[Archived] Rovers' accounts for 30 June 2016

[Mercer]

The accounts were filed at Companies House yesterday (17 Feb) and, for those of a masochistic nature, are readily available to view.

I think they make awful reading with  the profit on player sales keeping the club afloat and to a small degree disguising the mess we are in.

I think the filing of these accounts,  just prior to the Man U match, is more than coincidental with the club perhaps hoping the game will provide a welcome distraction and help to divet focus away from the parlous financial state of the club.

Taking a short break away so that's all from me on this subject for now.

 

 

[RoverCanada]

Only took a brief look, but similar story as the accounts up to March 2016 - these are up to June 2016.

The 'going concern' section strikes me as bit more emphatic that the directors are assured of Venky's continued financial support whether the bank overdraft facility is extended past 16 March 2017 (keep an eye out for that date anyway!), and this is repeated in the Creditors section. So, that's a good and bad sign depending on your point of view...

The creditors section mentions the 14% loan was repaid last summer, while another £1.8M loan, secured against 2016/17 season tickets, is charging 8% and is due for repayment in March 2017. These high-interest 'other loans' are falling (£2.2M vs £4.5M), while the bank overdraft grew £1.3M and it's at LIBOR+2.65%. So our interest payments may improve going forward, but it's still a mess debt-wise.

Someone with some time on their hands (or just me later haha) can probably work out what we made off the Cairney, Gestede, Rhodes, Olsson, etc. sales comparing the two sets of accounts' player trading profits. The year ended 31 March 2016 is saying £17.3M profit in player trading, while the year ended 30 June 2016 is saying +£14M.

Match turnover down from £4M to £3.5M, while media income actually slightly increased to £13.5M. I'm not sure exactly how our parachute payments taper off? We get access to the 'Championship consolidation' fund once the parachute payments finally run out, but if I remember right the difference is still a ~£5M drop in revenue. Commercial income has actually been holding steady at £5M, which is actually impressive for the Championship. Turnover's at £22M vs £22.4M in 2015, £30.4M in 2014, £26.9M in 2013, and £54.2M in our last PL year...

These accounts also provide the basic financials back to 2011/12, so we see how wages dropped from £50M to £37M once we hit the Championship, and it only then dropped to £34.5M with the combination of payoffs and our initial investments (Rhodes, Best, Murphy, etc.), but it's then dropped steadily to £27M two years ago and £25.3M last year. I'd guess we're now under £20M for this season? Other operating expenses are inching down after a weird spike in 2013/14 (what was gong on that year...)

Looks like sacking Shaw and Myers was a £186k payoff (maybe that accounts for the lawsuit too...?)

Anyway, just some tidbits I noted as I went through it. The views of proper accountants are always welcome!

[chaddyrovers]

Here are the Club accounts

https://beta.companieshouse.gov.uk/company/00053482/filing-history

[J*B]

Vinjay says Myers said on twitter he resigned and take didn't a pay off or sign an NDA - so that figure will just be Shaw. 

[yoda]

Just now, J*B said:

Vinjay says Myers said on twitter he resigned and take didn't a pay off or sign an NDA - so that figure will just be Shaw. 

lets all get friends with Myers

[awhom111]

Here are my thoughts on the accounts from the perspective of an accountant who works in industry (usually I would be the one helping prepare the accounts as opposed to auditing or analyzing them):

When I refer to a page on the accounts, it the page in the document as opposed to the page if you have downloaded the file.   Again, the accounts cover the period from July 1^st, 2015 to June 30^th, 2016.

Revenue (p18):

Matchday and commercial revenue are basically in range of where they have been during our time in the Championship.  This was our last season of parachute payments so we can expect a much lower figure for this season.  I threw together a quick chart comparing revenues across seasons:

Staff costs (p18):

As expected, our wage bill continues to drop and the overall number of staff employed has fallen a bit down to 247 on average over the course of the year.  I have made a chart showing the expenses in the two main categories:

Cash management (p12):

The net cash outflow from normal operating activities continues to be very large, although less than last season at 15.55 million.  This was almost completely wiped out by 22.2 million in transfer receipts, although there were also transfer payments of 3.9 million and payoffs of 3.27 million.

