Fortune income is £0.7m in total. £0.6m income from player sales. We have earned just £0.1m from EFL Papa John’s Trophy prize money and cup games. Without the Trophy prize money our cup income would be minimal this year.
We continue to be in a sound financial position day-to-day, with cash reserves in the bank. Of course, this is vulnerable to unplanned payments and uncertainties, especially any large and short notice demands (like significant debt repayments), this is unchanged.
Our trade creditors position remains good with the liabilities being low. All our PAYE and VAT liabilities continue to be paid up in full and on time.
Looking ahead, to the rest of the year to the end of June, the £0.5m profit so far is expected to become an overall estimated full year forecast outturn, broadly break-even, by the year end (as we have little income in May and June, but ongoing exceptional costs). This estimate remains subject to a number of income and costs uncertainties, so can still vary.
As detailed to fans before, we are now experiencing a reduction in cash reserves in the second half of 21/22. This cycle is normal every year (before any unexpected Football Fortune). This usual reduction in cash reserves will be higher this year from the additional spending on players in the January window, and the pay-off costs from changing in football management in February and DoF departure.
Funding
As planned and budgeted, we have received no additional debt funding (last borrower was May 2019). No debt repayments have been made in 21/22 so far, except £40k to the EFL to repay its Covid plan.
The Purepay position is unchanged as commercial funder. Purepay has been supportive since taking over the debt from EWM, leaving the loan in place on the same terms as before. It has not requested any capital repayments, or asked for interest to be paid, or asked for discussions on the repayment either. Neither had EWM before that. That assistance and care for the club has been brilliant in tough times for the club and then as Covid affected their own businesses.
We remain immensely grateful for their and their financiers ongoing support. It remains critical to, and invaluable to, the club. They have always understood the importance of that continuing support to the club, its fans and the community as a whole, and taken its responsibilities arising from that seriously.
That superb support even now is allowing the club to focus its cash on improving the club, and to now support Paul Simpson and the team which, in turn, improves the club’s ability to the repay the debt.
The steps taken in February, and the turnaround on the pitch, with higher gates and the most optimism seen for years, including the manner in which a relegation battle was avoided, have meant the club was not faced with a ruinous relegation, and all the ramifications that brings - including on its ability to repay the debt.
Interest continues to accrue, and an increasing commercial third-party debt that is not being serviced is not good for the club as a borrower, Purepay and its stakeholders and financiers, or the guarantors. That cannot go on indefinitely.
As I have said before, it cannot be ruled out that Purepay will require debt and/or interest repayments in the rest of 21/22 as confirmed in the club audited financial statements filed in March 2022.
Click HERE to view the audited accounts.
The debt is owed by 1921 and it needs to be repaid and serviced, and that is the intention of the board and shareholders. No direct discussions are currently taking place with them on this (nor are there any plans in the diary in place to have any at present), but it is a priority for everyone at the club.
So, the Holdings Board continues to actively seek a way forward to agree a repayment programme with PurePay, its stakeholders and financiers to repay the debt and service the interest in a way that is affordable and mutually agreeable, starting as soon as possible.
Year ending 30 June 2023
We expect and are planning for our costs and spending to increase in 22/23 and beyond. This includes on and off the field, as we do all we can to support Paul Simpson and his plans. This will mean the football budget will increase in terms of both Player Costs and Other Football costs as we invest in more people and things to improve.
At the same time, cost inflation will be an issue to manage. We need to grow income to cover extra spending and cost inflation. It is important the new optimism and changes we are making, along with extra spending, leads to more income and support.
Looking ahead to the next financial year, we have no significant further guaranteed transfer receipts to come from historic deals next year. With our self-sufficient funding model and no benefactor, that means our funding requirements in 22/23 (and any debt repayments) must be covered from the cash reserves remaining at 30 June 2022, and increases in net Business Income or Football Fortune for next season.
The positive and optimistic finish to the 21/22 season with new excitement for 22/23 is clearly vitally important. The 22/23 new season ticket sales will be critical to our plans and what we can afford to spend.
Income growth is needed alongside the continuing need to conserve cash to fund our normal future day-to-day trading activities and, if possible, build cash reserves, just in case, to cover unplanned events.
