Derby County confident that they will reduce losses
WITH matches coming thick and fast and a furore over season ticket prices for next season, Derby County's latest accounts almost dipped under the radar.
Figures for the financial year ending June 2012 were announced last month in the week of the Championship clash against Nottingham Forest.
Some suggested the decision to release the accounts amid the build-up to the East Midlands "derby" was a deliberate ploy by the club, something the club denies.
Undeniable is the fact Derby offered only a bare minimum of figures in the brief press release covering the accounts.
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They reported a loss of almost £8m to follow the £7.7m deficit the previous year.
Turnover was £17.3m, down from £18.1m the year before and operating costs were reduced from £17.6m to £17.3m.
The debt at the end of the last financial year stood at £33.2m, as was reported on the back page of the Derby Telegraph on January 17.
Now armed with a full copy of the accounts, it is possible to add more detail.
Derby's US-based owner General Sports and Entertainment invested a further £9.8m in the club in the 12 months to June 30, 2012 and have injected another £3.9m since the year end, we are told.
Match receipts were up slightly from £5.5m to £5.6m, sponsorship and advertising income was down slightly to £2m from around £2.1m, as was merchandising, from around £1.5m to almost £1.2m. Commercial activities dropped from £3m to £2.7m.
Derby say the annual accounts are "very much" in line with expectations and the club expect to return another loss in the current financial year.
But they are confident the loss will not be as heavy.
"The loss will be less than it has been in the previous two years," said Mal Brannigan, the club's vice president, finance.
"You will find that even though the loss for this year is higher than the previous one, it is more in line with the fact that turnover came down greater than the actual costs of running the organisation.
"The costs of running the organisation have come down year on year as well."
Asked how the club had made a loss of £8m and what was involved in the loss, Brannigan said: "The club has a cost base that still exceeds the income currently being generated.
"Some of those costs will be historic and legacy costs, which would have been borne by decisions made in previous financial years and that would still have an impact on the business on the financial year being reported."
On the size of debt, Brannigan commented: "There are two main stakeholders for the debt, one is the Co-op Bank (a £15m mortgage on the stadium and the property) and the other one is the ownership group.
"The balance of how the debt is split makes the position more comfortable for the club because the debt is now owned more by the ownership group and is the owners' responsibility rather than a third party.
"Some of the third-party debt recorded 12 months ago (a season ticket facility of around £4m) has now been taken on board by the ownership group as a cost, reducing the third-party debt.
"The ownership group continues to be the biggest source of finance for the club and they will continue to commit to funding the organisation going forward."
Loans from the ownership group are the largest part of the debt but has there been any interest payments made on those loans?
Brannigan said: "There has been no interest repayments gone to any of the owners as a collective or as individuals since they have bought the club in 2008."
Derby paid £1.4m in interest and similar charges on bank loans, overdrafts and other interests in the last financial year.
Derby's wage bill for all members of the club's staff was reduced from £11.6m to £11.4m.
Players' wages made up a large chunk of that figure, although the club remain coy on the size of the salary costs for players alone.
That has been reduced significantly in recent years since the club dropped out of the Premier League in 2008.
There is a perception that the size of wage bill for players puts Derby in the bottom half of Championship payers and yet they are in ninth place after 33 games.
Looking at the table, and without knowing exactly what other clubs are paying, one would suggest around 15 clubs might have more hefty wage bills.
Chief executive Sam Rush said: "I think we operate a very competitive football operation based on our income streams, which no longer have parachute money.
"The whole football operation wage bill is constantly reviewed and the current wage bill allows us to be competitive in the league and we are going through a process over the next few weeks where we will review it for the forthcoming season.
"But it is part of our plan that we will always have a wage bill that will ensure that we can be as competitive as possible.
"If we are going to continue this upwards trajectory of our performance, then we understand we have to have a wage bill that will ensure we can be as competitive as possible at the top of the League."
The accounts show that the package of the club's highest-paid director in the financial year ending June 2012 amounted to £273,656, although the identity of the director is not revealed.
Derby say General Sports has now pumped in £36.6m to meet the working capital needs of the club since the takeover five years ago.