Bradford City AFC last week filed its annual financial report – for the year ending 30 June 2022 – at Companies House.
The below report has been compiled by Alan K Biggin FCA, club director and chartered accountant.
As in previous years, we have filed a ‘fuller’ set of financial statements to provide supporters, partners and other interested parties with greater detail and more background to the year’s activities. This is particularly relevant to the ‘Directors Report’, which provides a ‘Business Review’ and is essentially more strategic in its content.
As I have stated many times, the football club is a major unifying entity within its local community. Its successes and travails are the lifeblood which bonds people together. It is much more than a corporate structure reporting results and answering to its shareholders.
It is also important, for everyone with an interest in our club, that there is an openness and understanding of what has occurred over the previous accounting year. Consequently, I am summarising some additional context to the financial statements filed at Companies House last week.
The indicative figures which are most discussed are extracted from the books, records, and financial statements of account – and are set out below:
- Revenue: £7.3m (2020/21: £5.4m) – Turnover minus transfer income is just under £7m, compared with the last near ‘normal season’ (2019/20), which provided under £5m of comparable, operational income. This represents an increase of over 42%, which is a tremendous achievement.
- Transfer Income: £459k (2020/21: £490k) – Transfer income was earned from player sales, sell-on clauses and appearance fees.
- Deficit – Profit / Loss: -£299k (2020/21: -£845k) – The deficit of just over £299,000 was significantly exacerbated by the departure of first-team manager Derek Adams in February, and the corollary of further first-team, unbudgeted expenditure.
- Companies House – Net Deficiency: -£1,112k (2020/21 -£813k).
- Crowds – Average Attendances (League): For the current year, 15,450 (2020/21 – 0, COVID-19 behind-closed-doors season) (2019/20 – 14,109).
I will take this opportunity to explain how these statements represent the club’s financial position and the difficulties it has experienced during the year under review.
The club has weathered the privations of the pandemic quite well and returned excellent income for a League Two club. We have lost the Government support we received throughout the COVID-19 lockdown, but this has been compensated by Premier League COVID support grants and EFL distribution. We have benefitted from the sale of two players from the academy ranks, and significantly improved commercial and ticketing operations.
We did not, however, anticipate the early departure of first-team manager, Derek Adams. We incurred further costs both in the termination of Derek’s contract and additional costs on players and staff in our efforts to maintain the dynamic and the season’s objectives.
The club must remain financially stable and be able to self-generate income - maybe not what some supporters wish for but, to me, it remains a cardinal principle. To highlight these fundamentals of a fourth-division football club:
- Our ticket office sales during the year are over £300k more than budget and this includes record-breaking income from ‘iFollow’ – the EFL’s official streaming service, of £180k.
- Our academy, as already referred to, has generated a surplus of over £300k.
- Our commercial department has performed particularly well, and revenue has doubled over this accounting year, which is not inconsequential in these challenging economic times.
Income:
As always, we are anxious to maintain and enhance our income streams. Transfer income is an important part of this strategy, along with increased revenues in ticketing and commercial activities. We will continue to generate income from this source and sales / transfer fees from our academy which provide a superb return, along with significant commercial and attendance growth. Regarding league distributions, we are of course aware that circumstances change and this ‘drip-down’ of income for the Premier League may vary depending on the Premier League’s future and its potential strategy. Nonetheless, we will act as necessity demands. We will look to continue with our affordable season-ticket policy, which has been ground-breaking and enormously successful. In such a large city as Bradford – with a low-income economy – it is a significant factor in ensuring season tickets are taken up in bulk.
Costs:
The major overhead of any club is its football wages, salaries, and on-costs. These costs have been incurred at £2.9m for the current season, compared to £2.7m previously. I am repeating what has been said before, but it should be noted that, in both these years, charges are within the spending constraint framework termed ‘Salary Cost Management Protocol (SCMP)’, which links clubs’ spending in Sky Bet League Two to 55% of their turnover. This may very well be an issue for some other clubs in the future, particularly for those promoted from the National League where no current restrictions exist. The definition of ‘turnover’ for SCMP purposes is rather wider drafted than EFL rules and allows donations and injections of equity from owners to be included in turnover. However, at our club, this is not necessary, and we do not rely on such injections. It should be noted that the Directors’ Loan account has remained at the same level for the last four years (£1.76m). It should be further noted that this £1.76m relates entirely to the funding requirement of 2018/19 season – where a loss of near £1.9m was recorded.
Our club will have no problem remaining within the desired parameters and considers all such rules to be part of a policy of good, sound financial management, which is completely necessary for the future of Bradford City AFC.
For better understanding, we set out the below figures – showing a more graphic explanation of the club’s running costs.
As can be seen from the graphic, the total income is £7.3m, analysed over transfer income and operating income. The real issue remains to keep costs and, in particular, wages and salaries at a level that is within the income parameters. This is not always easy to manage, as there is always the delicately balanced interaction between the club, its supporters, and the players.
Net Assets / Cash:
During the year under review, there has been modest expenditure on the stadium and other fixed assets, and it remains policy to improve assets wherever possible, within the available financial limitations. I acknowledge the stadium does not belong to the club, but we are custodians and within ‘our means’ we intend to fulfil our obligations and duty of care.
The current liability position has marginally deteriorated over the season as previously stated. Obviously, this position cannot continue, and it is the intention of the club to take every opportunity to maximise commercial relationships and generate new and increased income streams. Trading losses, other than for carefully considered investment for longer-term fiscal rewards, will be avoided in so far as we are able to control these destructive elements.
The net-asset position includes the cash balances of the club, which are significantly enhanced by the sale of season tickets and then gradually exhausted by the club’s normal financial activities.
Post COVID-19 Pandemic:
We have managed to survive the trials and tribulations of lockdown and the year under review represents a full year’s trading. We did not achieve our stated aim of promotion in this year, but we would like to feel that some progress has been made and we have largely maintained our support base for which we are very grateful.
New Income Streams:
The club continues to explore other avenues to generate new income streams. ‘iFollow’ has maintained its momentum and is proving to be most satisfactory, with greater growth and development expected in the years ahead.
Commercially, the club’s portfolio is continuing to grow, and diversify and this department is our fastest growing, with ticketing income also rising.
We continue to appraise costs and income to obtain maximum benefit for the club. As in the previous year, we have taken advantage of Government Support Schemes and initiatives, tax deferrals and the EFL and Premier League distributions and grants when available. It is widely acknowledged that the EFL has stepped up its campaign to receive a larger share of Premier League revenues. One independent report suggests that EFL clubs generated more than £865m of ‘social value’ to their towns and cities last season, through community programmes. It is an estimate of savings of public spending and other forms of social value in areas including physical health, mental wellbeing, education, and employment. All these issues are savings for the Government in terms of contributions and are all relevant to the sustainability of clubs.
Commercial:
Our commercial and community operations continue to prosper and build relationships, as we look optimistically to the future and towards significant growth in this area.
As referred to earlier, in the body of this analysis, we continue to adapt and review with constant forecasting, budgeting and problem assessing.
The Future:
The future is an emotive issue which can easily lose its grip on reality. Developing a football club without access to unrestricted or excessive amounts of money is not easy and takes enormous powers of fortitude, common sense, good housekeeping and effective budgeting control. We have a football club which has the potential to participate at a higher level of the EFL – and this is what everybody involved with the organisation aspires to make a reality, while maintaining a firm financial footing.
To view the club’s full, submitted accounts for the year ending 30 June 2022, on Companies House, please CLICK HERE.