Transfers in (p20):

Transfers in totaled 1.2 million for the season.  There is basically very little book value of players left in the club, which means that there will be very little amortization expense given our continued lack of transfers.  While this means nothing on a cash basis, it will make our expenses lower than they have been in recent seasons if anyone is trying to project profit or loss for future seasons.  Disclosures about events after the close of the accounting period state that our summer transfer activity was a net of 9 million of sales.  All these seasons of not buying players for much seem to have finally led to a decrease in the amount we owe on past transfers, which stood at 2.5 million at the end of the season, although the change of categorization from “Transfer fees payable” to “Football related creditors” definitely does not raise any suspicions.  The possible add-ons from past transfers have also decreased, now down to 2.2 million.

Transfers out (p20):

Trying to back out exactly how much sales we had is a little tricky, but I would estimate it at around 20 million for the period.  It really seems like we pursued getting cash as quickly as possible, because at the end of the season we were only owed another 1.5 million in transfer fees.

I have put together a chart showing purchases along with cash in and cash out on transfers:

Loans (p23):

Bank loans have decreased in part because we no longer have parachute payments to borrow against.  Given that the last loan was secured against season ticket sales, so people not buying season tickets in the summer actually could have had some effect on future financing at the club.   From a cash perspective, the constant need for these bank loans on top of the overdraft facility does make one wonder what is happening when it comes to cash management over the course of the season.

2016-17:

It is a good idea to at least try to figure out what the picture will look like at the end of the season on a cash level.  I will try to estimate as conservatively as possible.  On the revenue front, media income will drop, likely to around 6 million.  Assuming commercial stays around the same and matchday increases a bit thanks to the cup draw, which should get us to around 15 million, a decrease of 7 million.  The wage bill still appears to be dropping, so let’s assume 20 million and another 10 million for operating expenses, which would leave us at the same 15 million hole for cash flow from operating activities.  Player sales will probably bring in around 10 million, while cash outflow from transfers will probably total around 4 million.  It is unclear how much all of the payouts that we have arranged will cost, but that should probably add a few million so were are probably looking at a net cash outflow of around 10 million from football club related activities.  Following in the pattern from past seasons, we should see another share issue hit Companies House at some point, but I wonder if there are any other financing activities that we should be on the lookout for now.

If there is more people would like to know about, I will try to answer as best as I can.  I do not claim to be an expert in all areas and I know that there are other posters who have greater knowledge of corporate finance and some of the legal implications of all of this.  I hope that I was able to provide some information about some of the actual operating activity of the club though.

[cesus]

Thank you for the break down awhom, my question to anybody is if Venkys leave tomorrow with now no sellable assets could anybody level the books or are we too far gone?

How can costs be lowered more to a level that a fan or consortium could run the club for the foreseeable future and not just a couple of seasons until they bankrupt themselves?

Whilst it's all hypothetical I know I just can't see how anybody can afford to take the reigns of the club as it stands now and get it back on track. This isn't a we are screwed without Venkys post this is a post asking is it actually possible to level the books or is the only way administraton?

[Stuart]

Thanks for the summary. Excellent piece of work.

If that chart relating to P.20 doesn't illustrate asset stripping them I don't know what does!

[Mercer]

1 hour ago, cesus said:

Thank you for the break down awhom, my question to anybody is if Venkys leave tomorrow with now no sellable assets could anybody level the books or are we too far gone?

How can costs be lowered more to a level that a fan or consortium could run the club for the foreseeable future and not just a couple of seasons until they bankrupt themselves?

Whilst it's all hypothetical I know I just can't see how anybody can afford to take the reigns of the club as it stands now and get it back on track. This isn't a we are screwed without Venkys post this is a post asking is it actually possible to level the books or is the only way administraton?

Big thanks to Awhom111 - these things take some time to do!

