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Accounts to the Year Ended May 2018

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Accounts to year ended May 2018 have been issued to shareholders.

You can download a copy here if you are interested;

https://blackandwhitearmy.com/downloads/accounts-may2018.pdf

Some interesting contents, not least that we made a profit before tax of £77K which was up on £15K the previous year.

That seems good news until you realise that turnover was up £400K on the previous season and income from player sales was £728K (Mallan and Morgan) up from £220K the previous season (McAllister).

So in short we brought in just over £900K of additional income, but we only made £62K additional profit.

I might be reading this incorrectly but that's my understanding of what I am looking at :o

 

Maybe some bean counters could clarify if I am right or wrong?

I also note number of players was 43 as opposed to 34 the previous year, and management and admin staff was 34 up from 28 the previous year.

15 extra bodies on the payroll which more than likely accounts for a good chunk of the additional money we spent.

 

The chairman alludes to the fact that all the Lewis Morgan money was spent in January to "strengthen the squad".

Just about breaking even when bringing in £720K of transfer income is giving me the fear!

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If Div's reading is correct then I would also be deeply concerned at the current management of the club.

Next years accounts will be even worse given the bloated squad and payoffs. And do we really need 34 management and admin staff? A number that keeps going up and up. We are a relatively small business really.

Anyone who remembers the late 80s and early 90s should be watching Gordon Scott like a hawk now!

There is of course the McGinn money but that should have been a bonus, not just enough to cover the club running at a massive deficit.

Edited by Kemp

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Understand where you are coming from Div but Projected Income will be substantially higher in the Premiership.  Higher attendances, Higher TV money and Higher Prize Money (wherever we finish).  Add in the John McGinn money and we are OK for this season.  Nothing to be complacent about though. 

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Just now, St.Ricky said:

Understand where you are coming from Div but Projected Income will be substantially higher in the Premiership.  Higher attendances, Higher TV money and Higher Prize Money (wherever we finish).  Add in the John McGinn money and we are OK for this season.  Nothing to be complacent about though. 

Yes of course we are now in the land of milk and honey and the prize money for last season (which I think would be about £500K) would not have been included in these figures.

It is still a bit concerning, and I think we all appreciate that Stubbsgate is probably going to wind up having cost us around £300K to fix, at least.

The McGinn money should put a nice tint on the accounts in a years time too but my issue is what happens in the seasons when we don't bring in a load of transfer income :o

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2 minutes ago, div said:

Yes of course we are now in the land of milk and honey and the prize money for last season (which I think would be about £500K) would not have been included in these figures.

It is still a bit concerning, and I think we all appreciate that Stubbsgate is probably going to wind up having cost us around £300K to fix, at least.

The McGinn money should put a nice tint on the accounts in a years time too but my issue is what happens in the seasons when we don't bring in a load of transfer income :o

Div. You are right.  It's not this season that we would feel the pain.  

 

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20 minutes ago, div said:

Accounts to year ended May 2018 have been issued to shareholders.

You can download a copy here if you are interested;

https://blackandwhitearmy.com/downloads/accounts-may2018.pdf

Some interesting contents, not least that we made a profit before tax of £77K which was up on £15K the previous year.

That seems good news until you realise that turnover was up £400K on the previous season and income from player sales was £728K (Mallan and Morgan) up from £220K the previous season (McAllister).

So in short we brought in just over £900K of additional income, but we only made £62K additional profit.

I might be reading this incorrectly but that's my understanding of what I am looking at :o

 

Maybe some bean counters could clarify if I am right or wrong?

I also note number of players was 43 as opposed to 34 the previous year, and management and admin staff was 34 up from 28 the previous year.

15 extra bodies on the payroll which more than likely accounts for a good chunk of the additional money we spent.

 

The chairman alludes to the fact that all the Lewis Morgan money was spent in January to "strengthen the squad".

Just about breaking even when bringing in £720K of transfer income is giving me the fear!

Perhaps now, more people will sit up, take note and get actively involved in securing the future of our club. We spent an extra £600k on wages to win the championship, and what can you see for that outlay on the pitch now? The McGinn money will be gone now given what the paid Stubbs & co to hire, then fire them.

if we are relegated this season, we will have burned through the best part of £3million for absolutely nothing. Everyone still think our board are doing a great job?

