Cardiff City’s finances “stabilised” by Malaysian investment despite £12m loss, says directors’ report

March 3, 2012 3 Comments »

Cardiff City FC has reported a £12m loss for last year, but bosses at the Bluebirds say investment by the Malaysians has “stabilised” the club’s finances.

The losses were covered by Malaysian investors Vincent Tan, Dato Chan Tien Ghee (TG) and Tan U-Jiun, who between them ploughed £14.8m into the club.

Accounts published yesterday say that, while their funding is not guaranteed, “the new investors have indicated that, providing the business develops as planned, they will continue to support the club in the foreseeable future”.

In his directors’ report, Cardiff City chief executive Alan Whiteley goes on to say the Malaysians will “provide additional finance in order that (the club) can settle its liabilities”.

The document shows the club has almost £70m in debt on its books – an increase of £6m on the previous year – £40m of which is “due within one year”.

As reported last summer, the Malaysians have since converted more than £5m of the debt owed to them into shares, with an option to switch more in the future.

Mr Whiteley said the new board was working towards “the delivery of a coherent and sustainable business strategy” and continues to be “ambitious on and off the pitch”.

The £12m loss is detailed in the accounts of the Bluebirds’ holding company, Cardiff City Football Club (Holdings) Limited, published by Companies House and on the club’s website. The accounts cover the 2010-11 season.

The £12m loss followed a £900,000 loss in the 2009-10 season, the accounts show. The biggest change being profit on the sale of fixed assets, which dropped from £11.4m in 2009-10 to £460,000 in 20010-11. This related principally to the sale of Ninian Park in September 2009, together with the sale of the neighbouring hotel and House of Sport sites.

The accounts also showed the club’s turnover dropped from £16.9m in 2009-10 to £15.9m in 2010-11, with gate receipts and match-day income dropping from £7.97m to £6.63m.

But Mr Whitely said the 2009-10 results included extra income from cup competition runs and reaching the Championship play-off final.

Setting aside these, Mr Whiteley said the club increased turnover by about £1.6m, with like-for-like sales growth of 10.5% and the biggest season average crowd for 50 years.

But the £15.94m turnover was all but wiped out by the club’s £13.97m staff and players’ wage bill – down £1m on the year before despite the addition of Craig Bellamy on loan from Manchester City – and social security costs of £1.76m.

Mr Whiteley stated: “The club continues to face the challenging financial environment presented by the Championship competition, as illustrated by the comparable operating loss year-on-year, despite significant reductions in back-office costs – these gains being absorbed by increased direct football costs, whilst the club did not have the benefit of the one-off profits from asset disposals available in the year to May 2010 to bolster its final result for the financial year.”

Mr Whiteley said the club received “substantial” new investment, principally from the Malaysians, together with the restructuring of a number of new major creditors.

“Following this, the club was able to commence settlement of a number of its long-standing debts, including its historic tax liability,” he stated.

“The new investment has stabilised the club’s position, allowing the club to work towards the delivery of a coherent and sustainable business strategy, as formulated by the new board and its management team.”

The accounts don’t cover the current season under manager Malky Mackay, but Mr Whiteley said the Malaysian investors had continued to invest in the playing squad as they pushed for promotion.

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