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Financial improvement for CCFC after cup win; but losses mean more funding needed from owners.

Byline: KATY HALLAM News Reporter

COVENTRY City's finances improved in the last financial year on the back of last season's Wembley glory in the Checkatrade Trophy - but bosses warn the club will still need more funding from its owners.

Accounts for Otium Entertainment, which is the football club business, show the Sky Blues managed to come out of the financial year ending in May 2017 with a gross profit of PS4.62m - up PS304,301 on 2016.

But staff costs of PS4.172m and administrative costs of PS1.564m turned that into an operating loss of PS1.1m - down from PS1.75m the year before.

Otium bosses admit "significant investment" is still required both financially and otherwise if the team is to "remain competitive".

Money from player sales has crashed to just PS252,087 for the last 12 months, compared to PS2,478,588 in 2016.

And changes to the ticketing system have also seen running costs soar at the club by more than PS380,000 year-on-year.

Otium's parent company, Sky Blue Sports and Leisure, still has growing net current liabilities - a company's debts after its current assets have been subtracted from its current liabilities.

The group's net current liabilities now stand at PS46.69m, up from PS44.1m in 2016.

The accounts also show the parent group made an operational loss of PS1.11m over the last 12 months, although that is an improvement from the PS1.87m figure recorded in 2016.

The turnover - the net sales generated by a business - increased at the club in the 2016/17 period by around PS688,000.

In the year up to May 2017, the club recorded a turnover of PS6.13m - up from PS5.44m in 2016.

The costs of running the club increased by more than PS384,000.

Operating costs stood at PS1,506,587 for the last 12 months, up from PS1,122,123 in 2016.

A spokesman for the club said this was "partly due to additional costs for Cup matches" as well as the costs associated with running the new ticketing software system, Ticketmaster.

The club recorded an operational loss of PS1.1m in the last 12 months - better than the PS1.75m figure recorded in 2016.

Money from player sales contributed just PS252,087 in 2016/17 compared to PS2.47m in 2015/2016 - a massive drop of more than PS2.2m.

Otium accounts reveal the club recorded an operational loss of PS1,108,529 (2016: PS1,753,030).

The net capital debt owed to ARVO - a Cayman Island-based Sisu-related company used to invest in CCFC - sits at PS14,283,853 including accrued interest.

The company does not have any other material creditors, other than its shareholder. But the company has not secured any future revenue streams.

A strategic report by Otium listed the "key concern" for the club as the limited access to non-ticketing match day revenues.

It went on to say: "A number of challenges continue to face the football club.

"Although the club has agreed a deal to continue to play at the Ricoh Arena until the end of the 2018/19 season, efforts to progress relocating to an alternative long term home ground for the club continue.

"With regard to the academy, we remain in talks with Coventry Sports Foundation in respect of a longer term contract to remain at our Academy current site.

"The Board acknowledges that there are a number of risks and uncertainties which could have a material impact on the company's performance.

"The company's future income is affected by the club's performance because significant revenues are dependent upon team performance in the EFL and domestic cup competitions.

"ln order for the team to remain competitive, significant investment is required on an ongoing basis in both financial and nonfinancial terms.

"This investment needs to be balanced with the most important Board responsibility, which is to maintain a financially secure professional football club."

Coventry City Chairman Tim Fisher added: "The latest accounts may show further improvement in the Club's financial results and therefore financial stability, however, despite the Checkatrade Trophy success the club under performed on the pitch during the 2016/17 season and was relegated to League Two.

"Changes have been made to improve the playing side with the introduction of a player recruitment framework and a renewed focus on players' physicality, strength & conditioning.

"Those changes mean the club can focus on our aim of achieving promotion back to League One this season."

WHAT THE AUDITORS SAID THE club is still in a precarious situation because it is reliant on group shareholders stumping up more cash, according to the auditors.

They say the club has indicated more money is likely to be required over the next six months. While written confirmation has been received that group shareholders intend to continue supporting the club - by providing or sourcing the funding if required and not demanding repayment for the foreseeable future - this puts the club in a tricky position.

A report from the independent auditors added: "The parent company has confirmed to Otium Entertainment Group Limited its undertaking to provide continuing support to enable the company to continue as a going concern.

"Notwithstanding this intention, there is no contractual certainty that such funding will be made available nor that loans will not be called for immediate repayment. These conditions indicate the existence of a material uncertainty which may cast significant doubt over the company's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company were unable to continue as a going concern."


Coventry City Chairman Tim Fisher
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Publication:Coventry Evening Telegraph (England)
Date:Mar 3, 2018
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