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We have an ambitious chairman.

There’s a danger that comes with that and this set of accounts is cause for concern in my book. 

The idea that the £300k Morgan money was spent last January to secure promotion doesn’t stack up. We obviously went through the entire season last year in the Championship with a big playing budget. Dangerous game and doesn’t bode well. 

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9 minutes ago, Maboza said:

We have an ambitious chairman.

There’s a danger that comes with that and this set of accounts is cause for concern in my book. 

The idea that the £300k Morgan money was spent last January to secure promotion doesn’t stack up. We obviously went through the entire season last year in the Championship with a big playing budget. Dangerous game and doesn’t bode well. 

 

34 minutes ago, div said:

Yes of course we are now in the land of milk and honey and the prize money for last season (which I think would be about £500K) would not have been included in these figures.

It is still a bit concerning, and I think we all appreciate that Stubbsgate is probably going to wind up having cost us around £300K to fix, at least.

The McGinn money should put a nice tint on the accounts in a years time too but my issue is what happens in the seasons when we don't bring in a load of transfer income :o

Add to all this a £50k bung for the plastic pitch, a £50k rolling cash facility, a £15k USH loan and upwards of £30k in £2 pot payments... all from the good old Bank Of Smisa.

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1 hour ago, div said:

Accounts to year ended May 2018 have been issued to shareholders.

You can download a copy here if you are interested;

https://blackandwhitearmy.com/downloads/accounts-may2018.pdf

Some interesting contents, not least that we made a profit before tax of £77K which was up on £15K the previous year.

That seems good news until you realise that turnover was up £400K on the previous season and income from player sales was £728K (Mallan and Morgan) up from £220K the previous season (McAllister).

So in short we brought in just over £900K of additional income, but we only made £62K additional profit.

I might be reading this incorrectly but that's my understanding of what I am looking at :o

 

Maybe some bean counters could clarify if I am right or wrong?

I also note number of players was 43 as opposed to 34 the previous year, and management and admin staff was 34 up from 28 the previous year.

15 extra bodies on the payroll which more than likely accounts for a good chunk of the additional money we spent.

 

The chairman alludes to the fact that all the Lewis Morgan money was spent in January to "strengthen the squad".

Just about breaking even when bringing in £720K of transfer income is giving me the fear!

Can't see the issue here. The club took in transfer money and paid it out again. Had the transfer income not been there, it wouldn't have been paid out, so the net effect is the same.

The club targets to break even each year and it's done just that plus made a small profit.

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7 minutes ago, Thorizaar said:

Can't see the issue here. The club took in transfer money and paid it out again. Had the transfer income not been there, it wouldn't have been paid out, so the net effect is the same.

The club targets to break even each year and it's done just that plus made a small profit.

Hmm, not quite. The club states it intends to stay within it's budgeted income. Transfers are 'unbudgeted income'. So they spent all the transfer money on top of what they had already planned to spend. Basically chasing the dream as a certain leeds utd chairman once put it.

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19 minutes ago, Thorizaar said:

Can't see the issue here. The club took in transfer money and paid it out again. Had the transfer income not been there, it wouldn't have been paid out, so the net effect is the same.

The club targets to break even each year and it's done just that plus made a small profit.

Yip, that is true, the club has only spent what it has brought in and has no debt. That is to be applauded.

It also has to be acknowledged that the money spent was in order to win the league, which we did, so to that end it was successful.

You could suggest that a good chunk of spend might well have been in the form of bonus payments for winning the league. A big playing squad on even a modest bonus for securing promotion would still have eaten up a lot of cash.

That is all fair, but it's still a lot of money for a club of our size to have spent in a single season and I think it is right that we, as the future owners of the club, express some concern at this level of expenditure. 6 extra admin and management staff for example, is a big permanent overhead to carry for example. Throw in a Director of Football now on top of that, and the possibility of another coach coming in.

It all adds up.

We will gain much more prize money this season than last, even if we are relegated, but I'm a wee bit uncomfortable that we don't seem to have any sort of rainy day fund.