It's been said on many occasions, the club is unsellable.  

Messrs Battersby and Currie offered the V's what seemed a fair and sensible lifeline which, crazily, they didn't even seem to want to consider.

The further we sink into the abyss, the more difficult and expensive it will become to 'resurrect' the club.

I think we are already on life support.

[OJRovers]

The red flag for me is that these accounts have been signed and filed EARLY ahead of the March 31st deadline, which is unheard of under the reign of Venkys.

To me this has been done to avoid waiting til after the overdraft decision in March. If they wait for that and it is a "No" from Bank of India, then it is likely that the company would cease to be a going concern. This must be a possibility.

 

[awhom111]

16 hours ago, cesus said:

Thank you for the break down awhom, my question to anybody is if Venkys leave tomorrow with now no sellable assets could anybody level the books or are we too far gone?

How can costs be lowered more to a level that a fan or consortium could run the club for the foreseeable future and not just a couple of seasons until they bankrupt themselves?

Whilst it's all hypothetical I know I just can't see how anybody can afford to take the reigns of the club as it stands now and get it back on track. This isn't a we are screwed without Venkys post this is a post asking is it actually possible to level the books or is the only way administraton?

If Venky's left and wrote off the loans from themselves and left us with the overdraft and no assets... As a Championship club, the possible reward of getting us promoted would probably equal the amount that it would take to just get us in a position to be promoted.  As a League 1 club trying to cut costs again, we would probably need at least 20 million in the first season to deal with the remaining overdraft and to make up the remaining gap in operating cash flow without regard to putting together a competitive side.

13 hours ago, OJRovers said:

The red flag for me is that these accounts have been signed and filed EARLY ahead of the March 31st deadline, which is unheard of under the reign of Venkys.

To me this has been done to avoid waiting til after the overdraft decision in March. If they wait for that and it is a "No" from Bank of India, then it is likely that the company would cease to be a going concern. This must be a possibility.

 

Actually, last year was the exception, which might be due to the change in auditors.  Most of their filings have been well in advance of the deadline.  It's not like the audit work is not done until right before the deadline so I am sure these could have been filed earlier, but I would not be surprised if there was a strategic decision to file these after the transfer window had closed.

[tomphil]

9 hours ago, awhom111 said:

If Venky's left and wrote off the loans from themselves and left us with the overdraft and no assets... As a Championship club, the possible reward of getting us promoted would probably equal the amount that it would take to just get us in a position to be promoted.  As a League 1 club trying to cut costs again, we would probably need at least 20 million in the first season to deal with the remaining overdraft and to make up the remaining gap in operating cash flow without regard to putting together a competitive side.

Actually, last year was the exception, which might be due to the change in auditors.  Most of their filings have been well in advance of the deadline.  It's not like the audit work is not done until right before the deadline so I am sure these could have been filed earlier, but I would not be surprised if there was a strategic decision to file these after the transfer window had closed.

Isn't that similar to how Bolton were left after Davies ?   Although i know he did have the luxury of flogging about 30 mill of assets first of course.

[chor808]

Thanks for looking at these so us dummies can understand them. So from a quick look at the above and accounts it looks like 15+ million is needed every year in player sales to keep us running otherwise we are looking at venky/bank loans. Is it fair to say the last set of player sales covered our running costs, I know we like to think the money is in Barrys pocket but it does not look the case? Correct me if I am wrong.

I had to laugh at the bit about Owen and his team being bought in to address the performances and the results of the team, which were poor in 2015/16.

[tomphil]

Bits gleaned from the article in the Mail yesterday.

Funding virtually stopped 18 months ago.

Budget was told to be cut by 80% overnight.

Silent Pasha told Shaw to sack Bowyer with no explanation. 

Surely either the plug is being properly pulled or as i suspected way back the Indian bank have just taken grasp of it from Venkys before it blew up. Add in Mr & Mrs D withdrawing, on paper at least and Venkys going totally silent and invisible according to rumours out of the club.

