Finance Update
Attention at this time of year inevitably focuses on footballing results. We’ve never hidden our desire for promotion and the possible financial rewards of the play offs are a long way from our thoughts. The sharing of gate receipts between home and away teams, with a percentage also paid to the league, as per FA guidance, means the financial rewards are not as significant as most supporters might imagine. April’s financial results, however, should be positive regardless.
We are now through an exceptionally difficult period for the club. Playing two home games behind closed doors, and our last league fixture at Broadhurst Park, have been emotionally and financially draining but not terminal. Despite the damage to our P&L, we continue to have substantial cash reserves of £462,352 at the time of writing. We have already paid £279,415.32 plus VAT of the £652, 456.38 plus VAT required to build the new pitch. This is 43% of the total cost. Our year-to-date profits decreased to £41,339 as of end March but should improve in April, and we have made some significant progress which is discussed below.
The remaining £300, 000 from the Community Ownership Fund, which is administered by the Department for Levelling Up, Housing and Communities (DLUHC) has been drawn down and is reflected in our cash reserves. The original terms required the full £1m to be drawn down in the first 12 months from the start of the grant. As it was not drawn down in this period we were required to go through a new approval process which included a revised business plan for sign-off and several layers of approval, which took a little time, but was ultimately successful.
We are working with Bury Council to finalise their funding terms, having passed another financial diligence review undertaken by Greater Manchester Combined Authorities on their behalf. The funding needed to be re-approved as the previous approval was conditional on receiving the outstanding benefactor contribution, and further financial diligence was required to evidence that we remained financially viable without that additional capital. Maintaining healthy cash reserves to maintain financial resilience to short term financial downturns is important for our long-term viability. We understand that the £450, 000 from Bury Council will need to be drawn down in arrears after payments have been made, which is another reason we need to have funds available. Our cash position is likely to fluctuate as we pay and reclaim over the summer.
Even with a 3G pitch in place, it is evident that the stadium is not viable without a well-supported football club playing there. The stadium costs are significantly higher than forecast last summer, albeit this has been offset by attendances also well ahead of budget. To access funding it is vital to evidence the long-term security of the club playing at the stadium. We have moved all stadium costs to the football club and will put the majority of future income through the club also.
We are also considering an application to the Premier League Ground Stadium Fund for further improvements to Gigg Lane.
The management accounts have been adjusted slightly following discussions with our auditors. £20, 000 of income for The Bury Football Club Company Limited was pushed back into the previous year. which reduced its historical losses. We also received some old invoices for Bury FC Supporters’ Society which we were previously unaware of and have settled. These costs have been added into this year's accounts. Whilst the recent vote on refunds for the games behind closed doors was not binding, as there are a number of variables at play, it gave us some comfort that only a very small number of supporters wanted a refund and we have released the full season ticket accrual for these games into the management accounts. February‘s revenue was reduced due to postponements. We will make adjustments in future for refunds where they are requested but these have only been in single figures to date. We are in discussions with the league about what we can do with ticketing for our play off game at Gigg Lane, as there is a revenue share with both the away team and the league to consider.
We have also made an adjustment to the recording of programme sales income. This was previously included in ticket sales, but the programme costs were included under merchandise sales. We have now put all programme sales under merchandise sales, and this has corrected the issue we identified previously which showed merchandise income as lower than expected. We are now looking into the food and bev lines which we think have a similar problem.
Ticket revenue for March is at a reasonable level on the face of it, because we still played two home games in front of supporters. However we played five games in total and four of them at home so it would have been our biggest month of the season for ticket revenue without the crowd ban, and our costs were higher because of the number of games.
The police took an interest in the games played behind closed doors, as a result of some supporters threatening on social media to try and attend games or watch from the car park. As a result we were required by the police to pay for stewards to attend at almost the same cost as a normal game.
The other main adjustment is to include, for the first time, an accurate depreciation charge for the stadium. Whilst this isn't a cost to us in real cash terms, it is a significant number and took some time to agree. We have agreed with our auditors that the land itself should not be depreciated and were able to demonstrate a value of £1m for it. The stadium (i.e. the buildings, stands etc) is depreciated at a rate of 4%.
We invested heavily recently to bring the Main Stand up to standard, so that we can obtain permission to open it up to a greater capacity, potentially its maximum. The improvements will not be highly visible to supporters, as they mainly concern meeting enhanced safety standards, but the stand is in a significantly improved state now. We believe that we have completed the work to do this and are waiting for sign off from the relevant public authorities. Ideally, we would have the stand open for our play off game on 27th April, if it can be signed off in time, otherwise it will be ready for the start of the new season. We also hope to make it possible for season ticket holders to reserve specific seats for the new season.