Article: The 2014 Albion Financial Review

[El Presidente]

You can view the page at https://nortr3nixy.nimpr.uk/content.php?434-The-2014-Albion-Financial-Review

 

[seagullsovergrimsby]

Al Jazeera run their sports channels under the beIN Sports brand

 

[Dick Knights Mumm]

Good man El Pres.

 

[Rugrat]

Very nice summary, thanks

 

[Peter Grummit]

Thanks EP, some very clear analysis.

A couple of supplementary observations:

The savings in admin costs presumably include the outsourcing of catering costs to Sodexo, and as such are a one-off saving, in part balanced by the reduction in gross catering income. Any idea how much of the saving is due to this?

Depreciation will be higher again next year now the Training Ground becomes liable at 20% pa - although this won't contribute to FFP losses and is largely a paper exercise since Tony has already funded it - it will increase the headline loss. Again, do we know what this will be?

Cheers, PG.

 

[El Presidente]

Thanks EP, some very clear analysis.

A couple of supplementary observations:

The savings in admin costs presumably include the outsourcing of catering costs to Sodexo, and as such are a one-off saving, in part balanced by the reduction in gross catering income. Any idea how much of the saving is due to this?

Depreciation will be higher again next year now the Training Ground becomes liable at 20% pa - although this won't contribute to FFP losses and is largely a paper exercise since Tony has already funded it - it will increase the headline loss. Again, do we know what this will be?

Cheers, PG.

You're right in relation to costs not quite lining up with previous years, but the catering is a nightmare to compare, because there is the sacking of Azure, the inhouse running of the operation, and Sodexo coming in too. Costs in 2013 also included redundancy for staff too, but I don't have access to the actual numbers. I don't think the redundancy figures will be too high, as most of the staff had not been in employment long enough to be entitled to a large settlement, as Withdean was run on a shoestring.

Lancing has cost about £34 million to date, assuming it is being written off over 50 years (same as the stadium) the depreciation charge will be about £700k.

The one other significant piece of expenditure will be in relation to the hotel, should it be approved.

 

[Peter Grummit]

Lancing has cost about £34 million to date, assuming it is being written off over 50 years (same as the stadium) the depreciation charge will be about £700k.

The accounts notes (policy 1.6) say that Land and Buildings are depreciated at 2% (50 years) but Training Ground improvements at 20% (5 years). This is net of residual value, so I don't think we can take the full £34m x 20% (accounts say £32m), but it could nevertheless be a hefty charge and addition to headline losses for the next 5 years.

PG

 

[El Presidente]

The accounts notes (policy 1.6) say that Land and Buildings are depreciated at 2% (50 years) but Training Ground improvements at 20% (5 years). This is net of residual value, so I don't think we can take the full £34m x 20% (accounts say £32m), but it could nevertheless be a hefty charge and addition to headline losses for the next 5 years.

PG

Fair comment. I'm not sure which heading Lancing will fall under though. I think the improvements heading is for something else.

 

[Uter]

Good analysis. It’s worth noting that Category 1 academies receive an annual grant towards their running costs (I think this is currently £750,000) so the academy running costs might conceivably be slightly lower. That said, judging it on appearances alone, it is highly possible that the reverse is true, so £2.5 million seems reasonable with little to go on.

I expect there is probably some scope for further more modest reductions in admin costs as they still seem a little higher than most similarly sized clubs, but most of the easier cost savings have presumably already been made so there might be some tough choices ahead.

Long term I suspect the strategy to close the gap further is two-fold:

Firstly, should it go ahead, the new hotel will boost conferencing income (I suspect we are talking hundreds of thousands, rather than millions however). I have got the impression that the hotel itself will remain separate from the club so any income and expenditure directly related to this project can probably be discounted.

Secondly, the academy should, if all goes well, a) reduce the need to pay transfer fees, b) boost the general playing standard of the squad without an increase in wages, and c) increase transfer income through sales of
some academy graduates. Of course unless the benefits from the academy amount to at least than 2 or 3 million a season it will be a net drain on resources.

Having said all that, as you mention, there is little scope to increase income in this division so we can expect that to flat-line without promotion (or relegation), or even dip a bit. Even with the academy and hotel and further admin savings it’s hard to see them squaring the circle whilst we remain in the Championship so I agree with your conclusion, although I do think that the gap could be narrowed by a few more million.