Please let the end of them be in sight !

[JHRover]

Reading the comments section at the bottom of that Daily Mail article. One poster claims that in the 1990s Balaji and Venkatesh kept their deceased mother in cold storage with a view to trying to bring her back to life. Apparently Mrs D and the cops had to intervene to get the body back for burial.

No idea if its true or not, I've never heard that one before but if it is true it sums up what we're up against here.

[tomphil]

It's actually easier to believe than disbelieve, especially after the cat story. I hate Anderson with a passion but the guy pulled a blinder from his, the partners and the trusts point of view getting this lot behind their scheme.

It's hit the skids now of course but they'll be quids in it's just a pity the bank grasping this situation wasn't an English one we'd have been rid of Venkys a while ago.

[chor808]

LT leads with a cost cutting story this morning, must read if you are the new manager. Problem is cheston where are the 15 million in player sales coming from this year.

106 million debt my arse.

[Dunnfc]

Why should the fans pay for over inflated agents fees to the cronies and suspected money laundering which has allegedly taken millions from the club?

[Iceman]

Cheston is a joke... Venkys are a joke, the whole damn club is a joke

[Gone to seed]

The loons from Pune have brought this on themselves - by allowing 'advisors' to squirrel away monies gained from player sales, by condoning the systematic dismantling of the management infrastructure so that no-one with any understanding of football economics was left to ask relevant questions, and by continuing to ignore the clear signals coming from a well informed and passionate fan base. The result is that responsibility for setling any 'debt' rests firmly at the Rao's door. It is worying that there are now no assets capable of contributing to running costs if sold, so the reality of the situation will now become very stark for the misled ones of miles away - they either put up, or pish off. Simple as that - 'Madame' (the conceited cow) will no doubt be laughing heartily at her siblings, having made that cringeworthy faux-pas 6 years ago about 'putting in £5M a year'. as no doubt fat Barry and dweeb won't have £15m of loose change  / pocket money lying around to poke into the financial money pit they (loosely) own.

Time for bye byes, deluded ones of the Indian sub-continet. Get out of our club. Now. Oh, and take those idiots behind the scenes with you too - andersonkentarohubersemsportsmanagementmyarse@#!?hires. Scum, the lot of you.

[OJRovers]

What Magic Mike is conveniently forgetting is that Rovers still have high wages for this division.

This link shows that in 2015 we had the 5th highest wage bill: https://www.insidermedia.com/insider/national/146518-insider-football-finance-championship-wage-bill-tops-500m

£26m for 2016 would easily be top 10 in the Championship. Even if this is down to say £20m for 16/17, this is mid-table for this season.

So all of Cheston's, Bowyer's, Coyle's sob stories about lack of budget is nothing more than lies to cover up the massive drain of money going somewhere out of Ewood.

Look at Sheffield Wednesday and Huddersfield on that list £11m wages vs £35m at Rovers. Granted their wages will be a bit higher this season, but surely well below Rovers still.

Mismanagement of that wage bill is the number 1 mistake at Rovers, yet who has been held responsible for it?

 

 

[Dunnfc]

CHESTON OUT

[cesus]

The wages here still stagger me, historically since Jack we have been big payers but as squad quality has dropped the wages really don't seem to?! 

 

Could those wage figures still include pay offs? For instance we fired Leon Best off but paid him the remainder of his circa £30k p/w over say 2 years. I just really struggle to see how they are so high in relation to the rest of the league even now.

[Parsonblue]

From what Cheston says it sounds like we are still paying players who have long since gone.  Looking at these figures I honestly can't see the owners leaving and forgetting about £106 million debt.  More likely they will look at trying to sell what they can at Brockhall - with the new housing development that has now worked it's way down the hill to the Academy, I suspect they know that there is money to be made if they can sell either the Academy or the Senior Training Ground, even if they sell one or the other to another club as Bolton did with one of their training grounds.

[Tom]

You have to wonder did they really need to run with that article this morning, wouldn't it have been wise to wait just a while?