I'll be staggered if the McGinn money hasn't been savaged by Stubbsgate.

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45 minutes ago, div said:

Yip, that is true, the club has only spent what it has brought in and has no debt. That is to be applauded.

It also has to be acknowledged that the money spent was in order to win the league, which we did, so to that end it was successful.

You could suggest that a good chunk of spend might well have been in the form of bonus payments for winning the league. A big playing squad on even a modest bonus for securing promotion would still have eaten up a lot of cash.

That is all fair, but it's still a lot of money for a club of our size to have spent in a single season and I think it is right that we, as the future owners of the club, express some concern at this level of expenditure. 6 extra admin and management staff for example, is a big permanent overhead to carry for example. Throw in a Director of Football now on top of that, and the possibility of another coach coming in.

It all adds up.

We will gain much more prize money this season than last, even if we are relegated, but I'm a wee bit uncomfortable that we don't seem to have any sort of rainy day fund.

I'll be staggered if the McGinn money hasn't been savaged by Stubbsgate.

The old phrase of having to speculate to accumulate comes to mind, IF GS and the Board hadn't decided when we were looking very closely at the drop into division one to take the less than expected route to appointing a new Manager (one might even say they speculated in bringing in JR) and to speculate further (by backing him in the January window) then it is rather unlikely we would be having this discussion.  That being the case, any additional earnings that came in would have been additional to that which was expected (from potentially division one?).  So, it does seem rather unfair to criticise when all the facts are not known and if we want to attempt to survive and even prosper in the Premier league we need to step our game and our staff up to the same level as others and so long as we keep within budget I would think the Board and GS are doing OK

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50 minutes ago, jaybee said:

The old phrase of having to speculate to accumulate comes to mind, IF GS and the Board hadn't decided when we were looking very closely at the drop into division one to take the less than expected route to appointing a new Manager (one might even say they speculated in bringing in JR) and to speculate further (by backing him in the January window) then it is rather unlikely we would be having this discussion.  That being the case, any additional earnings that came in would have been additional to that which was expected (from potentially division one?).  So, it does seem rather unfair to criticise when all the facts are not known and if we want to attempt to survive and even prosper in the Premier league we need to step our game and our staff up to the same level as others and so long as we keep within budget I would think the Board and GS are doing OK

Spend, spend, spend. Has long ben the cry of football fans, that is until The administrators are trying to figure out if the face painter, or the cupcake lady get a tenth of what they are owed?

in these accounts the club are saying they spent a million quid in transfers,  £100k of smisa cash, league winning prize money and what they actually budgeted for.... and only had £77k left. It is f**king shocking! What happens now? This means to cover all bets they will have to accept whatever someone offers them for Magennis in January, and again we will have sold on the cheap!

mark this post, day and date. And refer to it sometime early January.

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One of the obvious issues is that the spend isn't for the full duration of contracts. Yes, you can "mutually terminate"...that's not free though. For two you MT you're probably using about 70% of a salary slot in the pay off. Spending all that money did get us up, but it's not sustainable.

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15 minutes ago, Lord Pityme said:

Spend, spend, spend. Has long ben the cry of football fans, that is until The administrators are trying to figure out if the face painter, or the cupcake lady get a tenth of what they are owed?

in these accounts the club are saying they spent a million quid in transfers,  £100k of smisa cash, league winning prize money and what they actually budgeted for.... and only had £77k left. It is f**king shocking! What happens now? This means to cover all bets they will have to accept whatever someone offers them for Magennis in January, and again we will have sold on the cheap!

mark this post, day and date. And refer to it sometime early January.

If you accept what is offered, surely that’s what the player is worth ?

If we don’t think so , we hold on to the player as he has two years of his contract left.  If he is good enough he will be in demand, if no one wants to offer more than , say ,what Morgan went for ...then that’s his value .

Edited by Callum Gilhooley

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We took a risk and it paid off.  We can push the boat a little further IMO but need to be able to recalibrate for season 2020/21 if we go down this season and don't come right back up in season 2019/20. Contracts would need to reflect that or another substantial bunch of transfer money would be needed. 

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The only concern for me is whether we took the gamble on players wages before we knew for certain that the Morgan/Mallan money was coming in. If we did then it should be worrying the crap out of everyone.

