Charlton Athletic Financial Results - a short analysis

First a big thank you to all of those who read my previous blog piece on the profitability of Championship football Clubs.  Having had a comfortable 200 or so hits to my previous blog pieces this received over 1200 hits.

One of the omissions from that particular blog was the financial report of my own team Charlton Athletic which had not then been published.  The accounts are now available and I thought I would provide a short overview for interested fans.

These are the consolidated figures for the holding company Baton 2010 Ltd to the end of June 2013 and well before the takeover by Staprix NV, Duchatelet’s investment vehicle.

The headline figure is a loss of £5.9m compared to £6.8m last year.  It looks like the club remains on course to continue to achieve Financial Fair Play targets once we take into account that certain expenses are disallowed.

Turnover/Income increased  by about £3m from  TV and broadcasting as a result of the move to the Championship and £0.5m from increased match day income.  There was a dip in commercial income owing to the way the company makes money from the club shop etc following the “Nike” deal which now sees the club receive a percentage of sales as a royalty, rather than account for sales in income and stock purchases in the cost line.  The upshot of this is that on an equivalent commercial income has actually risen slightly.

However, most of the increase in income was swallowed in salary costs which went up by approximately £3m.  Given that the number of commercial and administration staff remained static I assume that this increase was down to playing, training and football management which went up by 17.

Staff costs remain static at just over 100% of turnover which is clearly unsustainable and something which we have seen the new board address almost immediately much to the chagrin of many fans.  The sale of our reputedly highest paid player will go a small way to reducing this in the current financial year but I fear that in order to meet a more acceptable level further unpalatable cuts will be the order of the day, until both clubs players across the divisions realise that things will have to change.

The loss appears to have been funded by an increase in long term loans from the parent company CAFC Holdings Ltd who also appear to have funded the scheduled repayment of bank loans during the year.  The accounts confirmed that this debt has now been transferred to Staprix NV.

However, it appears that the interest free loans from previous directors remain in place, to be repaid if and when Charlton return to the Premier League.  There was speculation that that these might be repaid on the sale of the club but there is no mention of this in the post balance sheet events.

In other post balance sheet news, the club generated £570k from player sales and contingency fees.  I presume that most of this took place in the summer transfer window and does not include the sale of Yann Kermorgant or Dale Stephens as they were both sold after the accounts were signed off.

As expected the accounts are prepared and signed off by the auditors on a going concern basis with the parental support of Staprix NV.  From my little knowledge of audited accounts I believe that this means that as of 17 January 2014 (the day the accounts were signed off), Staprix has agreed to support the company for at least a further year.

In other news it is clear that the board are committed to the Youth Academy and intend on achieving Category 1 status in the Elite Player Performance Plan as soon as possible.  The fact that the New Eltham site has now got the go ahead confirms the new owners intention to honour this commitment which is good news for Charlton fans.

So all in all, no big surprises.  Despite what certain fans might think of them Jiminez and Slater kept the club alive and left it in a slightly better shape than when they bought it but more crucially they did find someone in time to be able to maintain and carry the club forward.

So on we go to the current financial year.  Again, Championship survival is key but other than that I don't expect any great surprises in the next lot of accounts.  Turnover will roughly be in line with the figures above but with the lack of player purchases this season and the sale of a few prominent players losses may come down a little further, again hopefully in line with Financial Fair Play.

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