Bradford City AFC has filed its annual financial report for the year ending 30 June 2023, at Companies House.
The below report has been compiled by Alan K Biggin FCA, club director and chartered accountant.
As in previous years, we are providing supporters and other interested parties with more background into the year’s financial activities. This is particularly relevant to the ‘Directors Report’, which provides a ‘Business Review’ limited in its content.
It is important for everyone with an interest in our club that there is some 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.
The indicative figures which are most discussed are extracted from the books, records and financial statements of account – and are set out below:
- Revenue: £8.5m (2021/22: £7.3m) - Revenues have increased by 20%. This a club-record high for Bradford City AFC, while operating in League One or League Two.
- Transfer and Loan Fee Income: £821k (2021/22: £459k) - Transfer income was earned from player sales, sell-on clauses, and appearance fees.
- Deficit - Profit / Loss: -£374k (2021/22: - loss £299k) - The deficit of £374k was principally a result of an increase in matchday expenses, which are very difficult to control bearing in mind the increased compliance and regulation and first team costs. The club, as indeed are all other commercial organisations, is subject to the vagaries of a struggling economy and spiralling costs.
- Companies House - Net Asset Deficiency: -£1.5m (2021/22: -£1.1m).
- Crowds - Average Attendances (League): For the current year, 17,862 (2021/22: 15,450).
I will take the opportunity here to explain how these statements represent the club’s financial position and the difficulties it has experienced during the year under review.
As disclosed above, the club has recorded an overall deficit in the year of £374k. During this season, we achieved an appearance in the League Two play-offs, only to fail at the penultimate hurdle at Carlisle which drew the curtain down on our season. Our progress in other competitions was quite limited. Although such involvements are not budgeted for, the financial outcome can, if successful, be an attractive boost to club resources. Unfortunately, this was not to be.
As a chartered accountant I am fully committed to the financial stability of the club. We cannot spend money we do not have, nor must we run the risk of excessive borrowing to ‘chase the dream’. This conservative pragmatism, as we know, does not win the popularity stakes. Risk must be evaluated and discounted. The club has suffered greatly from this in the past. We should, however, be open to opportunity and maximise income where possible. To emphasise positivity in the year under review:
- Our ticket office sales during the year are over £388k more than budget and this includes record-breaking income from iFollow of £300k.
- Our Academy has recorded a profit of £480k.
- Our commercial department has performed admirably in a very difficult market, with outstanding results and a profit of almost £900k, with numerous additional partners contributing to the club.
Income:
As always, we are anxious to maintain and enhance our ‘Income Streams’, which have increased by £1.2m in the current year. Transfer income is an important part of this strategy. We will continue to generate income from this source and sales and transfer fees from our Academy, which has provided a superb return of £625k. Regarding central distributions, we are of course aware that circumstances change and this ‘drip down’ of income from the Premier League may vary depending on the top flight’s future policy. Nonetheless, we will act as necessity demands. During this year, we have received EFL distributions of £639k, Premier League solidarity payments of £480k and an EFL stadium grant of £90k. We will continue with our affordable season ticket policy, as far as possible. It has been ground-breaking and enormously successful. In a large city like Bradford, with a low-income economy, it is a significant factor in ensuring season tickets are taken up in bulk. From a cashflow perspective, this is quite essential.
Costs:
The major cost of any football club are its football wages, salaries, national insurance, and all other costs relating to the department, including medical and loan fees, bonuses, compromise agreements and scouting. These costs have been incurred at £3.7m for the current season compared to £2.9m 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 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 as turnover. Such contributions (which are not repayable) are classed as ‘football fortune’ and can be available for distribution as wages and or salaries, which will produce some relief under the rules. As part of its continuing commitment to establish governance arrangements, the EFL has created a separate department, the Club Financial Reporting Unit (CFRU) serviced by qualified accountants, to monitor and enforce the financial regulations clubs are required to follow.
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 below figures - showing a more graphic explanation of the club’s running costs.
As can be seen from the graphic, the total income is at £8.5m analysed over transfer income and operating income, which is the highest-ever turnover recorded by this football club outside of the top two divisions. The real issue remains to keep costs and wages and salaries, at a level that is within the income parameters.
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 our duty of care.
The current liability position has again deteriorated over the season as previously stated. Obviously, this position must be managed. 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 them.
The net liability 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. I have explained this before, but it does need emphasising that season ticket sales are very consequential. This is common with all football clubs, and it is a mark of our club as to how this is managed. Further funds are unfortunately often required, and this remains one of the major issues for clubs at all levels. The club continues to meet its ongoing financial commitments and has managed this without any further injections of equity.
It is interesting to note that, with regards to the commercial appeal of the EFL, there appears to be much more interest of minority investment in lower division sides and indeed over 30% of English league clubs are part of networks with stakes in other football clubs worldwide. No doubt a precursor of things to come.
New Income Streams:
The club continues to explore other avenues to generate new income streams.
As in previous years, we continue to appraise costs and income to obtain maximum benefit for the club. We have taken advantage of Government Support Schemes and initiatives, tax deferrals, Research & Development Grants and the EFL and Premier League distributions 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 its towns and cities in previous seasons 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. I believe this is fair and rational. Proper consideration should be made to equalise some of the distribution of monies in a fairer and justifiable manner, perhaps by the appointment of a regulator to mediate on financial distribution and review prospective owners.
Commercial:
Our commercial continue to prosper and grow, and we look optimistically to the future, this year recording the highest-ever commercial revenue since the club was relegated from the Premier League.
As referred to earlier, in the body of this analysis, we continue to adapt and review with constant forecasting, budgeting and problem assessing. The club has a policy of operating with budget deficits (base budgets). This assumes automatic elimination from all cup competitions, no player disinvestment is considered, and attendances are based on historic commercial performances. This is a conservative strategy and allows surpluses to be measured for commercial decision making. Actual figures generally outperform base budgets.
The Future:
There are obviously issues here which cannot be determined. As with many things, the world is changing very quickly and we need to address, prepare and adapt for events which may be largely out of our control. I have referred to this earlier in this article as the style and nature of football clubs in the future will change with possible ‘global membership’ and free interchange of players. Football clubs will become an even larger player in the community with educational and sporting activities a significant part of their remit. I have no doubt that matters could change quite rapidly, and financial assistance will be a large part of this equation.
As a football club, we need to carry on with the issues which concern us and which we can influence. That is to run and organise a well-balanced commercial entity that can be both profitable and successful by re-investing its goodwill generation into its own Balance Sheet.
Bradford City AFC’s annual accounts for the year ending 30 June 2023 were filed on Tuesday 26 March 2024. We are awaiting them being uploaded by Companies House. When they are eventually published, they will appear HERE.