I think we'll be OK this year thanks to McGinn.

Next year we'll get a nice payment from Europe hopefully so that should be OK too.

The question is what do we do in 3 years when we don't have enough coming in to pay the bills.

We can't be spending this amount of money at that point.

Edited by oaksoft

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8 hours ago, Callum Gilhooley said:

If you accept what is offered, surely that’s what the player is worth ?

1

A players worth is strongly influenced by how financially stable the club is. That has a much stronger impact on the sell value than the actual ability fo the player. That's why Hibs are able to hold on to McGinn for so long until they get millions, while we end up accepting peanuts for Lewis Morgan and Stevie Mallan.

If clubs know we are financially secure (and our player is on a long enough contract) they will need to bid more.

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11 hours ago, Thorizaar said:

Can't see the issue here. The club took in transfer money and paid it out again. Had the transfer income not been there, it wouldn't have been paid out, so the net effect is the same.

The club targets to break even each year and it's done just that plus made a small profit.

A few things worry me;

1. When it comes to expenses, it is a lot easier to scale up than scale down. If we are carrying massive overheads due to wages there will be a season soon when we don't have any transfer income and we make a considerable loss.

2. Selling Morgan, Mallan, McGinn should have been an opportunity to build some cash reserves. History, and data from similar clubs, would suggest we are not going to be able to keep selling a player every season. The academy has been overperforming. For that money to have been spent on wages for players we didn't need (such as Donati), transfer fees (Heaton) and payoffs of guys who should never have been employed (Jackson) is poor management.  

3. 700k is a lot of money - we had the axe hanging over our heads for most of the 90s, and ultimately had to leave Love Street for our current legoland home due to a debt of around 2m. I get the point that expenditure went up in January because we had the Morgan money banked, but the wider pattern seems to be money to be flowing out the club quite easily, and I don't think the way Scottish football is set up guarantees us that it will come back in easily.

We are walking a tightrope here when we don't need to. Given the success of the academy, we could have been building up some cash reserves.

 

Edited by Kemp

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13 hours ago, Lord Pityme said:

Hmm, not quite. The club states it intends to stay within it's budgeted income. Transfers are 'unbudgeted income'. So they spent all the transfer money on top of what they had already planned to spend. Basically chasing the dream as a certain leeds utd chairman once put it.

Budgets can be and are adjusted when cash flow increases (or decreases), though. 

Had there not been so much cash incoming, the cloth would have been cut to suit. Simple as that. 

Edited by djchapsticks

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8 minutes ago, djchapsticks said:

At the end of the day, had the accounts been published and we'd made 600k pre tax profit but remained in the Championship, it would have caused a lot more anger and left questions to be raised. 

Yeah, I’m kinda on a similar boat. They are definitely not as healthy as I would have expected so a tad concerning.

However, we gained promotion and rightly or wrongly backed Stubbs. Hopefully, and despite all this, we can still turn a profit again this year....the real scrutiny will hit when we go down though.

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23 minutes ago, djchapsticks said:

Budgets can be and are adjusted when cash flow increases (or decreases), though. 

Had there not been so much cash incoming, the cloth would have been cut to suit. Simple as that. 

That doesnt stack up for a business case. The club like any business set a budget based on known income. To then receive substantial unbudgeted income, and spend all that on top of what you intended to spend is very unwise. What do you then do if subsequent income drops, but you are committed to employment contracts and lease deals etc?

as shareholders the smisa board should (on our behalf) have the club board up on their hind legs at the agm explaining why they have spent so much, and committed to spend even more this January, and how they intend to square that circle? We own 30% of this business, we are equally responsible to ensure it is run correctly.

will the smisa convener do this stbthe agm, or just wave the accounts through same as last time? 

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5 minutes ago, aldo_j said:

Yeah, I’m kinda on a similar boat. They are definitely not as healthy as I would have expected so a tad concerning.

However, we gained promotion and rightly or wrongly backed Stubbs. Hopefully, and despite all this, we can still turn a profit again this year....the real scrutiny will hit when we go down though.

These accounts are Pre Stubbs reign. So even more of a concern, no?

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